Features

Mike Cappetta – Northwest Bank

Data-driven approach sparks innovations at Northwest Bank

Mike Cappetta had been chief technology officer for Northwest Bank for about 18 months when he was offered the opportunity to become chief data officer in December 2022.

For almost 35 years, Cappetta managed technology, projects and strategy in the banking and finance industries at giants including Price Waterhouse, U.S. Bank and Citibank. So, he was interested as a business manager and as a user of data to drive sales and efficiency as he had done in previous roles.

Mike Cappetta | Chief Data Officer | Northwest Bank

Mike Cappetta | Chief Data Officer | Northwest Bank

His industry peers and friends provided him with advice and opinions, especially about the challenges of helping an organization use its data fully, efficiently and profitably. But as Cappetta grasped the changes his CDO role would bring, he also understood that data is money, and Northwest Bank was ready, willing and able to harness its data to grow.

“Northwest Bank is a dynamic regional bank striving to grow and working on better using its data resources and customer inputs,” Cappetta says. “I couldn’t accomplish anything without my amazing team. I’m excited to work with them daily and position the bank for success.”

Creating a data culture

Northwest Bank has 134 branches in Pennsylvania, New York, Ohio and Indiana to serve more than 700,000 personal and business customers.

Cappetta and his team of 16 have also collaborated with vendors, including Curinos and YDC, to increase data literacy and evolve what he calls a “data culture.” That’s being achieved in part by leveraging the YDC’s data models, which assess Northwest’s data at 2 or 3 percent of its asset value, and using internal resources, training company users on using Microsoft Power BI and data governance.

As Cappetta explains, banks profit by expanding client relationships to grow deposits, loans and solutions that generate income. To assist in business development, he and his team can increase the quality of leads by gathering and analyzing customer data to provide targeted opportunities for new product sales, customer retention and insight to create new financial products.

Mike Cappetta | Chief Data Officer | Northwest Bank

Mike Cappetta, Sindhura Ghanta, Mahes Nayak, Chrissy Rossow, Kannan Tamilraj, Ravi Penmasta (Microsoft)

His team created a machine learning tool to determine the value of sales leads and place the best leads in a banker’s queue for action. As the machine learning model receives more sales data, it improves its scoring algorithm and ability to convert sales, Cappetta says.

Northwest Bank has created a “golden customer record” to fully understand their relationships and how they use accounts and services. The bank uses the Curinos Amplero data engine and the golden customer record to drive what Cappetta calls “next best product” selection and increase customer sales and retention.

YDC’s work helped formalize the value of the three data categories for Northwest. Cappetta and his team use this baseline to show where the bank can operate more profitably and define the next best use cases to pursue and better quantify value.

“YDC confirmed our data has a value that we should pursue and took the guesswork out of the equation,” he says. “The tricky part is turning those estimates into use cases to execute.”

Forging ahead

Cappetta says increased data use helps loan officers understand and mitigate potential risks in deciding whether to lend to customers and underwriting the terms of a loan.

More data can help Northwest Bank look beyond a borrower’s credit score as the basis for making a loan by leveraging payment histories and other financial activities to establish a borrower’s creditworthiness. It will allow the bank to refine its lending practices by predicting credit exposure in its loan portfolios as well as the required reserve allocation.

The IT team is creating proofs of concept to review loan contracts, enable faster analysis and find gaps in loan documentation with machine learning tools. As many as 100,000 per day can be reviewed, and the automated reviews will eliminate back office manual tasks and allow staff to focus on exceptions, Cappetta says.

When he spoke to other CDOs about their roles and the difficulty of using data to generate revenue, Cappetta was cautioned to get the foundation in place before progressing.

Mike Cappetta | Chief Data Officer | Northwest Bank

While on the one hand, being organized and getting the fundamentals of data use correct was essential, waiting to use data could lead to missed growth opportunities. So, Cappetta also looked at use cases where data could already be applied to aid sales. He split the team’s efforts to establish the foundation while simultaneously applying revenue-generating use cases such as those with Amplero and next best product, which allowed the team to demonstrate value from data early in the cycle.

“Northwest Bank’s data team plays a critical role in how we’re unlocking new customer growth opportunities. Mike’s extensive experience and leadership are essential ingredients to our success,” says Devin Cygnar, Northwest Bank’s chief marketing and communications officer.

Embracing his role

A Connecticut native, Cappetta studied math at Yale before earning his bachelor’s degree in electrical engineering from Rensselaer Polytechnic Institute in 1987. His leadership roles in IT and technology include managing at global professional services company Accenture from June 1987 to March 1992.

“I’ve always been fascinated with technology but found I’m a far better user and adapter through things like strategy, project planning and managing tech initiatives,” he says. “I’m not a deep technologist, but I am a good businessman and know how to build a team to be successful.”

After serving as a senior manager for Price Waterhouse from March 1992 to September 1996, Cappetta began a nearly 20-year tenure at Citibank that culminated with a decade as director of its strategic transformation group. Before joining Northwest Bank in March 2021, he was head of transformation strategy at U.S. Bank.

He joined Northwest Bank in March 2021 as the CTO and says the switch to CDO has been more rewarding than he expected.

“I like monetizing data for success,” Cappetta says. “I like being able to do cool stuff- it’s why I get up in the morning.”

View this feature in the Fall I 2023 Edition here.

Published on: October 22, 2023

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