Analytics in Banking – What are the next avenues of value addition?

“If we knew what we know, we would be a different organization”

This is what many CXOs quote.  One of the most effective ways to do this is by identifying, analyzing and harnessing the knowledge within the organization. This can be done by leveraging the power of analytics, predictive or otherwise. However, there is often a misconception that terms like Big data, Analytics, Data warehouse etc. are more apt for IT industries. Truth being, they are equally applicable to financial sector as well – especially banking industry.

Banks are considered richest, not only in terms of money, but also in terms of data. They have huge volumes of data from various sources, generated at a high pace. This raises two key problems – Data storage and Data Management.  Even if the data is stored, it is usually scattered and difficult to access.

The much talked about “Digital transformation” in Banking has led many players to adopt technologies like digital and mobile banking. However, for better decision making and customized offerings, banks need to go further than that. This is where analytics steps in.

• Banks can utilize the power of analytics for various functions, right from customer segmentation and profiling, to sharpen risk assessment and drive revenues.
• The traditional Business Intelligence solutions which were initially used are now replaced with advanced analytics, for functions such as risk management, business strategy, fraud analytics, etc.
• By analyzing transaction patterns, banks can gain actionable, real-time customer insights. These insights can be used to improve customer engagement by offering customized products at individual level.
• Scorecards based on customer recovery status, data mining and reporting are some of the other analytical applications.

The need is to go deeper than the surface-level information to uncover the valuable customer insights hidden within your data.

“He uses statistics as a drunken man uses lamp posts – for support rather than for illumination.”
Andrew Lang, Scottish Writer

The diagram below shows the various analytics application areas in banking:

So what benefits can analytics provide?

• Enhanced capability to cross/up sell products to the right customers
• Enhanced Customer profitability
• Transparency in processes and effective risk management
• Increase in collections using delinquency prediction
• Monitoring and diagnostics of current recovery trends
• NPA recovery prediction, tail value estimates

Pentation Analytics

At Pentation Analytics we aim to make sense of large data for enterprise decision making. Our expertise in the banking industry helps us to combine predictive and operational intelligence technology for business benefits. In the banking space, we specialize in Big Data consulting and implementation, data warehousing, loan analytics and customer analytics.