Written by Pradeep Rao
Introduction:
With the unprecedented growth in both banking
and payment transactions in digital form, banks have been becoming repositories
of large volumes of varied data piling up at a great velocity. The more the
data available, more informed the decisions would be, provided the data is
analyzed quickly and meaningfully. More importantly, the hidden patterns are to
be recognised and appropriate alerts raised in a useful and usable way. Analytics provides banks with more marketing muscle.
Functional areas like Risk, Compliance, Fraud, NPA monitoring and Calculating
Value at Risk can benefit greatly from Analytics to ensure optimal performance
and to take crucial decisions where timing is very important.
Day-to-day functionalities in a banking
environment will be severely limited and handicapped if analytic tools were not
made available to them. The use of Analytics can help banks differentiate
themselves and remain competitive in the future.
Analytics
can be used in following areas in the Banking function:
Credit
risk and Collection
- Lend to right type of
customers.
- Monitor collections.
- Predict and reduce
delinquencies.
- Reduce NPA and increase
profitability.
HR
and performance management.
- Track performance V/s
business objectives.
- Get the best out of
people.
- Reduce attrition.
Finance
and treasury
- Determine interest rates
and forecast NII .
- Monitor and control
interest rate risk.
- Establish risk tolerance
levels and submit Intelligence to ALCO.
- Manage overall funds
situation and FTP.
Marketing
and sales
- Design products and make
customers aware through various marketing channels.
- Maximize sales at minimum cost
through optimizing revenue.
- Increase customer
loyalty and reduce attrition.
Fraud
Analytics
Social
Media Analytics
Benefits
of Analytics:
Ø Analyse
deeper into customer experience
Ø Customer
retention
Ø Improve
employee performance
Conclusion
Statistical
data analysis is taking a huge step forward becoming data analytics by merging
with computer science via Machine learning and operation research, which is
playing a vital role in many industries, especially service. All types of
analytics found immense applications in BFSI sector with some astonishing
results. Banks are making big investments for big data and analytics to stay
competitive. While previously the
cost of investment was one of the barriers for enterprise wide analytics
implementation, it no longer is the case with open source technologies.
Source
:
- Article by Sri. Vasudevan, Wipro. https://www.wipro.com/en-IN/banking/banking-on-analytics/
- Article by IDRBT, Hyderabad https://idrbt.ac.in/assets/publications/Staff%20Papers/Analytics.pdf
