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1
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ATA
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AREHOUSING
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ANKING
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RANDS
 
Dr. Subhojit Banerjee
Intitute of Business Management,VBS Purvanchal University, JaunpurISSN
 – 
161Year: December 2008 Volume 2, Issue 4/4
Abstract
:
 
Data warehousing is an emerging technique of data base management which can act as astrategic differentiator for data intensive sectors like retail banking. The paper starts with briefly explainingthe concept of data warehousing and points out the areas in retail banking which can be most benefitedfrom data warehousing. The paper also proposes data warehouse architecture to support retail bankingactivity. Finally critical issues related to management of the data warehouse which will affect theusefulness and functioning of the bank has been discussed. The paper is concluded with a futuristic outlook of data warehousing.
Key-Words:
Datawarehousing, Data Mining, Banking, Brands, Strategy
LEVERAGING RETAIL BANKINGBRANDS USING DATAWAREHOUSING
The business environment in the newmillennium accentuates change. Retailbanking as we know is no exception tothis rule. Organizations that will surviveand flourish in this millennium are theones which are able to analyze, plan andreact to changing business conditions ina much more rapid fashion. In Indiaretail banking has taken a myriadchange, from limited number of servicebranches situated in district headquartersit has grown to over 30,000 bank officesoperating across the length and thebreadth of the country
1.
Similarly theoffered services have also undergone a
vast change. ATM’s, telephone banking,
internet banking and personalizedservices are giving way to fluorescent lithalls, chained entrances and serriedranks of cashiers.With international banks breathing downthe neck of Indian Banks, the state of 
‘blissful indifference’ that the Indian
banks had enjoyed might be coming toan end. From being an organization
which ‘Sells services to the customer’, ithas to be an organization which ‘deliver 
s
services as per the customers needs’. For 
materializing this paradigm shift,bankers in India need to have a deeperinsight in to their customers needs andalso continuously monitor the change intheir need pattern.To implement this need-based strategy,bankers are in want of more informationand knowledge than ever before. But thisstatement holds true not only for bankingsector but any business in general. Sowhat makes retail banking special interms of information and knowledge?Banking is an extensively data intensivesector. Large amounts of data pertainingto various transactions are generated.This large quantity of data regardingindividual customers saving, earning andspending pattern can speak volumes
about an individual’s taste and
 
2preferences, habits, family and hispersonality in general. But most part of these data is locked up in files andcomputer systems and is exceedinglydifficult to get it. Ken Orr (1996) defines
this phenomenon as ‘data in jail’
2
.Recently a significant concept that hasemerged, which addresses to this
 problem is ‘data warehousing’. Data
warehousing has grown out of being justa technique of providing efficient,precise and flexible data management
tool to an organization’s most valuable
and critical asset. The ensuing text dealswith the concept of data warehousing inreference to retail banking and areaswhich are most sensitive for datawarehousing.Bill Inmon (1992) is widely credited forpopularizing the data warehouse conceptand terminology. Also known as the
‘Father of Data warehousing’, defines a
data warehouse as follows
3
:-
 A (data) warehouse is a subject oriented, integrated, time-variant and  non-volatile collection of data in support of management decision- making process
-
 
 Bil l   I  n m o n
By way of additional explanation, Inmonprovides these definitions:-
Subject- oriented:
Data that givesinformation about a particular subject
instead of about a company’s on going
operations.
 Integrated:
Data that is gathered in tothe data warehouse from a variety of sources and merged in to a coherentwhole.
Time Variant:
All data in the datawarehouse are identified with aparticular time period.
 Non Volatile:
Data is stable in a datawarehouse. More data is added, but datais never removed. This enablesmanagement to gain a consistent pictureof the business.Daniel Amor (2000) defines as a copy of the business transaction data specificallystructured for query and analysis
4
. Theoperational system cannot hold their datafor infinite times, therefore data ismoved in to the data warehouse.Vivek Gupta (1997) defines datawarehouse as a structured extensibleenvironment designed for the analysis of non-volatile data, logically andphysically transformed from multiplesource applications to align with thebusiness structure, which is maintainedand updated for a long time period,expressed in simple business terms andsummarized for quick analysis
5
.It is clear from the definitions givenabove, that data warehousing largelydeals with storing large and varied datathat has been collected from differentsources, over a period of time and can beretrieved for future analysis. The
obvious question that comes in to one’smind is ‘how is data warehousing
different from conventional data base
management system (DBMS)’? Subhojit
Banerjee (2002) states the followingdistinguishing features of datawarehouse
6
:1)
 
Data warehouse is a largecollection of data, which hasalready been executed.
 
32)
 
All the data that is stored is inreference to a particular timeframe.3)
 
Data is fed in to the datawarehouse through multiplesources. In other words a datawarehouse holds a wide varietyof data pertaining to all thefunctions of the company.4)
 
As data is fed in to the datawarehouse from various sources,all data are first converted in to acommon platform. This enables joining of data for query andanalysis.5)
 
Data can be recalled from thedata warehouse using variousfront-end tools, as the userrequires.6)
 
Data is updated (New data is fed)in the data warehouseperiodically.
Areas in which Data warehousingtechniques will support bankingactivities:
As has been mentioned earlierthat banking is an extremely data-intensive sector. Hence datawarehousing has immense potential inthis sector. Data warehousing whencombined with effective retrievaltechniques like data mining can reap richharvests in retail banking in terms of larger deposits, faster clearance of loanproposals, and accurate prediction of cash flows which will eventually lead tobetter assessment of loan proposals andoverall reduce NPA and bad debts. Someof the areas in which data warehousingtechnique will support banking activitiesare:
Customer Profiling:
Customer profilinguses data warehousing information tohelp bankers understand thecharacteristics and behaviour of specifictarget groups. Through this process,bankers can really understand who issubscribing to particular offers andschemes and how they are reacting topromotional offers and pricing changes.Some additional benefits of customerprofiling includes: -
 
Selecting target groups forpromotional appeals.
 
Finding and keeping customers witha high lifetime value to the bank.
 
Understanding the characteristics of institutional account holders.
 
Customizing the service package tosuit the individual needs of thecustomers.
 
Reducing operating costs bytargeting high response customers.
 Identifying High-end Users:
Datawarehousing enables queries whichanalyze the Recency, Frequency andMonetary value (RFM analysis) of accounts. Since the data that is stored ina data warehouse is in reference to atime frame, when the last transaction hasbeen made can be determined(Recency).Next how often transactionsare made can also be determined(frequency) along with the type e.g.transaction has been made to pay salariesor to invest in stocks and shares can beknown. Third what amount does itinvolve (monetary). The advantage of RFM analysis is that often retail bankstake up salary accounts of largeorganization in the esurience of 
improving upon their ‘deposits’.
Apparently these accounts may seem tobe large in monetary terms, howevermany retail banks may find it a bitdifficult to efficiently service the largenumber of salaried employees that theaccount may inveigle. RFM analysis can
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