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Universal Banking Solution | Systems Integration | Consulting | Business Process Outsourcing
Customer intelligence: Part II Layered analytics - An integrated approach
Banks and financial institutions have always found it difficult to provide unique products and services, and offer differentiated experiences to engage customers. The irony is that banks are sitting on a huge unexploited wealth of data which can be utilized to gain insights that could help them differentiate their services. With innovative modes of engaging customers and new channels and devices emerging, the data available to banks is multiplying at a rapid rate. Banks are now realizing the power of data available to them, which could help in predicting future business and defining growth strategies. Research suggests that “analytics” would be one of the primary areas where banks would invest heavily to identify opportunities to grow their business and to enhance customer service.
Need for an integrated approach towards analytics
Different flavors of analytics solutions, including customer analytics, channel analytics, risk analytics, regulatory analytics, fraud analytics, social analytics, behavioral analytics, and predictive analytics, have emerged over the years. Successful banks have already implemented one or more of these analytics solutions and others have started implementing these to address their analytics needs. However, the ability to analyze customer data from all angles, derive intelligent and actionable insights from it and get a holistic view of customers, still eludes most banks today. The need for an integrated approach is increasingly being felt and banks and technology solution providers have started working to knit together the various flavors of analytics. This integrated approach - the layered analytics - is the next wave in banking analytics. Imagine your bank having an intelligent dashboard which predicts customers‟ investment plans, probable fraud patterns or even their interactions with banks. This is not a distant dream - thanks to technology solutions that combine data from multiple sources, analyze it with a multitude of parameters and produce informative and actionable insights.
Layered analytics - The future of analytics
Layered Analytics combines data from multiple sources, analyzes it with respect to multiple parameters and produces insights that help the bank on various fronts. The benefits are unlimited. Consider analyzing the transaction history of a customer, the amount transacted online, origination place of transactions, checks deposited remotely, payments made, authentication modes, loan repayments made, products searched for, reviews and polls viewed, discussion forums visited, expense pattern and investment plans of the individual and the members of the community to which he/ she belongs or even the transactions done by household members. Imagine a score being calculated as a result of this analysis, which can
be used to approve further loans, predict the probability of fraud and recommend the type of deposit that suits the individual ‟s investment plans. This is exactly what layered analytics can
do - analyze and synthesize huge volumes of data from multiple touch points using multiple parameters and derive insights that can aid banks in various ways.
How successful banks embrace analytics
Banks which have implemented analytics solutions have experienced the power of data and have gained in multiple ways from the insights derived. Successful banks follow a structured approach for defining analytics strategies. The process that could be followed for streamlining your banks analytics strategy would start with identifying the key business goals for which customer intelligence inputs are required. All stakeholders need to be convinced about the potential of analytics and how it can aid financial institutions to grow their business. Identifying a solution provider who offers advanced scientific methods for customer analytics is equally important. In addition to providing solutions to satisfy current analytics needs, the solution provider should also demonstrate thought and content leadership and the innovativeness required to develop futuristic solutions. Business and IT teams should collaborate with the solution provider to identify key data points and sources that need to be analyzed. Clear definition of goals helps modify existing analytics metrics, tools and reports to produce optimal results. Once the analytics solution is up and running, the insights produced can be converted to actionable items, to fine-tune the financial institutions‟ goals. Customer acquisition, engagement and retention strategies devised can be enriched by incorporating actions based on analytics insights. Consider the following scenarios showing how financial institutions use layered analytics to their advantage: A customer, who has made a deposit in the previous year, has recently got a salary hike and is reviewing various investment products offered by the bank. For the bank, this could be an opportunity to sell a long term recurring deposit or a mutual fund. The Bank can proactively reach out to this customer and discuss various options that could be beneficial to him. Knowing the customers income, expenses, salary hike pattern, assets and liabilities from personal financial management, the bank can also predict his future buying behavior and financial needs and offer appropriate investment plans. The probability of conversion would be higher, if the bank could send targeted offers to a set of identified customers based on their needs. Consider the case of a customer who has frequent high volume transactions from electronic channels, initiated from different locations. This customer is exposed to a high risk of fraud. Implementing layered security specifically for relevant customer segments and alerting the customers on their preferred channels for every successful transaction and login attempt failures have become a necessity. A 360 degree view of customer information along with relevant and contextually analyzed data empowers banks‟ to develop innovative products and services and offer differentiated customer experiences. Continuous evaluation of analytics strategies to suit the changing behavior of customers will empower financial institutions to innovate, and build their brands while expanding their customer base. As in every solution, there are challenges that need to be addressed while deploying analytics and this is particularly so in the case of layered analytics. Producing clean data, after addressing redundancy, from various host systems of the financial institution is in itself a big challenge. Analysis of the cleaned up data, keeping in mind multiple dimensions like customer behavior, security and maybe be even cross sell opportunities, is no simple task either. Defining
the kind of data that needs to be analyzed and the dimensions to be applied for each set of data, forms the basis of any layered analytics solutions. Once the framework is established, the
financial institution and the solution provider can collaborate and put in place advanced data analytics that could provide inputs for developing business strategies.
What lies ahead?
Successful banks focus on defining analytics strategies to utilize the wealth of data available to them for producing actionable insights. What is important is selecting a technology solution provider, who can collaborate with the bank‟s business intelligence team and IT staff to produce the best analytics solution tweaked to suit the bank‟s need. In addition to that, banks need to pull in analytics experts who can define and execute strategies to ensure that data is being used intelligently for achieving the identified business goals. The future of analytics lies in “Layered analytics‟, be it in fraud reduction, right selling, regulatory compliance or in enhancing customer services. It will be one of the key drivers for success in banking and financial services industry. As the field of analytics advances, it would unfold newer benefits for banks investing in it.
Arunnima B S
Principal Consultant, Finacle, Infosys
Sudha Annie Saigal
Senior Associate Consultant, Finacle, Infosys
Finacle from Infosys partners with banks to transform process, product and customer experience, arming them with „accelerated innovation‟ that is key to building tomorrow‟s bank. For more information, contact Finacleweb@infosys.com www.infosys.com/finacle
© 2012 Infosys Limited, Bangalore, India, Infosys believes the information in this publication is accurate as of its publication date; such information is subject to change without notice. Infosys acknowledges the proprietary rights of the trademarks and product names of other companies mentioned in this document.