Assignment 2

By Daniel Rizvi

Setting up the real world scenario - Banks Analysis

I ) Data Integration -
Data Integration in banks help processes to gain meaningful and valuable insights from
customer data. In order to become completely data-driven, banks and other financial institutions
are integrating such processes into their operations, thus improving their business agility and
effectiveness.
Data integration techniques, when combined with powerful business intelligence, help these
institutions engage customers across all channels while receiving a complete overview of their
behaviour. Data integration tools help banks to study their customers’ needs and expectations,
thus allowing them to boost their sales and services. Such solutions also assist banks in gaining
a better understanding of multichannel customer relationships.

II) Descriptive Analysis -

In order to discover the set of critical success factors that will help banks reach their strategic
goals, they need to move beyond standard business reporting and sales forecasting. By
applying data mining and descriptive analytics to extract actionable intelligent insights and
quantifiable predictions, banks can gain insights that encompass all types of customer
behaviour, including channel transactions, account opening and closing, default, fraud and
customer departure.
III) Predictive Analysis -
The main factors on the basis of which we can predict the output are as follows -

● Fraud Detection

Analytics can be used to recognise frauds that are not very obvious and then predictive
analytics can be implemented on them to analyse them further. Data integration, utilising
unstructured data and machine learning techniques like supervised and unsupervised learning
can help detect fraud cases by following a pattern.

● Application Screening

Predictive analysis in banking can help process huge volumes of applications, without excluding
important variables, without delays or errors, without growing tired- all of it with regularity and
steadiness. The results are very much accurate and authentic to be used.

● Customer Acquisition & retention

Predictive analytics help in the process for optimised targeting, making it easier for banks to
instantly identify the high-value customer segments most likely to respond. The customer base
can further expand by acquiring the right type of customer.

● Cross Selling
Efficient cross-selling of products can happen by analysing the existing customer behaviour at
places where multiple products are offered. Which specific products are to be sold to whom
hence predicting the outcome is what successful cross-sellers do. And all of this results in more
effective cross-selling thus increasing profitability and strengthening the customer relationship.
Today, securing one profitable customer is a big task for banks, hence cross-selling another
product to an existing customer helps a lot.

● Collections

Banks have a mix of customers who always pay on time and those who lag. It is a tricky task to
keep a track and maintain records of all individuals and differentiate who to focus more.
Predictive analytics offers clear benefits in this area. Banks can attain a better understanding of
their portfolio risk and thus improve the productiveness of the collections process.

● Better Cash / Liquidity Planning

Predictive analytics can help banks track the past usage patterns and the daily coordination
between the in- and out-payments at their branches and ATM’s, hence predicting the future
needs of their potential customers. Optimal management of liquid assets can result in their extra
income and a proper analytics plan can help obtain an overview of future changes in investment
and liquidity options.
IV) Prescriptive Analysis -
Descriptive analysis is ideal for financial organisations that are wrestling with how to make
business decisions faster and more efficient while aligning them with business goals.
Consider these real-world examples in three of the most common types of applications:

1. Customer-focused sales and marketing -

Banking customers today are more knowledgeable and mobile than ever before. They have a
plethora of choices and they shop carefully for banking products, including checking and
savings accounts, loans, and investment products. These customers expect their data to be
packaged into personalised advice and benefits, tailored to their financial goals and personal
needs.
2. Product innovation and management -
Banks can be challenged to develop new products and solutions that serve customers’
immediate financial needs. In a competitive environment in which fin-tech firms are encroaching,
decision optimisation offers the speed and innovation firms need to differentiate their
businesses.

VV) Cognitive Analysis -

The banking industry is currently passing through interesting times as the entire world is
witnessing the fourth industrial revolution. We get to see significant technological advances in
data science, genetics and computer vision that is rapidly increasing the pressure for change,
regardless of the industry. Unlike previous industrial revolutions, this one is proceeding faster
and its effects will likely be broader. We are not just seeing automation in manufacturing or
service provision, but are seeing a transformation of both services and professions
simultaneously.
Consumers in every industry are now continuously connected, digitally savvy, convenience-
loving and price sensitive. This is demanding a change in the way banks are doing business.
Banks need to find ways to cut through vast stores of data and figure out actionable information
that will keep their customers.