BUSINESS ANALYTICS CIA--1

APPLICATIONS OF BUSINESS
ANALYTICS IN FINANCE
"Information is the oil of the 21st century, and analytics is the combustion engine."

BY -

SWAPNIL NAWANI (20212059)

ESHITA SETH ( 20212067)

AKARSH JAIN ( 20212005)

RITIK RAJ (20212046)

WHAT IS BUSINESS ANALYTICS ?

Business analytics is a data management solution and a subset of business intelligence that
involves using methodologies like data mining, predictive analytics, and statistical analysis to
analyse and transform data into useful information, identify and predict trends and outcomes, and
make better, data-driven business decisions.

COMPONENTS OF BUSINESS ANALYTICS

● Data Aggregation
● Data Mining
● Predictive analytics
● Text Mining
● Forecasting

DIFFERENT DOMAINS OF BUSINESS ANALYTICS

● Banking, Finance Services and Insurance

● IT industry
● Manufacturing
● E-commerce
● Online Services and marketing
● Logistics and Supply Chain Management
● Telecommunication

CHOSEN DOMAIN -- FINANCE AND FINANCIAL SERVICES

ROLE OF FINANCIAL BUSINESS ANALYST

The prime role of a financial analyst is to research, analyze, and interpret financial and
accounting information and predict the future performance of the company. They are also
responsible for forecasting future revenues and expenditures, as well as modelling capital
structure and budgeting

APPLICATIONS OF BUSINESS ANALYTICS IN FINANCE DOMAIN

In the below given analytics problems the applications of business analytics have been
explored in order to solve the problem.

PROBLEM 1. - Payments and the future of mobility ( FRAUD DETECTION)

There are innumerous payments in daily transactions. Thus consumers expect an unshakable and
integrated way to process it. This can act as both opportunity and challenge for payment

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providers. Keeping a check on an individual basis is almost an impossible task. Analytics plays a
colossal role in it.The payments industry is facing considerable change largely because of factors
such as digitalization, the increasing prevalence of Omni-channel customer experiences, and the
ongoing shift from owning assets to the sharing economy.

PROCESS

The process of fraud analytics involves gathering and storing relevant data and mining it for
patterns, discrepancies, and anomalies. The findings are then translated into insights that can
allow a company to manage potential threats before they occur as well as develop a proactive
fraud and bribery detection environment.

Most expect transactions in the new mobility ecosystem to be a bundle of services covering one
or multiple modes of transportation as well as some ancillary services

POTENTIAL BENEFITS

Adding analytics to this mix can significantly expand fraud detection capabilities, enhancing the
“white box” approach of the rules-based method.

● Identify hidden patterns- Unsupervised or non-rules-based analyses driven by analytics

technology can uncover new patterns, trends, fraudulent schemes, and scenarios that
traditional approaches miss.
● An extra layer to add punch to your existing efforts.
● Cross the divide - Fraud analytics can pull data from across your organization into one
central platform, helping create a true, enterprise-wide approach

IBM’S EXAMPLE OF FRAUD DETECTION AND IMPLICATION

Use of AI & Machine learning protects users in minutes as compared to hours for anti-phishing
takedown services.

● Trusteer Rapport is designed to defend against MitB attacks, remove malware from
endpoint devices using financial malware protection.
● Protection from new phishing tactics- It identifies new phishing attack methods, alerting
a team of threat intelligence researchers who further analyze the attack and deploy
protection for all users.
● Global threat intelligence service-

a. continuously analyzes data to uncover new threats

b. New protection walls added according to the need and future predicted malwares

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Author Name: Deloitte (2012);Title of Doc: Fraud Analytics -3 minute Guide;
Available:https://www2.deloitte.com/content/dam/Deloitte/tr/Documents/deloitte-analytics/tr-fra
ud-analytics.pdf

Author Name: IBM (2018);Title of Doc: Create a seamless experience for customers
throughout their digital journey ;Available:https://www.ibm.com/downloads/cas/PRKQRG60

PROBLEM 2 - RISK ASSESSMENT AND RISK HANDLING

A financial risk assessment can assist you in determining the level of risk unique to your

company, prioritizing those risks, developing strategies to avoid them, and outlining methods

to manage them if they occur. A financial risk assessment can also assist you figure out how

much risk you’re willing to take.

SOLUTION-

RISK MODELLING –

● The application of formal econometric approaches to determine the aggregate risk in a

financial portfolio is known as financial risk modelling.
● Organizations in the public and private sectors have recently begun to use a variety of
risk models and simulations to address strategic, operational, compliance, geopolitical,
and other categories of risk.
● Modelling is becoming more realistic as more data and sophisticated analysis capabilities
become available; at the same time, the necessity to manage with an increasingly
dangerous environment is boosting its worth.
● Once risk models have been created, they may be used to assess how a system performs
under normal operating conditions as well as hypothetical & what are the scenarios.
● This aids organisations in determining their risk tolerance and determining how to
integrate resiliency into systems so that they can survive a variety of impacts.

RISK MANAGEMENT SOFTWARE –

● MasterControl Risk provides a comprehensive picture of your company’s risk

environment. This encompasses all product lines, business units, procedures, quality
control, and document control, among other things.
● The tracking and analytical functions of risk management software make it simple to
identify and mitigate long-term system, process, and product risks.

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 ● Life sciences firms must avoid quality risks, which add costs and cause delays, in order to
launch products successfully and on time. Risk management software that is automated
allows you to swiftly detect and mitigate hazards throughout the life cycle of a product.
● The ability to properly track, assess, prevent, and repair problems is a company’s largest
risk and quality management challenge, because quality processes rely on accurate risk
evaluations.

HIGHER INTERPRETATION (authors)

● With the emergence of Big Data and the introduction of dynamic data visualisation tools,
there has been a surge in interest in employing data analytics to mitigate risk.
● Business analytics, on the other hand, has its limits, one of which is that the historical
data employed is necessarily backward looking.
● you’re looking at how a system has behaved in the past and looking for connections that
can help you figure out what’s going on.
● Circumstances change all the time, therefore the past may not be a fair prediction of what
will happen in the future. you can’t extrapolate those results into the future and expect the
system to perform the same way it has in the past.
● This is where modelling comes in, both a complement to data analytics and other
statistical tools as well as a powerful decision-making tool in and of itself.

Author Name : Deloitte(2021); Title Of Doc : Risk Modeling ; Available At:

https://www2.deloitte.com/mn/en/pages/governance-risk-and-compliance/articles/risk-modeling.
html

Author Name : Master Control (2022); Title Of Doc : Risk Analysis Applications; Available
At: https://www.mastercontrol.com/quality/risk-software/analysis-application/

PROBLEM 3- CASH FLOW MANAGEMENT

● Cash flow management involves monitoring and analysing the movement of the amount
of money in your firm .
● If not done accurately then you will not be able to forecast how much money your
company will have in the future.
● You will not be able to determine how much cash your company requires to satisfy debts,
such as paying staff and suppliers.
● CFM helps you to recognise patterns, plan for the future, and address any cash flow
issues.
● Reports generated for each business runs over 30 pages and covers details with over 100
sections ranging from financial trends, management and shareholders details to

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 operational details,financial assets and liabilities all in one place. The clients experience
slow and error-prone data collaboration and inconsistent report document formatting.

SOLUTION-

INTELLICUS -Data Integration and Business Intelligence Platform

● Intellicus created a data collaboration and report generating process that was fully
automated.
● The reports were created using templates, which ensured that each business report was
consistent and reliable.
● Intellicus & workflow-based approval method expedited the delivery of reports to
subscribers once analysts examined and authorised them.
● On a private cloud, the customer implemented a fully web-based Intellicus business
intelligence solution with no impact on analysts & PCs.
● The client simply extended the solution to their offices in other parts of the world after
going live in record time with the support of Intellicus professionals.
● The whole report delivery time was reduced from 25 days to 3 days after the closure.
● Intellicus collaborates and produces a business report in 6 seconds, versus 5-7 man days
of analyst effort previously.
● This freed up a significant amount of time for analysts to focus on more productive tasks.

HIGHER INTERPRETATION (authors) –

● The application solves three major problems that are –

● The unstructured nature of the data, which must be processed, analysed, and presented to
traditional investors in a highly organised report style.
● The risk reports & time to market criticality, especially in light of rival reports arriving
earlier and, more critically, the lag between business events and investor choices.
● Credit history, business-to-business sales and marketing, counterparty risk exposure,
supply chain management, lead scoring, and social identity matching are among the
commercial data they provide to firms.

Author Name : Intellicus (2021); Title Of Doc : Enterprise Analytics; Available At:
https://www.intellicus.com/enterprise-bi/?utm_source=Adwords&utm_medium=PaidAds&utm_
campaign=AwarenessAPAC

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PROBLEM 4 - ROBO ADVISORS ( MANAGING INVESTMENTS)
Planning your investments can seem like a daunting task. On one hand is a bewildering array of
choices and on the other is the effort required to plan, monitor and adjust one’s portfolio at all
times. But what if there were an automated tool that could manage all your investments? In a
world where automation has entered every sphere of life, robo-advisors are emerging as a choice
to manage wealth.

SOLUTION -

A robo-advisor is a digital financial advisor that provides financial advice or manages

investments with moderate to minimal human intervention. Robo-advisors are designed to
deliver advice digitally based on inputs received from the investor.

PROCESS-

Robo-advisors use algorithms to understand and predict investor preferences, risks and goals.
Usually, they do this by asking a set of psychographic and demographic questions that leads to a
model portfolio.The most basic profile questionnaire will include queries on gender, income,
liabilities, willingness to take on risk and current asset allocation.

Simplistic robo-advisors will use this information to create the investor profile. Comprehensive
robo-advisors look for more in-depth information through AI and data. They use financial
transactions including investment, bank and credit card transactions to understand the actual
financial behaviour of the investor. These advanced tools help comprehensive robo-advisors
judge your financial behaviour and how you are likely to behave in a particular situation.

BENEFITS OF ROBO ADVISORS-

● Easy access: All one needs to access a robo-advisor is an internet connection. Most
robots are designed to be straightforward and easy to use. But what makes them more
accessible than the average human wealth management advisor is the lower fee.
● Free of human bias: One of the drawbacks of taking human advice is the possibility of a
bias. Even the most competent advisor can be blinded by their own unconscious bias
towards an asset class or their evaluation method when assessing risk.
● An AI-based robo-advisor, on the other hand, uses a mathematical algorithm to assess the
investor.
● Comprehensive services: Today robo-advisors offer a host of services that take care of
your entire financial planning. This can include services such as retirement planning,
tax-strategy schemes and rebalancing the portfolio.

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 ● Tracking your investment priorities: A robo-advisor builds your investment goals based
on your profile. In the process, it can reveal financial priorities or responsibilities that
may not be immediately obvious when you are in pursuit of different goals.Robo advisors
like INDwealth, Scripbox, and Paytm Money have in-built mechanisms to help keep
track of these goals through timely reminders.

HOW DELOITTE USES ROBO ADVISORS ?

The wealth management industry is likely entering a period of significant disruption, with
robo-advice at the heart of this disruption. Digital, automated advice will likely become a
standard expectation for the mass-affluent and mass-market segments. But big data and advanced
analytics have the potential to dramatically expand the scope of robo advice, incorporating
financial planning into broader retirement, health, and wellbeing, and enabling quasi institutional
research, which could then impact all investor segments.

Author Name :Deloitte (2022); Title Of Doc :Robo-advisors Capitalizing on a growing

opportunity;AvailableAt:https://www2.deloitte.com/us/en/pages/consulting/articles/robo-advisor
s-capitalizing-on-growing-opportunity.html

Author Name : FORBES ADVISOR (2021); Title Of Doc :what is a robo advisor and how it
works;AvailableAt:https://www.forbes.com/advisor/in/investing/what-is-a-robo-advisor-and-ho
w-does-it-work/

PROBLEM 5: RegTech - (CHANGING THE REGULATION LANDSCAPE)

What is the most significant challenge the financial services industry faces today? It is
complying with ever-changing regulations. Non-compliance leads to cancellation of license,
significant penalties, legal issues, and sanctions.The financial industry is increasingly looking at
technology-driven transformation in regulatory affairs, popularly known as RegTech, to deal
with the new directives and regulations. Below are the significant regulatory challenges the
financial industry face

● Comply to regulators

● Process Lines

● Operations

● Consumer Protection

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Solution

RegTech, or regulatory technology, applies innovative capabilities and techniques to help

financial institutions improve their regulatory governance, reporting, compliance and risk
management.RegTech helps firms effectively achieve regulatory compliance while reducing
costs and financial crime.

Impact of RegTech

Rising technologies like AI/ML, Predictive Analytics, Chatbots are applied in the following
regulatory compliance areas

● Real-time reporting – Automation of reporting and compliance processes

● Identity management and control – Customer due diligence (KYC) and money
laundering, tax evasion (AML)

● Transaction monitoring – Real-time monitoring and auditing

● Regulatory Compliance - Gain insight to comply with evolving regulatory requirements.

● AI and Automation - Automate risk and compliance for faster and improved insights.

● Trading compliance – Bots to facilitate real-time queries on trades

How Accenture Perceives RegTech !!

With technologies such as AI, ML, robotics, blockchain and biometrics, RegTech can
enable regulatory compliance to become both the sword and shield against financial
crimes. Such a benefit not only reduces the burden of cost and complexity, but also
augments capacities of regulators and the regulated by automating compliance
processes, most of which are still manual, error-prone and biased.

Some Functions are :

● Managing customers more efficiently

● Every move you make, we’ll be watching you
● Weeding out the rogue addresses
● Following the bitcoin trail
● AI and ML

Author Name : Accenture (2019) ; Title Of Doc :Regtech - The New War Cry Against Financial
Crime;AvailableAt:https://www.accenture.com/_acnmedia/pdf-106/accenture-regtech-the-new-w
ar-cry-against-financial-crime.pdf

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Author Name : Nasscom (2020) ; Title Of Doc :RegTech - Changing the regulation landscape;
AvailableAt:https://community.nasscom.in/communities/policy-advocacy/regtech-changing-the-
regulation-landscape.html

PROBLEM 6 : STOCK MARKET ANALYTICS

Capital markets areas typically generate large volumes of data— be it through

trading,transactions, or operations. However, computing efficiencies and cost constraints limited
the management of such data in the past.

SOLUTION -

Typically, data strategies can be applied to a whole range of functions, ranging from front
office.Trading to back office processing, surveillance, reference data, and support.Some of the
better known solutions are:

● Revenue Optimization Trading Analytics : A good example of the intent to generate

revenue for big data analysis is sentiment analysis. Big data strategies can be used to
gather and process information about specific markets to clearly understand the sentiment
driving front office trading strategies and determine the valuation of individual securities.
● Client Relationship Management: A single view of the customer can make an immense
difference to customer satisfaction levels,to consolidated, rich, relevant and insightful
data.A 360 degree view can be obtained by applying analytical insights to data captured
at various touch points in the client management lifecycle.
● Cost Rationalization :Cost clarification can arise whilst fraud and dangers are detected in
a well-timed manner. Big Data analytics allows companies to overlay current statistics
together with patron transactions with statistics collected from unstructured and
semi-dependent reasserts to supply deeper insights into fraud.
● Shareholder Analytics: Shareholder Analysis is a screening feature that listed companies
receive to discover information about the individuals and groups that own their
shares.Shareholder Analysis provides information on the number of issued shares and
how often investment groups buy shares.

How Accenture plans to revolutionise !

The ultimate win would be to achieve full exchange automation with tokenization using
blockchain technology, thereby removing the high cost messaging and reconciliation dynamics
of the industry. Several players have announced they are close to go-to-market with digital
exchange offerings, and these would have the potential to revolutionize the exchange market as
we know it today.

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Author Name : INFOSYS (2014); Title Of Doc :Big Data in Capital Markets
AvailableAt:https://www.infosys.com/industries/financial-services/white-papers/Documents/big
-data-capital-markets.pdf

Author Name :ACCENTURE (2020); Title Of Doc :Capital Market Vision

AvailableAt:https://www.accenture.com/in-en/insights/capital-markets/capital-markets-vision-2
025

CONCLUSION

Financial analytics can help you focus on measuring and managing your business' tangible assets
such as cash and equipment. It provides an in-depth insight into the organization's financial
status and improves the cash flow, profitability, and business value. It can prove to be the most
effective tool for the company if used judicially.

NEWS ARTICLES RELATED TO FINANCIAL ANALYTICS

● https://finance.yahoo.com/news/financial-analytics-market-size-worth-151500434.ht
ml
● https://www.business-standard.com/article/finance/banks-struggling-to-deal-with-in
creasing-fraud-incidents-amid-covid-survey-122011700591_1.html
● https://www.business-standard.com/article/finance/banks-struggling-to-deal-with-in
creasing-fraud-incidents-amid-covid-survey-122011700591_1.html

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