Data Analytics To Play A Key Role In Banks' Growth

by Sohini Bagchi    Jun 18, 2014

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Data analytics is going through exciting times with more enterprises looking at turning insights into customers’ needs. This is especially relevant in the banking sector, which relies heavily on customer information. In an exclusive interaction with CXOtoday, Anand Raisinghani, Country Leader - Business Analytics, IBM India/South Asia discusses the big data analytics landscape in India, highlighting the opportunities and challenges in the banking sector.

What is the market scenario of Analytics in India?

Analytics has caught up the imagination of not only the large companies, but also the small and the medium enterprises in recent times. From large organizations to young enthusiastic entrepreneurs and start-ups, everyone is able to see the role Big data and analytics technologies play in decision making across the various domains of business, whether it is marketing, sales, supply chain, manufacturing, HR practices, finance and others. As Big Data spreads into every-day life, Big Data users and decision makers are changing, too. In fact, it is following the same path as IT, which has gone from being the sole purview of the CIO, to a shared item on the C-suite agenda, to an increasingly in-demand tool for everyone from a growing range of enterprise clients to public officials and chiefs of police to mayors and educators. Used prominently in BFSI, telecom and retail, we are today seeing increased adoption of Big data and analytics technologies.

 What are the key opportunities posed by analytics to the banking sector?

One of the greatest contributions that Data Analytics will have is to detect and minimize fraud and bring about an authentic, efficient customer and client servicing platform. This front office transformation – the alignment of every system, process and person to a customer – has come to the forefront as consumers have embraced digital technologies to bank, shop, communicate and manage pieces of their lives. Banks have expanded their horizons and applying analytics across all the areas of their functions. Today, it’s applied in Marketing, Product management, Channel management – which is market centricity; Risk, Finance, Treasury, Payments – which is market identification, in order to take the automation to the next level. Thus, banks are changing the way financial products are being created, delivered, sold and serviced.

Banking leaders are also reassessing how they serve their customers, not as a large audience, but as individuals with personalized needs. By unlocking data captured in operational and financial systems and coupling it with the right capabilities, banks can outperform in areas such as:

Risk: Brings together all the key risk exposures—credit, operational, market, reputational and more—to enhance decision-making, customer confidence and profitability.

Customer care and insight: Gain a single view of customers to help increase wallet share, improve customer satisfaction and loyalty, serve mass market customers more cost-effectively and offer the products and services they need.

Operational efficiencies: Shore up internal operations—including finance, IT, customer service, HR, and sales—to ensure the entire organization is running at peak efficiency.

How relevant is advanced analytics for the BFSI segment?

Banks, today, are drowning in data. Advanced analytics helps organizations predict outcomes with confidence. Today banks need smarter systems to manage the flow of information around the planet. The way to increased profitability lies in better decision-making—by aligning all data an organization collects and making sure it is accurate, timely, in context and available to all who need it. This will be the key to bring about speedy, effective and business driven decision for institutions like the banks and the other financial organizations as its relevance stems from its purpose.

Banks can adjust their plans and strategies to become more competitive, minimize potential risk and make the best decisions in real time. For example, analytics will be fruitful in Customer targeting and will bring about new insights and reflect consumer behavior, segmentations, and the right financial plans for the right audiences and similarly the channels to reach them. This will also help in forming and maintain customer relationships as they are the financial institutions’ greatest assets. Another aspect where analytics will play a crucial role is the collections – manage cost of collections and the like. In short the process that will be strategic and backed with evidences. IBM understands the business challenges and dynamics of the banking vertical and helps them more effectively understand trends from real-time data feeds from various network devices, web analytics, social media feeds, text messages and other forms of unstructured data and make the most of all the information they have.  

What’s IBM’s role in providing analytical solutions to Banking vertical. Can you please give us an example.

The greatest advantage of data and analytics is the opportunity it gives organizations to embrace customer-centricity: banks tailor experiences to the individual, while also becoming more profitable. Those who strategically use Big Data and analytics to deliver a more personalized banking experience win the loyalty of more customers in an increasingly competitive marketplace. We take our customers from what is often an automation and efficiency driven investment decision to one that promises so much more – better practices, better insight into the source of profit and growth, continues and well informed steering of the enterprise to strategic outcomes. IBM analytics is playing a vital role in Banks budgeting, planning, and management reporting. The financial sector deals with data which is exhaustive and of sensitive nature, hence, a strong IT infrastructure which would perform like a well-oiled machine at the same time at a reduced cost. IBM is driving its commitment to big data and analytics through sustained investments and strategic acquisitions.

Central Bank of India, one of IBM’s clients is leveraging our analytics to radically transform its financial management processes which includes activities ranging from budgeting to forecasting to liquidity management. The Central Bank of India is now one of the few public sector banks achieving complete automation of corporate performance management activity on a bottoms-up approach. With the use of analytics, the Central Bank of India can smartly analyze daily financial data based on actual performance and potential for growth and uncover new sources of customer value.

In another instance, IBM is providing innovative technology to enable IndusInd Bank to deepen customer relationships by delivering personalized, location-based recommendations and offers in real time. We have developed a new technology that connects people with contextual information. Once a user has opted in for the service, the tool cross-references the user’s location with the user’s activity to provide useful insights. As users conduct daily transactions, such as buying airline tickets or shopping at the mall, the system sends relevant promotions by email and mobile alerts, as per the user’s preferences.

Big data analytics skill gap poses a threat in the industry at present. What is IBM doing in terms of training to bridge the skill gap?

To narrow this skills gap, IBM is committed to partnering with universities around the world to provide students with Big Data and analytics curriculum to make an impact in today’s data-driven marketplace. Today, we are partnering with over 1,000 universities across the globe, focusing on Big Data and analytics — all of which are designed to prepare students for the 4.4 million jobs that will be created worldwide to support Big Data by 2015. These collaborations span a variety of majors — including business, marketing, mathematics and health services — providing schools with access to IBM Big Data and analytics software, curriculum materials, case study projects, and IBM data scientists who visit classes as guest lecturers.