Indian companies will be forced to strengthen their analytical capabilities
The deployment of big data and analytics for decision-making is yet to take off in a big way, as many CXOs still prefer to go by their intuition and experience. However, experts believe that increasing competition and changing market dynamics will force leaders to reorient themselves. Ganesh.S, CEO, Dun & Bradstreet Technologies and Data Services, speaks on the emergence of data analytics and how the banking sector, in particular, will be affected.
What are some of the compelling reasons for organizations to go for analytics?
The last decade has seen significant developments in technology that have altered the customers’ behavior, attitude and expectations dramatically. They have become better informed, less patient and certainly less loyal. It is in this context that analytics would be a source of sustainable competitive advantage that improves the velocity and enables mass customization of services’ offerings. Globally there are organizations across sectors such as e-commerce, telecom, retail and healthcare that use cutting edge analytics. With an entry of some of these global players in India, other players in these sectors would be compelled to strengthen their analytical capabilities.
Considering that the banking sector has been a frontrunner in implementing IT, do you see a similar trend in using analytics and business intelligence?
It is true that the banking sector given its data intensive nature has been one of the largest spenders on IT solutions in the last decade. This makes it a leading consumer of analytics and BI solutions. The financial ability to invest in cutting edge technology and innovative ideas also works in its favor.
Does that mean the banking sector is gearing up to implement analytics in a big way?
Yes. In the last decade, investments made in digitalization and transaction automation have enabled the Indian banking industry to evolve significantly in its ability to capture raw customer behavior data. The industry is now ready to exploit this data through analytics to improve business performance. In the coming decade, domestic banking is set for an exponential growth and would become the third largest globally. Analytics & technology would play a key role to enable the domestic players bridge the gap with the more established global players.
What are the key areas where you believe it can make a significant impact?
Some of the key areas, where analytics can make a significant impact are more efficient capital deployment, improvement in speed & accuracy of credit decisions, offer differentiated products based on customers’ needs & risk profiles and reduction in operational costs through enhanced automation in customer decisions. Today, Indian banks staff about 20% in back office operations against the global standards of 10% whereas only 60% are in customer facing roles against the global benchmark of 80%. Analytics can enable banks take more decisions without human intervention. This would help them become more consistent, competitive and customer centric, besides enabling compliance with regulatory requirements and BASEL accords.
What has been your experience with your clients in other countries? Are Indian CXOs equipped to leverage it?
We work with several banks across the globe and find that adoption of analytics in emerging markets of South Asia, Middle East and Africa is less significant compared to those in more mature markets. Banks have a lot of data at their disposal but that is yet to be fully exploited to take business decisions based on scientific evidence. The fundamental belief that analytics can produce the right answers, even if such answers are counter intuitive, is not present in the higher levels of management. This may be because most organizations a generation ago lived in a data starved environment. This resulted in most successful managers of that time to base their decisions on experience and intuition.Though over the last few years, there has been a significant mindset change, this is yet to completely permeate the corporate board rooms. This is likely to undergo a change as more C-suite managers make a start and become comfortable in the current data overload environment. The benefits will soon start coming in to justify the additional investments.
How do you see the market shaping up?
The Business Analytics industry in India is still in an early growth phase. It has grown annually at around 20% with revenues of about $70 mn in FY 2013. Given strong global demand and India’s traditional strengths in mathematics and computer science streams, we have the potential to become a leading global player in analytical solutions and services.
What are the major gaps or challenges that you foresee?
Businesses commit more investments only after realizing the financial impact. There is currently a gap of skilled professionals who are able to translate business problems into analytical problems and then to subsequently come up with practical implementable solutions that deliver real business value. Analytics solution providers need to have an in depth understanding of the business and context in which the analytical models would be used. For example, in the Indian Banking industry, there has been a situation of tight liquidity and a decline in asset quality while in markets like UAE, banks have struggled to expand the credit, given the lowest loans to deposit ratio in the last seven years. It is in this context, we suggest that the right analytical solutions would be able to deliver business value.
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