Business Analytics and Data Warehousing Business Analytics as
Business Analytics and Data Warehousing Business Analytics as a concept has come a long way, from being a novelty to a norm today Suresh Kumar Financial Services Asia Pacific Oracle Corporation
Agenda • • Market Assessment Business Analytics in Banking Trends In Banking Business Requirement in Banking Oracle Business Analytics Solution What Are Analysts Saying Summary
Market Assessment: Banking Key Business Drivers & Challenges facing the Banking Industry: Business Drivers • • • Customer Insight – understand customers better, improve interactions and responsiveness, offer multiple channels Operations transformation of legacy systems to improve process efficiencies Corporate Governance – integrate Risk Management in day-to-day operations and performance management. Reduce back office costs through shared service centers, automation of processes Regulatory compliance requirements Managing human capital for increased competitiveness Business Challenges • • • High cost of maintaining highly customized older technology – many organisations looking to replace core systems Fragmented data – difficult to understand profitability of customers, products and channels Lack of automation to support key Banking processes, eg: loan origination, transparency and accountability enabling regulatory reporting/tracking Consistency of service across channels and improve cross selling To service current business needs through an adaptive IT architecture To manage human capital and internal knowledge
Business Analytics in Banking 2 nd Time Around § Business Intelligence “Failure” – Prior limited success of BI-DWH were not just technology problems, IT was only one of the many reasons § Growth in Distribution Channels & Delivery Systems – Branch, Internet, Contact center, ATM, Payments, Kiosks, Mobile Devices… § Lack of Industry understanding in the past – BI-DWH is about bank profitability & risk, retention and acquisition, not just reporting – Understanding your customer (customer data), automation and integration across systems § BI-DWH is now a Strategic Platform
Business Analytics in Banking 2 ND Time Around Multi-Vendor BI Strategies Integrated BI Platform • Unnecessary Software Spending • Unified Data Layer • Centralized Tools • Excessive Training Development and Support • Shared Metrics • Multiple Versions of “Truth” • Complete Customer View
Future Trends in Banking Exception Based Banking – Real Time Interaction Example – Retail Banking Industry Retail Banking Segments • • High Net Worth Mass Affluent Mass Market Premier Banking Geography Demographics Product Key Events • • • • Request to Close an Account Significant Balance Fluctuation Address Change Birthday Call Frequency/Trends Documentation/Funding Fraud Alert Last Payment or Prepayment Request Maturity of Investment Missed Payment Name Change New Channel/Product/Service Trade Information/Transaction/Information Evaluations • • Account Asset Liability Contact Behavior Customer Information Customer State Warning/Fraud Detection Actions • • • Alert/Notification Sales Call Correspondence Email Recovery Plan Launch Marketing Hold on Account Retention Plan Cross Sell Personalized Plan Value Proposition • Information driven Personalized service to the customer across all touch points • Help Increase customer retention and wallet share • Enable execution of segment strategies across branch, call center, web • Drive ROI from data warehouse / mining investments
Future Trends in Banking Beyond Traditional BI-DWH: More Customer Centric Model ü What to Sell Select ü Which Customer ü What Price/Risk $ Extend ü What Channel Acquire Retain ü What Margin? Customer Segmentation & Analysis Customer Level Profitability (RAROC) Segment a Revenue Expense Cost Of Funds Segment c… Expected Losses Products Business Units Data Warehouse & Customer Data Integration Segment b Risk Charges Channels Enterprise Wide Information Customer Accounts Transactions Financial Acct
Future Trends in Banking Empower All Users - Not Just the Few STRATEGIC Executives Summary Concise metrics on KPIs at corporate level Highly correlated with overall strategic plans Management TACTICAL ACTIONABLE RELATIONSHIP INFORMATIVE Focused on Key Performance Indicators for a business unit Report employee performance versus goals Broader scope of business Employee Users Targeted analytics to improve job performance Broadest scope for ad-hoc analytics Partners Targeted analytics to improve multi-organization initiatives Limited ad-hoc capability Customers Highly focused analytics to monitor customer activity and guide behavior Detailed
Business Users Requirement
Business Users Want Answers Retail Credit Risk Finance Strategic Issues Tactical Issues HR Market Risk Liquidity Risk Operational Issues ?
Business Users Want Answers Customer Segmentation • What is the customer break up across various categories (e. g. salaried, selfemployed and professionals; rural and urban)? • How has this changed over the last three months in different organizational units reporting to me? • What is the demographic and lifestyle break up of my customers? Budget Achievement • How are organization units performing vis -à-vis targets in terms of various products (e. g. mortgages, cards, consumer finance, vehicle finance)? • Which branches are doing better in which products? RETAIL Customer Acquisition • What are my customer acquisition costs across different products lines / channels? • How is sales performance across different delivery channels (agents, branches, telemarketing / call centres)? Cross Sell / Up Sell • How many existing customers bought other products of the bank? • How many existing customers availed more of their credit facilities, or went in for an increased level of the same facilities? • What is the average number of products per customer? Does this differ between different customer segments? Could I see how it is in my organizational units, so I can get branches with lower products per customer to move to higher products per customer?
Business Users Want Answers Customer Attrition • What are the top reasons for customers to leave? • How many of my customers have been lost across different organizational units in the last month? In the last quarter? RETAIL Channel Usage / Efficiency • What is the customer transaction break-up across different delivery channels (branches, ATMs, Internet banking, POS, telebanking, mobile banking, etc)? • What is the peak/non-peak transaction load of various bank ATMs over a period of time? • What is the potential of migrating transactions to lower cost channels?
Business Users Want Answers Credit Portfolio • What is the break-up of the portfolio in terms of industries, geographies, product / instrument types? And how has this changed over the last two quarters? • How has my credit portfolio been changing in the last 12 months across different credit grades? • How are my ratings migrating / transitioning over a period of time (usually over the last couple of years)? • How are organizational units at meeting their portfolio targets? • How is the predicted vs. realized default rate in my branches? CREDIT RISK NPL Analysis • How much of my NPLs are in time buckets above 3 months past due? • What is the categorisation of NPLs in different severity grades? • What is the industry-wise break-up of NPLs across different exposure types / product types / instrument types? • Which credit grades / which geographies / which instruments / which collaterals are my NPLs? • Which categories of NPLs to focus on for recoveries (based on past track record, etc)
Business Users Want Answers Cost Analysis • What are the major cost heads in branches / organizational units? • How are branches performing vis-à-vis budgeted costs? Which cost heads are at variance with budgets? Procurement • Number of invoices on hold due to issues pending resolution. • How many purchases are made outside the standard contracts ? Profit & Loss Analysis • Which are my more profitable branches? Regions? How has this changed over the last three quarters? FINANCE Financial Analysis • Branch wise Trial Balance? • Analysis of Region wiseArea WiseTerritory wiseBranch wise info? • Online information on value of assets pledged with the Branch? Assets • What is the provisioning for different categories of assets? How much has this changed from the last quarter?
Business Users Want Answers Employee Attrition • Which lines of business are facing the maximum employee attrition? How has this profile changed in the past six months? • Is there any area where employee attrition is a critical concern? Employee Training • What are the average training hours for employees in different lines of business? HR Employee Productivity • What is business per employee in different organizational units? • How has this changed over the last two quarters?
What is the Answer? Deploy Enterprise Data Warehouse Enabling Analytics to Provide Business Insight
What is Data Warehouse? Definitions “A Data Warehouse is a subjectoriented, integrated, time-variant, nonvolatile collection of data in support of management’s decision-making process. ” Bill Inmon The data warehouse is intended for knowledge workers, that is, the people who need to analyze information provided by the warehouse and make business decisions.
Oracle’s Business Analytics Solution
Traditional Business Analytics Environment Multi-Vendor, Un-integrated OLAP Engine ETL Tool Analytic Apps Transformation Engine Name/Address Scrubbing Transformation Engine Security? Mining Engine Query & Analysis Database Reporting Engine Enterprise Reporting • Protracted and complex implementation • Escalating maintenance costs • Poor and incomplete BI solution P o rt al
Oracle’s Business Analytics Strategy Simplify, simplify Enable consolidation to fewer, more cost effective systems Scalable, integrated, costeffective data warehousing Eliminate the need for special purpose engines Analysis capabilities embedded in the database “Bring the algorithms to the data, not the data to the algorithms” Simplify the end-user experience Secure, personalized, easy to use, with analytical sophistication Simplify, costly ETL procedures Complete ETL, metadata services, based on open standards
Oracle Business Analytics Platform Simplify Your Life S O U R C E S Y S T E M U s e r A c c e s s
Oracle Business Analytics Helps Bank to Achieve Revenue growth • Achieve Single view of customer Data, optimize customer segmentation unify the “data silos” and provide a single version of the truth throughout the enterprise reducing redundancy of marketing interactions and providing one integrated view of customer data. • Grow value of each Customer, align on Customer Profitability optimize the risk/value ratio for customer portfolio in order increase their overall profitability. Align organization around profitability driven vision at each levels, develop a cohesive interaction strategy based on that metric. • Better Retain profitable customers Understand Attrition drivers, identify risky behaviors and profile, target proactive service and marketing actions to prevent and reduce attrition • Better cross-sell/up sell through increased interaction intelligence optimize each interaction to increase perception of value added to customer. Banks need to truly understand what is being done with their products and services and how they impact a customer’s life and lifestyle. • Accelerate decision time make analytic-based decisions in seconds and pervasive rather than days or weeks long and exclusive. Deliver granular insight to all touch-points in order to respond rapidly and intelligently to customer requests, and increase the value of each interaction.
Oracle Analytic Applications Increase Value of Every Step Of The Customer Lifecycle
Implementation Approach for Banking
Data Warehouse in Banking In search of a problem • Business Vision • Avoid Field of Dreams • Three steps to solving any problem – Goals & priorities – Initiatives – Information that supports initiatives
Data Warehouse in Banking Starting Points • • • Top Down: Business / Functional Analysis Bottom Up: Technical Analysis Think Big, Start Small Incremental - limit scope, limit risks Each increment has value Start with Proof of Concept
Data Warehouse in Banking Implementation Methodology Warehouse Planning Phase Business Strategy IT Strategy Warehouse Infrastructure Implementation Technical Architecture Business Application Implementation Increment 1 Increment A Proof of Concept Increment 2 Increment 3 Increment n Increment B Increment C Increment Z Requirements Capture Warehouse Definition Phase Scoping Study
What are the Analyst Saying
Winter 2005 “Top Ten” Results Summary Oracle Dominates the VLDW Market § § § § The world’s largest commercial database runs Oracle The world’s largest commercial DW runs Oracle The world’s largest commercial UNIX DW runs Oracle The world’s largest commercial Linux DW runs Oracle The world’s largest scientific database runs Oracle powers nine of the world’s top 10 UNIX OLTP systems Oracle powers 100% of all Linux DSS and OLTP measured in the Winter 2005 Top. Ten program § Oracle customers represent 58% of the all validated participants in the Winter 2005 Top. Ten program Source: Winter Corporation, September 2005
Enabling Banking Customers
Grid Momentum in Financial Services The world’s leading FSI Institutions are moving to Grid Computing 917 Production Customers / 156 of these are in Financial Services!
Summary
Value of Business Analytics • Enable Banks to have the single source of “Truth” – thereby able to differentiate themselves from the competitors • Enable the Banks to do performance management through measurable KPI within the enterprise • Enable Banks to be fully customer centric – Providing complete information about the customer and their relationship with the Bank • Enable the Bank to provide the service differentiator and innovation to it customer • Enable Banks for Corporate Compliance and Regulatory Compliance • Enable Banks to provide analytical information to every realm of the business for making better and informed decisions • Enable Banks to provide a uniform method for information delivery irrespective of location and geography though a well defined user friendly dashboard
Oracle’s Differentiation • • Single Integrated Architecture Oracle BI solution is scalable and Flexible – – • • Provides the Single Source of truth Oracle Lowers the TCO of Data Warehouse – – – • Single & Stable Vendor for all your BI&W needs Platform, Tools, Applications Leadership in the Market Place – – • Consolidation of Data Marts RAC for Scalability, Availability & Flexibility Simplify the Data Warehouse deployment Completeness of BI&W Vision & Solution – – • Real Application Cluster Various Options e. g. Partitioning, OLAP Analysts Reports & Benchmarks Reference Customers Security and Audit – – Most Secure Database Extensive audit capabilities within the Database Oracle Business Intelligence & Data Warehousing
Thank You
- Slides: 35
