Business Analytics in Financial Services.

 Need :

·         Data is a source of significant competitive advantage for any organization.  Financial institutions need to support business activities and decision making in a fashion that is timely, relevant, verifiable, and personalized to meet a variety of stakeholder requirements.

·         The financial services industry is constantly and rapidly changing, making it more and more challenging for financial institutions to keep up with the changes and with the competition.

·         With a vast range of customers and customer needs, changing regulations, and growing fraud threats, financial services companies need information management solutions that will allow them to make smart decisions.

·         Financial services front offices are increasingly pressured for real-time business analytics, customer insights, and centralized customer preference profiles for their delivery channels.

Application areas of Business Analytics in a typical financial organization:

·         Operation Reporting:

Financial services companies sometimes overlook the many cost-saving opportunities within its own operation. By maximizing operational efficiency throughout their entire organization companies can reduce costs to help them increase and maintain their profit margins. Business Analytics allow companies to compare operational metrics across the enterprise to create accurate, real-time reports that identify areas in need of streamlining.

·        Customer Credit Management:

With increasing customer diversity, financial institutions want to track their customers’ credit habits to discern the most profitable avenues and to protect themselves from loss through customer default on credit. Business analytics uncover new revenue opportunities through targeted up-sell campaigns and to prevent default through predictive analysis.

·         Asset Management:

Financial services companies must keep track of extensive and varied assets in many different forms. Business analytics and monitoring capabilities allow companies to ascertain which assets are most profitable, determine how to maximize profitability of their various assets, and ensure that their many assets are properly managed. In addition, with the consolidation of assets resulting from mergers and acquisitions, business intelligence software allows financial institutions to identify areas where they can reduce redundancies and drive performance improvements.

  

·         Risk Management:

Financial institutions need intelligent risk management strategies to meet regulatory requirements, as well as to ensure their own security. The regulations within the New Basel Capital Accord (Basel II) are driving financial institutions to determine portfolio risk segments, operational risk levels, and the associated required capital allocation. The reporting and disclosure requirements of the Sarbanes-Oxley Act have prompted financial institutions to conduct extensive risk assessments of both internal and external factors. Within a financial institution’s vast data warehouse and data stores there exist immense amounts of information that can help companies identify potential risk areas and detect fraud.

·         Competition Analysis:

Financial institutions have multi-tiered management configurations, involving complex employee compensation structures, as well as diverse performance goals across the enterprise. Business Analytics allow companies to pull data from multiple sources for more accurate analysis and to support complex incentive compensation plans.

·         Regulatory Compliance:

The changing regulatory environment within the financial services industry is requiring financial institutions to measure and report risk and manage their capital in new ways. International Financial Reporting Standards (IFRS) requires improved information on financial instruments in financial statements. Basel II is forcing financial services companies to adopt sophisticated methods for determining risk-adjusted capital, and the Sarbanes-Oxley Act of 2002 calls for accelerated financial reporting and more rigorous disclosures and certifications. Business Analytics consolidates, analyzes, and reports on financial and other enterprise information, and it allows companies to categorize risk and improve internal controls.