Business Analytics and Data Warehousing

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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
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Agenda

• Market Assessment
• Business Analytics in Banking
• Trends In Banking
• Business Requirement in Banking
• Oracle Business Analytics Solution
• What Are Analysts Saying
• Summary

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Market Assessment BankingKey Business Drivers
Challenges facing the Banking Industry
Business Drivers
Business Challenges

• 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

• 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

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Business Analytics in Banking2nd 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

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Business Analytics in Banking2ND Time Around
Multi-Vendor BI Strategies
Integrated BI Platform

• Unnecessary Software Spending
• Excessive Training Development and Support
• Multiple Versions of Truth

• Unified Data Layer
• Centralized Tools
• Shared Metrics
• Complete Customer View

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Future Trends in Banking Exception Based Banking
Real Time Interaction
Example Retail Banking
Segments
Actions
Evaluations
Key Events
Industry

• High Net Worth
• Mass Affluent
• Mass Market
• Premier Banking
• Geography
• Demographics
• Product

• Account
• Asset
• Liability
• Contact Behavior
• Customer Information
• Customer State
• Warning/Fraud Detection

• 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

• Alert/Notification
• Sales Call
• Correspondence
• Email
• Recovery Plan
• Launch Marketing
• Hold on Account
• Retention Plan
• Cross Sell
• Personalized Plan

Retail Banking

• 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

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Future Trends in Banking Beyond Traditional
BI-DWH More Customer Centric Model
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Future Trends in Banking Empower All Users -
Not Just the Few
STRATEGIC
TACTICAL
ACTIONABLE
RELATIONSHIP
INFORMATIVE
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Business Users Requirement
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Business Users Want Answers
?
Retail
Strategic Issues
Credit Risk
Finance
Tactical Issues
H R
Operational Issues
Market Risk
Liquidity Risk
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Business Users Want Answers
RETAIL
Customer Segmentation
Customer Acquisition

• What is the customer break up across various
  categories (e.g. salaried, self-employed 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?

• 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?

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?

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Business Users Want Answers
RETAIL
Channel Usage / Efficiency
Customer Attrition

• 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?

• 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?

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Business Users Want Answers
CREDIT RISK
Credit Portfolio
NPL Analysis

• 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?

• 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)

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Business Users Want Answers
FINANCE
Cost Analysis
Financial 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?

• Branch wise Trial Balance?
• Analysis of Region wise\Area Wise\Territory
  wise\Branch wise info?
• Online information on value of assets pledged
  with the Branch?

Procurement
Assets

• Number of invoices on hold due to issues pending
  resolution.
• How many purchases are made outside the standard
  contracts ?

• What is the provisioning for different categories
  of assets? How much has this changed from the
  last quarter?

Profit Loss Analysis

• Which are my more profitable branches? Regions?
  How has this changed over the last three quarters?

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Business Users Want Answers
HR
Employee Attrition
Employee Productivity

• 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?

• What is business per employee in different
  organizational units?
• How has this changed over the last two quarters?

Employee Training

• What are the average training hours for employees
  in different lines of business?

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What is the Answer?
Deploy Enterprise Data Warehouse Enabling
Analytics to Provide Business Insight
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What is Data Warehouse?Definitions
A Data Warehouse is a subject-oriented,
integrated, time-variant, non-volatile collection
of data in support of managements
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.
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Oracles Business Analytics Solution
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Traditional Business Analytics EnvironmentMulti-V
endor, Un-integrated

• Protracted and complex implementation
• Escalating maintenance costs
• Poor and incomplete BI solution

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Oracles Business Analytics StrategySimplify,
simplify, simplify
Enable consolidation to fewer, more cost
effective systems Eliminate the need for special
purpose enginesBring the algorithms to the
data, not the data to the algorithms Simplify
the end-user experience Simplify, costly ETL
procedures
Scalable, integrated, cost-effective data
warehousingAnalysis capabilities embedded in
the databaseSecure, personalized, easy to
use, with analytical sophistication Complete ETL,
metadata services, based on open standards
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Oracle Business Analytics PlatformSimplify Your
Life
SOURCE SYSTEM
User Access
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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 customers
  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.

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Oracle Analytic Applications Increase Value of
Every Step Of The Customer Lifecycle
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Implementation Approach for Banking
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Data Warehouse in BankingIn search of a problem

• Business Vision
• Avoid Field of Dreams
• Three steps to solving any problem
• Goals priorities
• Initiatives
• Information that supports initiatives

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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

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Data Warehouse in Banking Implementation
Methodology
Warehouse Planning Phase
Warehouse Definition Phase
Business Strategy
IT Strategy
Technical Architecture
Warehouse Infrastructure Implementation
Business Application Implementation
Requirements Capture
Increment 1
Increment A
Proof of Concept
Increment B
Increment 2
Increment C
Increment 3
Increment Z
Increment n
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What are the Analyst Saying
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Oracle Dominates the VLDW Market
Winter 2005 Top Ten Results Summary

• The worlds largest commercial database runs
  Oracle
• The worlds largest commercial DW runs Oracle
• The worlds largest commercial UNIX DW runs
  Oracle
• The worlds largest commercial Linux DW runs
  Oracle
• The worlds largest scientific database runs
  Oracle
• Oracle powers nine of the worlds top 10 UNIX
  OLTP systems
• Oracle powers 100 of all Linux DSS and OLTP
  measured in the Winter 2005 TopTen program
• Oracle customers represent 58 of the all
  validated participants in the Winter 2005 TopTen
  program

Source Winter Corporation, September 2005
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Enabling Banking Customers
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Grid Momentum in Financial ServicesThe worlds
leading FSI Institutions are moving to Grid
Computing
917 Production Customers / 156 of these are in
Financial Services!
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Summary
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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

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Oracles Differentiation

• Single Integrated Architecture
• Oracle BI solution is scalable and Flexible
• Real Application Cluster
• Various Options e.g. Partitioning, OLAP
• Provides the Single Source of truth
• Oracle Lowers the TCO of Data Warehouse
• Consolidation of Data Marts
• RAC for Scalability, Availability Flexibility
• Simplify the Data Warehouse deployment
• Completeness of BIW Vision Solution
• Single Stable Vendor for all your BIW needs
• Platform, Tools, Applications
• Leadership in the Market Place
• Analysts Reports Benchmarks
• Reference Customers
• Security and Audit
• Most Secure Database
• Extensive audit capabilities within the Database

Oracle Business Intelligence Data Warehousing
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Thank You