Post on 09-Jul-2020
Pentation Analytics
In today’s emerging digital era, banks must be capable enough to come across with consistent and relevant expertise in furnishing excellence for fulfilment of customer requirements. Many players are innovating and experimenting with new products, delivery channels and analytics. Digitization hasenabled Banks to remove the limitations of Time and Geography.
With the evolution of new channels, we believe that behavioural analysis toohas a major part inproviding excellent customer experience and developing profitable customer relationships. One of the most effective ways to do this is by identifying, analysing and harnessing the knowledge within theorganization. To achieve this aim, banks can adopt the ABC approach:
INTRODUCTION
01
02
03
ANALYSE THE CUSTOMER Analysis of existing customer behaviour to investigaste whether the bank meets the customer demand.
Big Data and Analytics can be used for futher analysis of behavioural trends and predict likely decisions.
BUILD NEW APPROACHDesigning the approach in such a way that format choosen reflect the needs of the target customers.
CREATION OF DIGITAL STRATEGYOpertaional efficiency
Data availability for customer analysis, performace analysis and strategy formulation
Increases reach
• Analyse the Customer
• Build new approach
• Creation of digital strategy
• Highly regulated environment
• High operating costs
• Poor visualization
• Low involvement of customers in operational process
• Difficulty in upgrading or replacing legacy core banking infrastructure built over long period of time
Banks are considered richest, not only in terms of money, but also in terms of data. They have huge volumes of data from various sources, generated at a high pace. The issues that pushed bankingindustry toward digitization are:
The most important issue being, the traditional model lacks in addressing the fact that No Customer is alike. Rather than implementing a one-size-fits-all approach, financial institutions can respond to thepreferences of the different consumer groups that comprise their customer base.
For Example, Pentation Analytics segmented the banked consumer population into 7 segments, basedon their card usage.
TODAY’S CHALLENGES IN TRADITIONAL BANKING
Convenience POS
CONSUMER SEGMENT OVERVIEW
Convenience POS
Moderate POS
Causal eCOM
Elite POS
Elite eCOM
Dormant
Transact frequently on POS with low ticket size more than dormant
Frequent card user on POS with very low ticket size
Transact moderately on POS with mid-level ticket size
Transact moderately on eCOM but with low-ticket size
Transact frequently on POS with very high ticket size
Transact frequently on eCOM with very high ticket size
Rarely transact (if at all) with very low ticket size
Digital channels pave the way to develop new forms of relationships through interactivity, self-service, direct communication and personalized offers and services.
Digital transformation in Banking has led many players to adopt technologies like digital and mobile banking. However, for better decision making and customized offerings, banks need to go further thanthat. This is where analytics steps in.
DRIVERS FOR ONLINE CHANNEL ADOPTION
BENEFITS
FINANCIAL INSTITUTIONS
Reduction in operational Costs
Expansion into new Markets
Enhanced customer view
Better strategy formulation
Enables Management of Data
Managing Risks
Convenience
Information on pricing and returns is easier to gather
Comparison of products and services made easier
Intangible benefits- “auto fill” feature helpConvenience
Information on pricing and returns is easier to gather
CUSTOMERS
Analytics aren’t new to the world of banking; many banks are gearing up for the next big analyticspush, propelled by a load of data and new sophisticated tools and technologies.
Analytics can be primarily used to drill down on existing data to extract valuable insights for enhanceddecision making. For example, in case of Customer Analytics, insights can be derived for:
The diagram below shows the various analytics application areas in banking:
ANALYTICS REVOLUTIONIZING CONSERVATIVE BANKING
Knowing your customer - understanding consumers and providing offerings and services tailored to them
Identifying suitable channel -focuses on engaging the customer through suitable communication medium to predict and provide customers with what they want
Enhancing customer relationships – Enables creation of a centralized hub for accessingcustomers complete transactionalhistory, manage all of their finances and achieve all of their financial goals
CUSTOMERSEGMENTATION& CAMPAIGNS
LOANANALYTICS
ANALYTICSREADY DATA
ENVIRONMENT
PAYMENTSTRANSACTIONINTELLIGENCE
DIGITALAPPLICATION
MANAGEMENT
Banks can potentially increase their online banking adoption by working with customers to increasetheir service co-production efficiency.
Thus, we can see that customer demand, customer efficiency, and network effects play a significant role in online banking adoption.Upon adoption of online banking, customers might significantly increase their transaction demand and their adoption of banking products by opening more accounts. As a result, they also increase their use of other bank channels, such as ATMs, customer support repre-sentatives (CSRs), and branch services. In addition, there is increased customer retention after onlinebanking adoption.
ANALYTICS REVOLUTIONIZING CONSERVATIVE BANKING
Study of present customers; Segmentation of the same
Statistical approaches to generate insights:
Transactional Behavioural traits and patterns
Demographic traits
Predictive model development for migration of customers from “Offline to Online” channels
PREDICTIVE ANALYTICS
ABOUT THE AUTHOR
himanshibhatia@pentationanalytics.comajayrastogi@pentationanalytics.com trishadas@pentationanalytics.com
AJAY RASTOGI HIMANSHI BHATIA TRISHA DAS
REFERENCES
1. Project experience & Banking Analytics collaterals at Pentation Analytics
2. Adoption of Internet banking :http://www.iosrjournals.org/iosr-jbm/papers/Vol11-issue2/G01124651.pdf?id=5020