BI & Big data use case for banking - by rully feranata

Copyright © 2013, Oracle and/or its affiliates. All rights reserved. public1

Managing Information Explosion“Is it challenge or gold mine? how does banks response?”

Rully Feranata

ASEAN Enterprise Architect for FSI


�JPMorgan Chase

� 150PB data online

� 3.5B Chase.Com logins /year

�234M Web sites

� Facebook

�500M Users

� 40M photos per day

� 30 billion new pieces of

content per month

�7M New sites in 2010

�New York Stock Exchange

�1 TB of data per day

� Web 2.0

� 147M Blogs and growing

� Twitter – 12TB of data per day

Data is Everywhere!Facts & Figures


Value of Corporate DataStill Not Fully Realized

80%

Significantly improve their ability to react quickly to market

changes and improve customer service

50%

Help their company grow

revenues

63%

Biggest challenge is sharing data across the enterprise

15%

Have applied best practices using data strategically

22%

Frontline managers have access to data


Information Architecture Challenges

5

� Processes (Business process change too frequently)

� Tool (Too many BI tools)

� Data movement and integration

� Data Quality (Master Data, Reference Data)

� How to consolidate BI projects

� How to develop a BI platform


What Can We Do?Challenges of Information Architecture

� Users

� Tools

� Integration

� Quality

� Consolidation

� Governance


� Security is The Top Most Priority

– Customer demands transparency and security

– Reputation at stake

� Regulation, and then some more regulation

– BASEL II, III, Dodd-Frank, Volcker Rule, Durbin amendment, KYC, AML, Solvency II, Fraud detection, PCI-DSS ....

– Risk Management has elevated to top of heap

� Rise of The Generation-Y

– Consumers are becoming more technology-savvy and mobile

� Customer Centricity

– Needs for insightful metrics on each of customer needs

� Data Explosion Growth

– Structured and Un-Structured data

� Cost Efficiency and Optimization

– Low cost infrastructure that can keep up the pace of business

Major Banking Industry Challenge 2013Security on Each Layer of

Information:

� Securing Data on Database Level not

only from Application Level

�Database Security Portfolio from Oracle

– Defense in Depth methodology

Regulators, Compliance and Risk

Management:

�Oracle has complete application portfolio

for Risk Management – includes Market

Risk, Operational Risk and Credit Risk as

part of Basel Acts requirement, etc.

Rise of the Generation - Y:

�Complete Multichannel solution for

banking – Internet, Mobile, etc. to enable

banks exploits new experience for

customers

Customer Centric Approach:

�Need to have flexible and agile system

for CRM on the Operation level – to boost

sales and marketing growth

�Also for exploring new kind opportunity

by analyzing customer information through

analytics

structured data

Big Data:

�Capture hidden treasure from vast,

abundant of information from any kind of

resource – hence to predict the future

�Oracle has the complete portfolio for Big

Data Platform – either be un Structured or

structured data

storage.

Cost Efficiency and Optimization:

�Capacity Planning through

Standardization and Consolidation

�Automated provisioning and

Management as

�Virtualized network, compute and

storage.


The Importance of “Massaging” Data


Data from Core SystemsNeed to have identifiable focus segments

Source: Oracle Internal Market Analysis


Data From External: Online Shopping Cart Conversion

• Analyze abandoned shopping carts

• Improve search responses conversion

• Improve recommendation engine

• Increase up-sell at checkout

Business Goals

• 20 million page views per day

• Weblogs are 10 terabytes per day

Challenges


Data From External: Bank’s Portal

• Top Most/Trending Banking Products

Search on Bank’s Portal

• Customer Personalized Portal’s

Approach for Products Offering

Business Goals

• Thousands page views per day

• Random search for banking products

Challenges


Data From External: Social Media

• Sentiment Analysis for trending

products

• Introduced new channels

• Tap on for new opportunities

Business Goals

• Millions comments but only few related

to specific requirement

• Semantic that can profile not only

English but also Bahasa

Challenges


How do Banks Manage The Data and Transformed it Into Useful Information

• Identified Customer

Segment to Focus on

Retail/Commercial Banking

• Accurate Marketing or

Promotion Using Spending

Behavior Analysis

• Targeted Cross Sell and

Up Sell

• Attract and Retain Clients

Using Unique Personal

Services

Business Goals


Banking Use Cases


Managing Data – The Strategies� Find the right models

� Provide clear target information consumer

� There’s no one-solution-fit-all – find the right approach with the right objectives not the best. At least it answers three main capabilties:

– Pas-Tense Approach: business units focus on making better business decisions by analyzing historical data

– Present-Tense Approach: business units harness BI tools and technology to push real-time data to workers to make better business decisions in the moment

– Future-Tense Approach: using advanced analytics and data modeling to predict likely future events so business units can plan their behavior accordingly

� Sample use cases:

– Customer Segmentation & Behavior Analytics

– Banking the Unbanked

– MIS Reports

– Regulatory Reporting and Risk Analytics


Use Case: Customer Segmentation & Behavior Analytics


Result: Three segments Most Suited for Tailored CampaignsMarket size and findings identified as potential


Result: Segments show distinctive financial asset and behavior (I)

Demographic /Geography

Segment behavior

Transaction behavior

• Branch visit

• ATM usage

Private employeePrivate employee

• Avg. age: 36

• 46% in top 7 cities

• Like to try new products

and services

• Knowledgeable

consumers

"Frequent transactor"

• 23% visit branch at least

2x a month

• 26% use ATM at least

4x a month

Government employeeGovernment employee ProfessionalsProfessionals HousewifeHousewife

• Avg. age: 45


• Not price sensitive

• Prefer to spread deposit

across multiple

institutions (risk averse)

• Care about service

"Medium transactor"


2x a month


4x a month

• Avg. age: 42


• Like to try new products

and services

• Willing to pay extra to

save time


"High branch users"


2x a month


4x a month

• Avg. age: 40


• Limited knowledge

about banking products /

state of the account

• Easily influenced by

friends and family

"Low transactor"


2x a month


4x a month

60 20 10 25Total savings(Tn)


Result: Segments show distinctive financial asset and behavior (II)

StudentStudent

• Avg. age: 20


• Price sensitive (both

rates and fees)

• Attracted to gifts and

promotions

"Frequent ATM user"


2x a month


4x a month

RetireeRetiree Fisherman / FarmerFisherman / Farmer

• Avg. age: 66


• Not price sensitive


• Unlikely to change /

switch

"Medium transactor"


2x a month


4x a month

• Avg. age: 47


• Easily influenced by

friends and family

• Care little about service

• Attracted to gifts and

promotions

"Low transactor"


2x a month


4x a month

15 60 30

Demographic /Geography

Segment behavior

Transaction behavior

• Branch visit

• ATM usage

Total savings(Tn)


Result: Targeted Segments for Marketing

Housewife

Value

proposition

Value

proposition

• More confident in the

management of household

finances

• Ensuring the best value for

the family / dependents

• Special recognition and

privilege

• Good work deserve its

rewards

• Most trusted brand in

Indonesia

Idea conception based on findings

from the information sources

Idea conception based on findings

from the information sources

Govt. employee

Campaign

Product

• Free grocery voucher for top-up or new deposits

• Free financial advice and planning

• Free insurance (e.g. jewelry )

• Incentive bonus or higher interest rates if no

withdrawals

• Debit card for segment with special discounts (e.g.

woman, family card or grocery card)

• Family bundled savings program (e.g. free debit card

for minor with no high interest rates)

• Flexible automatic savings (Standing order to deduct

only if a certain balance is reached)

Campaign

Product

• Special privilege for segment (e.g. preferential pricing

for Insurance and Deposit products)

• Free ATM usage

• Incentive bonus or higher interest rates if no

withdrawals

• Debit card for segment with special discounts

• Flexible automatic savings (Standing order to deduct

only if a certain balance is reached)


Call to Action: Indonesia Market- Calls for Tailored Product Campaign

FindingsFindings

Indonesia retail personal deposit market is highly

competitive

• Driven by aggressive marketing campaigns (e.g.

BRI Untung Beliung Britama)

• Competitors have started to develop tailored

campaigns for specific segments

Limited number of consumers establish new

banking relationship

• ~5% of consumers establish new deposit

relationship every year

Product offering and promotion are cited as key

reasons for establishing new relationship

Needs to develop tailored marketing to capture

attractive personal segments

• Beyond traditional mass campaigns

Strategy Strategy

• Prioritize and target attractive personal

sub-segments

• Housewife

• Government employee

• Students & early jobber

– Capture deposits at the beginning of

the customer life cycle

• Understand segments' behavior and

develop marketing campaigns

• Develop distinct value proposition based

on understanding of customer behaviors

• Tailor marketing campaigns to priority

segments


Use Case: Banking The Unbanked


Access to Finance – World Population Snapshot


Several Facts in Indonesia

� Population of Indonesia: approx. 240 million

� GDP per capita : USD2.600

� Banking industry holds more than 80 % of financial sector assets

� More than 90% of banks accounts are less than Rp100 million (less

than USD10,000)

� Number of commercial banks: 123

� Number of rural banks: +9.300

� Number of cooperatives: +13.000

� Number of microfinance institutions: +8.000


Unbanked Population in Indonesia


Potential Expansion Focus with Identified Market Growth for Deposit

Savings market share (19%)

Source: Bank Indonesia, Oracle Internal Analysis


The Market is ThereM.WaitingM.

It’s a GOLD MINEM!!!


Distributors and Suppliers Have the Highest CASA BalancesDistributors and retailers have the largest deposits base


Branch remains a key channel to perform transactions for self-employed customers


Multiple Revenue Drivers Available for Payments


Solutions in The Picture

� There are more than twice as many people in the world with mobile

phones than people with bank accounts. This means that mobile has

the potential to play a major role in bringing financial services to the

world's unbanked population

� What are the main challenges to mobile meeting the needs of the

unbanked?

– The challenge is two-fold: first is the need to educate users that there is

now - a way for them to access financial services; second (and more

importantly), we need to achieve a level of scale so that users can see and

feel, wherever they are, that they can access appropriate financial services

via mobile

� Who is best placed to address banking of the unbanked: banks, mobile

operators, third-party payment providers or others?


Use Case: MIS Reports


MIS Reports

� Business Planning – Report Management


MIS Reports



MIS Reports

� Business Planning – Budgeting


MIS Reports

� Business Planning – Business Solution


Use Case: Regulatory Reporting and Risk Analytics


Performance

Management

Customer

Insight

Governance

& Compliance

Risk

Management

Treasury Risk

Credit Risk

Governance and ComplianceRegulatory Compliance (Financial Crime)

Channel Insight

Analytical CRM

Anti-Money Laundering

Trading ComplianceBroker Compliance

Fraud Detection

Portfolio Analytics

Marketing Analytics

Service Analytics

Channel Usage

Channel Performance

Economic Capital

Regulatory Capital

Economic CapitalAdvanced (Credit Risk)

Operational RiskEconomic Capital

Performance Management and Finance

Activity-Based Costing

OFSAA Case Studies

Budgeting and Forecasting

Hedge ManagementIFRS 9 – IAS 32/39

Customer Profitability

Asset Liability Management

Market Risk

Basel II

Retail PortfolioRisk Models and Pooling

Loan Loss Forecasting

RAPM

Balance Sheet Planning

Know Your Customer

39© 2011 Oracle Corporation

Accounting HubConsolidationProfitability Funds Transfer Pricing

Reconciliation

Operational Risk

Retail Credit Risk

Corporate Credit Risk

Liquidity Risk

ICAAP

Stress Testing

Pricing Management

Key Client Requirements:

• Unification & greater

transparency to finance &

risk processes within the

bank

• Present a coherent picture

to the regulator in the UK

across its risk & finance

numbers

• Reduce financial close

process from 20 days to 5

days


• Unification & greater

transparency to finance &

risk processes within the

bank

• Present a coherent picture

to the regulator in the UK

across its risk & finance

numbers

• Reduce financial close

process from 20 days to 5

days


Performance

Management

Customer

Insight

Governance

& Compliance

Risk

Management

Treasury Risk

Credit Risk


Channel Insight

Analytical CRM



Fraud DetectionOperational Risk

Retail Credit Risk


Portfolio Analytics

Marketing Analytics

Service Analytics

Channel Usage

Channel Performance

Economic Capital

Regulatory Capital

Liquidity Risk



Accounting Hub


ConsolidationProfitability

OFSAA Case Study





Market Risk

Basel II


Funds Transfer Pricing

Loan Loss Forecasting Pricing Management

RAPM


Know Your Customer

40© 2011 Oracle Corporation


• An enterprise risk data

Infrastructure

• A unified view of exposures

across the bank

• Improved stress testing

responsiveness

• Able to address future risk,

treasury, finance use cases

• Trustworthy, cleaned and

reconciled data

• Common understanding of risk

across LOBs


• An enterprise risk data

Infrastructure

• A unified view of exposures

across the bank

• Improved stress testing

responsiveness

• Able to address future risk,

treasury, finance use cases

• Trustworthy, cleaned and

reconciled data

• Common understanding of risk

across LOBs


ICAAP

Stress Testing

Reconciliation


Performance

Management

Customer

Insight

Governance

& Compliance

Risk

Management

Treasury Risk

Credit Risk


Channel Insight

Analytical CRM

Fraud DetectionOperational Risk

Portfolio Analytics

Marketing Analytics

Service Analytics

Channel Usage

Channel Performance

Economic Capital

Regulatory Capital

Liquidity Risk


Accounting Hub


Consolidation

Customer Snapshot


ICAAP


Market Risk


© 2010 Oracle Corporation – Proprietary and Confidential4

1

Pricing Management



Retail Credit Risk


Basel II


Stress Testing


ProfitabilityStarted here ��

Added

Added

Operational RiskEconomic Capital Added

Reconciliation

Funds Transfer Pricing

Started here



RAPM


Added


Performance

Management

Customer

Insight

Governance

& Compliance

Risk

Management

Treasury Risk

Credit Risk


Channel Insight

Analytical CRM

Fraud Detection

Portfolio Analytics

Marketing Analytics

Service Analytics

Channel Usage

Channel Performance

Economic Capital

Regulatory Capital

Liquidity Risk




Customer Snapshot




Market Risk


© 2010 Oracle Corporation – Proprietary and Confidential42



Retail Credit Risk


Basel II


Operational Risk

ICAAP

Stress Testing

Reconciliation



RAPM


Accounting HubConsolidation

Pricing Management

Funds Transfer PricingProfitability


43

How do we manage this

complexity ?

How do we manage this

complexity ?


Information Architecture Spectrum

Data Realms Structure Volume Security

Storage &

Retrieval Modeling Integration Consumption

Master data

Transaction

Analytical

Metadata

Structured Medium -

High

Database,

app, & user

access

RDBMS /

SQL

Pre-defined

relational or

dimensional

modeling

ETL/ELT,

CDC,

Replication

Message

BI & Statistical

Tools,

Operational

Applications

Reference

data

Structured

and Semi-

Structured

Low-

Medium

Platform

security

XML /

xQuery

Flexible &

Extensible

ETL/ELT,

Message

System-based

data

consumption

Documents

and Content

Unstructure

d

High File system

based

File

System /

Search

Free Form OS-level file

movement

Content Mgmt

Big Data

- Weblogs

- Sensors

- Social Media

Structured

Semi-

Structured

Unstructur

ed

High File system &

database

Distributed

FS / noSQL

Flexible

(Key Value)

Hadoop,

MapReduce,

ETL/ELT,

Message

BI & Statistical

Tools

Evaluating Economic and Architecture Tradeoffs

Todays

!!


An Architect’s Approach to Enterprise Initiatives

Adopt Information Architecture Capability Model

Data Realms

• Master

• Transaction

• Reference

• Analytical

• Metadata

• Unstructured

• Big Data

Diverse

Data

Realms

Sharing & DeliverySharing

& Delivery

BI & DataWarehouseBI & Data

Warehouse

IntegrationIntegration

Content Management

Content Management

Master Data Mgmt

Master Data Mgmt

Enterprise Data ModelEnterprise Data Model

GovernanceGovernance

SecuritySecurity

InfrastructureInfrastructure


Best Practices

• Adopt Enterprise Architecture Framework for data management

• Ensure centralized IT strategy for standards and governance

• Use a center of excellence to minimize training and risk

Adopt an Enterprise Architecture Approach

• Embrace data diversity• Correlate big data and structured data• Provide high performance and scalable analytics

Expand Your Information Architecture

BI & Big data use case for banking - by rully feranata

Data & Analytics

Transcript of BI & Big data use case for banking - by rully feranata