‘Time to look forwards not backwards’

Simon Doherty, a career banker and qualified accountant who heads Teradata’s Financial Industry Centre of Expertise in EMEA discusses why it is critical, post-financial crisis,for banks to use new ways to gain insight and value from their data.  

simon dohertyThe financial services and banking industry post-global financial crisis is a completely different place. In a newly competitive and fragmented marketplace filled with uncertainty, banks have had to evolve the way they do business. It’s a wonder that many in the industry still base their business decisions and strategy almost exclusively on patterns established pre-financial crisis.
Most of the analytical techniques used to create business intelligence look back at what has happened and model the future using this information. Given dramatically changed business conditions, this method, whilst still important, is increasingly limited in its ability to provide useful insight.
Financial services organizations need to be smarter in the way they use data. Data warehousing technology enables an organization to better analyze both current and historic data drawn from its entire business operations to drive smarter and faster business decisions.
Competition in the marketplace is fierce and understanding rapidly developing customer attitudes has never been more important. Banks and other financial institutions with only operational IT systems, or where data is kept in department-specific silos are at a disadvantage. Operational systems are designed to answer questions we know are going to be asked. To gain most value from customer data and implement the most successful marketing initiatives, banks need an intelligent way to respond to a wide range of new and unforeseen questions.
One bank that understands the importance of using current data more smartly is BNP Paribas Bank Polska S.A. The bank recently selected Aprimo Relationship Manager from Teradata, a customer relationship management software solution that incorporates sophisticated “event management” capabilities, to better meet the financial needs of its retail banking prospects and customers.
Through the use of this solution the bank can communicate with the right customers at the right moment to offer the financial product or service they need at that time. Adding relevance to every customer interaction is essential in creating effective marketing initiatives. The Aprimo solution enables BNP Paribas’ local resources to create their own campaigns, with centralized control and reporting – improving the effectiveness of marketing across its operation. Through Aprimo, the bank has been able to eliminate bottlenecks in its marketing process, reach prospects and customers sooner, reduce costs and provide a better response rate based on precise targeted marketing.
Data warehousing provides a foundation for customer relationship management solutions. It enables continuous monitoring of customer behaviour by providing a single and transparent view of the business.
The real benefit of a data warehouse is achieved by using the rich mix of data to help foresee events as they are about to happen. For example, data taken from a website may be used to alert a call centre that when a customer contacts them, they will be interested in, say, mortgages or insurance, as these were the products they clicked on. If this event data can be combined with information about the profitability of this particular customer and their propensity to buy, then the information is worth even more.
Adding value to data doesn’t have to be difficult or risky. Technology such as data warehousing should be seen as a business enabler. Using data wisely, businesses can increase the potential to up-sell solutions and products. The same can be applied to assessing credit risk. Banks can pre-empt a problem by combining up to the minute event data. Spending profiles and visits to an online account or ATM can be used side-by-side with analytical data from different sources such as credit scores and total amount of credit exposure. The integration of profitability with risk data enables banks to enhance their management of capital, ensuring the best return and protection against unexpected losses in a volatile environment.
We need to realise the importance of investing in the future and embrace enterprise data warehousing technology as a business enabler that continues to deliver “free lunches” in terms of business benefits for many years to come. In fact, one of the biggest advantages of using a data warehouse is that once installed there is no limit to the amount of event management, analytical calculations, analysis, reporting or decision making it supports. Consequently, what can appear to be a major challenge for one bank such as coding tens of thousands of lines of data to meet a new regulation- is a small issue that can be solved almost instantaneously for another bank with the help of a data warehouse.
Working from data that does not reflect the current market trends is disruptive with only the wrong outcomes guaranteed to be predicted – increasing the risks a business faces. Using a data warehouse based on sound principles and best-in-class technology to analyse a rich mixture of data, ensures businesses can deliver innovative initiatives. The only real danger with data warehousing is not realising its full potential.

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