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