The Prospects of Using Business Intelligence in Fintech Sector
Let’s have a closer look at how banking and finance institutions can leverage business intelligence (BI) solutions to drive profitability, reduce risk, and create competitive advantage.
Improves Operational Efficiencies & Increases Profits:
In the highly competitive fin-tech industry, it is necessary to utilize the full efficiency of an institution. Banks can reduce ongoing costs, and maximize existing resources and expertise by analyzing the operational process. For example, business intelligence tools can generate massive internal efficiencies by analyzing the performance of sales personnel, tellers and account managers etc. It also helps to understand the growth patterns to minimize the chance of repeat-ability.
Tracking individual revenue streams to determine profitable and non-profitable services and products, setting key benchmarks for crucial metrics such as the number of net new customers and their profitability, comparing them against industry standards, and track them towards defined goals are some major scopes where business intelligence plays a game-changing role for increasing efficiency which leads to boost company profit.
Additionally, developing more effective marketing and sales campaigns through detailed and accurate customer segmentation according to costs, profits and services used and identifying profitable customers are also possible by business intelligence solution.
Manages & Reduces Risks:
In a constantly changing financial world, banking institutions need to rely more on fact-based actionable information, gleaned from ever-increasing data assets and to reduce risk wherever possible. Business intelligence provides actionable information that financial institutions can use to mitigate risks in several areas. Tracking customer transaction histories enables banks and fin-tech industries to rapidly detect and reduce fraudulent activities( i.e. credit card fraud).
Another risk mitigation benefit business intelligence tools provide is accurately estimating the risk of customer loans based on such key criteria like- the customer’s earning capacity as well as current financial assets, prevailing economic climate etc. Business intelligence can also be used to analyze credit reports and uncover potential possibilities of crimes early so preventative actions can be taken.
Data analysis is another business intelligence approach that can also analyze trends in customer delinquency, from which new policies can be developed to reduce the rates of delinquency cases in the future.
Another area where business intelligence and analytics play a crucial role is in security and fraud detection. Fraud has been a major issue in this sector from the very beginning. To the rescue, behavioral analytics plays a huge role in determining fraudulent behavior. Analytics can track and identify patterns which could reveal fraudsters’ modus operandi. This way, banks, and other fin-tech industries could put up safeguards against such attempts.
The data can also be used to refine automated fraud prevention protocols to minimize instances of legitimate transactions being flagged as fraudulent. Legitimate users who encounter such issues often consider it poor user experience to be denied and can eventually become a lost customer for the business.
Other fin-tech segments need to be ready with such measures as well. Fin-tech services will be a prime target for cyber criminals due to the wealth that they are managing. The proper implementation of business intelligence and analytics can guide prevention strategies.
Measures Performance & Helps in Budgeting
With the power of BI and analytics, banks can measure different business performances and KPIs in different areas including employee, branch, products, marketing, campaigns, etc. From the insightful information from data, a company can allocate budgets and set new goals in allocating resources. Business intelligence can also help to monitor the progress towards achievements of set targets. The data represented as information can also give insight to make strategy for new products that are best suited to customer demand.
Helps with Proper Customer Segmentation
A world-class business intelligence solution allows banking institutions to accurately and efficiently segment their customers based on understanding customer needs and sentiments regarding banking. As a consequence; developing, implementing and offering new market-leading financial products and services help to gain and maintain a competitive advantage.
By Analyzing the data stored in the core banking CRM based on a range of customer segmentation by geographically & demographically, a business can identify their loyal customers. The customer base can be analyzed to determine profitability across branches as well as products to identify new cross-sell and up-sell opportunities and marketing campaigns accordingly.
Research indicates that the cost of selling new banking products and services to an existing customer is five times lower than to a new customer. In addition, cross-selling strengthens customer relationships and loyalty.
Helps Improving Customer Satisfaction
Fin-tech institutions can further increase customer satisfaction appraisals by proactively harnessing data to give clients superior insight into their individual transitional operations, allowing them to more effectively manage their finances by having both the real-time understanding of payments and the real-time understating of spending. This will enable customers to more easily manage finances by being able to track and analyze their spending and earning patterns.
Additionally, by analyzing customer point-of-contact data can help an institution to understand customer sentiment and behaviors in order to effectively and efficiently satisfy customer needs and demands.
Helps to Improve Services & Products
Business intelligence software allows fin-tech industries to track individual revenue streams to determine exactly which products and services are profitable and which are not. In addition, analyzing a huge amount of customer data to gain information about customers’ needs and perspective regarding banking provides information that is used to improve services and products.
Improves Customer Retention
Business intelligence analytical tools can aid banks and fin-tech industries by discovering why customers switched to a competitor. This gives fin-tech institutions the knowledge needed to implement new and improved procedures to prevent losing customers. Tracking customer preferences, habits, and behaviors also allow banking and fintech organizations to customize products and services in various ways to meet their customers’ needs, resolve difficulties, and promote customer loyalty and retention.
Offers Historical Data Analysis
Historical analysis is a must for banking and other financial organizations. To predict the future, banks need to look at past internal and external data, which will help them to plan for the future. Business intelligence can also help to spot patterns, address issues going forward and set goals that improve upon historic metrics.
Helps to Generate Reports by Executive Dashboard
The executive dashboard of any BI solution helps end-users to visualize the data using graphs, charts, animation etc. through customizable interfaces. Managers can run queries and pull reports based on their needs. They can analyze the percentage of loans by type, monthly operating expenses or profit and loss by region which will give them a clear view of the business.
The Future of Business Intelligence in Banking Sector
In order to stay ahead of the competition in a long run, business intelligence solutions and integrations are essential for banks as they enable them with capabilities to detect frauds, mitigate risks, reduce costs and more. While the modern consumers are being already exposed to business intelligence through firms excelling in e-commerce platform, social media or mobile phone production spaces, they expect a similar type of personalized experience through their financial and banking services providers. Going forward, those fintech institutions that adopt and fully utilize BI solutions to manage risk, increase operational efficiency, and provide products and services that meet real customer needs will be better positioned to enjoy sustained growth, profitability and a competitive edge for years to come.
Hope you enjoy reading our blog. If you have more queries regarding to BI, feel free to connect with us.
For the last decade, the rapid advancement in information and communication technology has significantly influenced our banking industry in Bangladesh. Banks and financial organizations have
“If your business is not on the internet, then your business will be out of business.” – Bill Gates And the very fast step of
Machine learning is the most trending topic in the information technology sector. This technology allows computers to access hidden insights and predict outcomes which leads to remarkable changes to businesses. In my last article, I tried to draw a basic outline of machine learning concept. In this article, I’ve discussed different types of machine learning techniques and some use cases as promised earlier.