Banking Analytics in Investment Banking vertical

Banking landscape in India and the world over is fast changing. Increasing de-regulation / regulation / re-regulation and the resultant competition driving a sea change in banks’ operations and profitability. Emergence and growth of unconventional competitors has challenged banks to fine their own operating models. Rapid evolution of technology has changed the ways in which the customers interact with banks. Introduction of new products has given customers more options for their financial service needs. Increasing urbanisation coupled with population growth and demographic preferences has brought in a large and hitherto unbanked segment under the ambit of banking services.

Analytics is the use of data, information technology, statistical analysis, quantitative methods and mathematical or computer based models to help managers gain improved insight about their business operations and make better, fact based decisions.

Understanding, exploiting and deploying ‘advantage’ analytics leads to (i) clearly identify areas to be focused upon, (ii) Develop action plan and functional goals, (iii) Implement specific actions and monitor progress, (iv) Emphasize priorities through regular senior management review, (v) Create a culture of continuous performance improvement, (vi) Evolve strategies and tactics to protect and enhance relative strengths, (vii) Provide an insight and support in areas where competition is ahead, (viii) Assess relative changes in performance over a period of time, (ix) Confirm preparedness of the organisation with changes in the market and (x) Identify customer base and loyalty more precisely

A comparative analysis of use of analytics can be drawn from medical field. A diabetes patients monitors his sugar level by using glucometer which provides his sugar level numbers. This analytics helps in administering / monitoring / managing the insulin inputs. Without this number analytics, monitoring and controlling his sugar levels would become virtually impossible. In a similar manner, banking analytics enables us to monitor, control and exploit the performance of banking business.

Application of banking analytics in the Risk Management of Financial Institutions enables financial institutions to manage risk more efficiently by making risk aware decisions, reducing fraud and credit losses. Also provides financial institutions with end to end support in accurate, timely regulatory reporting and compliance.
Banking analytics enables traders and senior management alike in Integrated Treasury Operations to manage and monitor exposure levels on their counterparties; manage exchange exposures and also exploit evolving business opportunities.

Risk Management and Derivative Analysis field would not have developed to the present levels but for the banking analytics. The derivatives industry mainly depends on business analytics. It would not have seen its present volumes / levels but for the development and deployment of Greeks through the use of analytics.
International Banking Analytics equips banks to manage expenditure, cash flow and investments better and uncovers insights that help in better financial planning and control. It also provides valuable insights into customer behaviour to help provide personalised engagement, develop bespoke products, mitigate fraud through transaction pattern analysis and develop relevant financial models and more.

Global Financial Markets thrive mainly because of the developments in the analytics field. The banking analytics facilitate monitoring the performance, making mid-course corrections, countering competitors squarely in the market place, etc. Global Financial Markets’ risk can be better managed with more insight with business and banking analytics.

Related Articles