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Updated: May 4, 2010 03:18 IST

Banking on analytics

D. Murali
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Durai Rajasekar. Photo: Special Arrangement
Durai Rajasekar. Photo: Special Arrangement

Durai Rajasekar is a seasoned banker, who fondly remembers the ambitious automation project in Canara Bank that the then Finance Minister Dr Manmohan Singh had inaugurated in 1993, at the Parliament Street branch, New Delhi.

Now, as Senior Vice President in Chennai-based Ramco Systems (http://bit.ly/F4TRamco), DR’s focus is on analytics, in banking and other sectors. During a recent interaction with Business Line, he mentions that the company has tied up with HP for delivering a pre-built data warehouse and analytics solution for banks, in domains such as deposits, loans, CRM, trade finance and profitability.

“Most of the banks would like to analyse data for the last 5-10 years based on the year of completion of their core banking solution project; and, for this purpose, the banks would need large data warehouses,” elaborates DR, in the course of a subsequent email exchange.

Excerpts from the interview.

Where do you expect newer focus to happen in analytics?

Pattern-based strategy. This is a framework to proactively seek, model, and adapt to leading indicators, often termed ‘weak’ signals, that form patterns in the marketplace, and to exploit them for competitive advantage.

Such a strategy will allow an organisation to not only better understand what’s happening now in terms of demand, but also to detect leading indicators of change, and to identify and quantify risks emerging from new patterns rather than continuing to focus on lagging indicators of performance. Business intelligence (BI) solutions are expected to meet this requirement of business in a big way.

Another area is that of readily-built analytics for top management. These pre-built analytics, hassle-free and quickly deployable, offer business intelligence solutions to CXOs for monitoring the performance of key business indicators. Contrast this with the conventional approach of buy-and-build followed by businesses so far.

Do you find analytics playing a role in decision-making?

Today’s business executives face more challenges in decision-making in various areas such as pricing, market development, market penetration, product costing, customer servicing and retention. Such a situation has arisen due to the explosion of media coverage and advertisement budgets, the crumbling of entry barriers, and the shrinking of time to launch new products.

In this scenario, the conventional of way of looking at information through tabulated forms and reports is no longer relevant though it cannot be avoided altogether for regulatory reporting purpose.

Enterprises are redefining the MIS itself and they want on-demand MIS in crisp and analysed form and not as lengthy reports. What a report wants to convey should be possible to know through a few signals and alerts and summarised data with scope to drill down to detail at leisure or on need basis.

Here comes the role of pre-built analytics which give all this at the click of a mouse or touch, on various platforms such as laptop and mobile devices. Analytics have not only come to stay in decision-making but are also going to become an integral part of day-to-day business decisions.

Would you like to talk about the ‘what you see is what you get’ feel in the solution?

In the case of readily-built analytics, the various key business parameters that are continuously monitored by the businesses are used to build BI solution, and sample data are used to model the process of performance monitoring. This, when shown to the top management officials, helps them to understand what they are buying though the underlying platform is not visible at that point in time.

That way, the CXOs see beyond the tool and platform to understand the value they will get from what they see for monitoring the various parameters in finance, materials, production, sales, shipment, asset management and so on.

This cuts down the cost of internal team formation for data warehouse development cycle, which generally goes on and on without end, often benefitting the IT companies and not necessarily the businesses. There is certainty in the ‘what you see is what you get’ approach, with cost and time-to-use being pre-fixed and measurable.

How does a bank benefit from analytics?

When analytics give a 360-degree view of the core business areas, a bank which has a network of branches spread across the length and breadth of the country will be able to measure, monitor and control, all key business parameters, both at summary and detailed levels.

Some of the key business questions addressed by the analytics solution are:

• Where is my business growing and in what segment?

• Which product contributes to the growth, in which region?

• What is the product distribution, price-range-wise?

• What is growth rate in fee income?

• What is my exposure to capital in risk adjusted assets?

• How much have I actually earned and from where?

• What is the cost of my liabilities in total cost?

• Who is contributing to my profits and who is not?

• What is the level of gross and net NPA (non-performing assets)?

• What is the breakup of non-interest income?

• What is the actual yield vis-à-vis contracted yield income?

• What is the interest rate-wise distribution of assets and liabilities?

By looking at one of the several hundred parameters monitored in the analytics, e.g. interest rate-wise distribution of deposits as on yesterday, a bank can decide to change the cost of deposits today and see the impact of such decision tomorrow.

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