Banks evolving with investments in digitalization and automation

BANGALORE, INDIA: Analytics plays a key role in enterprises in taking key decisions at rite times so as to translate opportunity into gains and also build a healthier relation with customers.

In an interaction with CIOL, S Ganesh, CEO of Dun & Bradstreet Technology and Data services, an industry veteran with over 20 years of experience spanning Banking and IT, dwelt on importance of analytics and social media in BFSI sector. Excerpts:

CIOL: Can you brief us about Dun & Bradstreet Technologies and Data Services Pvt Ltd offerings?

S. Ganesh: Dun & Bradstreet Technologies and Data Services was established as a global center of excellence to develop cutting edge analytics and technology solutions to D&B and its clients globally.

Over last five years, we have built sophisticated analytical models and decision platforms to predict customer behavior particularly in credit risk area to help our clients take credit decisions based on scientific evidence for greater consistency and accuracy. Two years back, we also started offering our expertise to banks and financial services organisations in emerging markets of West Asia and Africa to help them manage their risks better.

Today, our offerings include scoring and rating solutions, customer analytics, credit risk management platforms and business intelligence solutions.

CIOL: How do you see the impact of computing revolutionizing the financial service industry?

SG: The massive increase in computing power, cheap cost of data storage and mobility has been and will be the main driver of expansion of banking services and credit. The same will also ensure that there is going to be an explosion in the potential banking universe especially in chronically under banked countries in the African continent and South Asia.

Technology drastically reduces transaction costs associated with banking like money transfer, payment processing and monetary reconciliation. The explosion in computing as well as the democratisation of hand held devices also ensures that the potential universe for consumer credits is increasing dramatically. This availability of payment behavior as well as contact ability ensures sufficient data is available on a far larger population, leading to banks and (or) FI's having a credit profile to lend upon.

It is this technology inflexion that will enable banks and financial services organizations to offer mass customization of its products and services which customers in the developing world truly need.

CIOL: How best can financial institutions make use of social media in lending decisions?

SG: Social media is becoming important primarily from marketing and product management point of view. It is not yet having significant influence on lending decisions because of lack of reliability and inherent negative bias.

At D&B, we have invested in building sophisticated technology infrastructure that allows us to capture social media inputs on business entities and we are further researching on how our risk models can incorporate these inputs in predicting credit behavior of business entities by mitigating such biases.

CIOL: There is lot of activity and interest among banks to build sophisticated analytical models. What are the key areas where it can make a significant impact?

SG: We work with several banks across the globe and find that adoption of analytics in emerging markets of South Asia, Middle East and Africa is less significant compared to those in more mature markets. The fundamental belief that analytics can produce the right answers, even if such answers are counter intuitive, is not present in the higher levels of management. This may be because most organizations a generation ago lived in a data starved environment.

This resulted in most successful managers of that time to base their decisions on experience and intuition. Though over the last few years, there has been a significant mindset change, this is yet to completely permeate to the corporate board rooms. This is likely to undergo a change as more C-suite managers make a start and become comfortable in the current data overload environment.

In the last decade, investments made in digitalization and transaction automation have enabled the banking industry to evolve significantly in its ability to capture raw customer behavior data. The industry is now ready to exploit this data through analytics to improve business performance.

Some of the key areas, where analytics can make a significant impact, are more efficient capital deployment, improvement in speed and accuracy of credit decisions, offer differentiated products based on customers' needs and risk profiles and reduction in operational costs through enhanced automation in customer decisions. This would help them become more consistent, competitive and customer centric, besides enabling compliance with regulatory requirements and BASEL accords.