Business intelligence is no longer a strange phenomenon in the banking industry. It is a revolution that’s changing how banks perceive data and analytics. We’ll discuss the role of BI in banks in the modern-day scenario.
Technological innovations are the key to being relevant in this fast-changing world. The banking industry is not an exception to this rule. From following traditional bookkeeping methods to computerizing the transactions, we’ve noticed many changes in the banking sector. Another such development is the use of analytical tools to streamline internal operations and enhance customer experience.
Even the banking industry has competition as more banks are going multinational and opening new branches around the world. Collecting data, creating a centralized database, and processing huge volumes of data requires much more than legacy systems and spreadsheets like MS Excel.
Business intelligence has successfully entered the banking, insurance, and financial sector. Banking analytical solutions can help employees, management, and the leadership have more control over day-to-day operations and provide better services to their customers. BI is undoubtedly a revolution in the banking industry, and here’s how.
Before we talk about how BI is changing banks and financial establishments, let’s first understand what business intelligence is and why it is important.
Business intelligence is a set of technologies, processes, architectures that help collect, clean, and convert raw data into meaningful and actionable insights. BI is a suite of software applications and services used for transforming data into intelligence. Business intelligence impacts the operational, strategic, and tactical decisions of an establishment. BI tools are used to collect, clean, format, process, analyze, and present data in real-time.
BI uses historical and real-time data to derive insights and generate reports. Employees can run queries by setting parameters to get accurate responses from the tools. Business intelligence is important to measure KPIs, set benchmarks, identify market trends, overcome challenges, and make data-driven decisions.
Applications such as Power BI, Tableau, Qlik, etc., are some well-known business intelligence tools used by businesses from different industries. Power BI is the most preferred tool in the banking industry.
Business analytics help in understanding the bank’s data based on statistical models and quantitative methods. Analytics can be used in various ways in the banking industry. The core reason to use business analytics is to answer questions like:
Business analytics is a part of BI.
Knowing what the customers want is important to achieve the bank’s goals and generate profits. Banks offer a range of financial services for individuals and business entities. From operating a savings account to funds management, loans, credit cards, and insurance services, the banking industry deals with everything related to money management and control.
Business intelligence helps in analyzing the huge volumes of data generated every day to identify the trends in customers’ demands/ requirements. Is there a decrease in home loan applications? Are more customers investing in a certain mutual funds scheme?
Finding answers to these questions will help the management make the necessary changes to their financial products and services.
Understanding your customers is a good way to increase your customer base and ensure brand loyalty. The banking industry has become a competitive field. You need to reach out to the target audience with offers that’ll surely make them consider you as a first choice. But how do you know what the market wants?
BI in banking helps use customer data and data analytical tools to derive insights about each target base. It is not essential to spend money on ads that may or may not be effective. You can create ads for each target group with the confidence of knowing what they want. The bank can generate more returns with less investment, identify the weak points in the existing marketing strategies and correct them in time.
According to a report shared by Security Magazine, the banking industry saw a 1318% increase in ransomware attacks in 2021. Banking data of individuals, corporate entities, and non-profit organizations are highly confidential information. While this data can be obtained through several malpractices like hacking and phishing, a cyber attack on a bank’s database gives criminals access to valuable information in bulk.
Business intelligence tools play a role in monitoring the network traffic and can alert you in case of irregularities. The data collected and analyzed by BI tools gives security experts the necessary information to identify hot spots and improve the security layers at each level.
Customer retention is necessary to maintain a healthy customer base. A bank needs to have customers who’ve been with them for years and will continue to be. Providing personalized services and ensuring quality customer experience promotes customer retention.
BI tools can be used to identify customers who are more likely to impact their business with the bank or move to a competitor. You can also understand the reasons behind this trend and find ways to prevent it from happening. CEOs, CFOs, and other chief executives can run analytics on historical and real-time data to understand the patterns and come up with a solution.
Should you approve the loan application of a customer? What is the risk associated with it? Banks already have a system to process credit requests and approve/ reject applications based on it. However, changing times require advanced systems. You may need to consider more risk factors, especially when the customer is a business entity and the amount is millions.
Banking business analytics is used to process customer data from multiple sources. It helps analyze spending habits, income stability, and the probability of fraud before a loan application is approved. This lowers the credit risk for a bank and reduces defaulters.
The banking industry has to adhere to the various regulations set up by the national and global bureaus that help in establishing anti-money laundering norms, etc. Banks have to regularly send reports and updates to the concerned authoritative boards.
Using business intelligence tools like Power BI helps create data-driven reports to send accurate information and helps the boards prevent money laundering and illegal monetary transactions. It becomes easier to be regulatory-compliant when you have the necessary tools to process data in a quick time.
The dashboard is a treasure house of information and actionable insights. Employees access the required reports through the dashboard. They can run a query to know more about a customer before making a decision. The efficiency and user-friendliness of the dashboard depend on the BI tool used by the bank. For example, Power BI offers an intuitive dashboard with real-time analytics and an easy interface.
Power BI is a business intelligence suite of software applications developed by Microsoft. It is considered a reliable and efficient tool for banking analytics. Many banks and financial institutions have already integrated Power BI into their systems by hiring expert consultants to streamline the process and minimize risks. Power BI offers the following benefits:
DataToBiz is a business intelligence solution provider and offers offshore consulting services to businesses, banks, and establishments from various industries. The Power BI consultants are experienced in customizing banking analytical solutions to match the requirements of each bank/ financial institution. Schedule an appointment to talk to the team and adopt the data-driven model.