Business Intelligence And Banking 732s1

Business Intelligence and Banking Major applications of business intelligence software in the banking industry

Business Intelligence and Banking

1. Introduction............................................................................................................................. 2 2. The Banking Industry: Consolidation, Regulation, and Diversification. ...................................... 2 3. Industry Factors Driving Business Intelligence Solutions at Banks. ............................................ 3 4. Applying Business Intelligence to the Needs of the Banking Industry . ..................................... 4 4.1. Financial and Operational Performance Management ...................................................... 4 4.2. Customer Profitability Management . ............................................................................... 5 4.3. Other Application Areas in the Banking Industry

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6

5. B anking Organization Snapshots: Bank of the West and Finansbank ....................................... 7 6. Conclusion............................................................................................................................. 8

Business Intelligence and Banking

Major applications of business intelligence software in the banking industry The banking industry is becoming increasingly competitive and facing ever-changing regulatory requirements, making it more and more challenging for banks to keep up with the changes—and with the competition. With a vast range of customers and customer needs, ongoing regulatory changes, and increasing consolidation, banking enterprises need information management solutions that will allow them to make smart decisions. Banks need to use all the tools at their disposal to manage the many industry challenges and ensure their own financial stability through intelligent business solutions. With such a far-reaching scope of services and concerns in the banking industry, banks handle immense amounts of information. It’s hard to keep track of important information and even to know which information is valuable, and banking enterprises need the tools to take advantage of the myriad information at their disposal. The information technology available today allows these companies to make better business decisions and to better target performance goals. MicroStrategy offers the banking industry the business intelligence software to report on, analyze, and monitor the vast corporate data through a business intelligence architecture that helps companies reduce costs, increase revenue, and maximize the value of information.

The Banking Industry: Consolidation, Regulation, and Diversification Banking enterprises need to keep up with their constantly changing industry to stay viable and competitive. Over the past several years, a host of mergers and acquisitions in the banking industry has resulted in a shift in corporate goals and an increased focus on managing internal systems. All this consolidation activity gives banks the opportunity to greatly reduce overhead costs by integrating operational processes. To make the most of this opportunity, banks must identify areas where they can increase efficiency, cut costs, and reduce redundancies. In addition, consolidation of assets allows banks to manage these assets in such a way as to maximize their profits. Continuing regulatory changes, such as Basel II and the Sarbanes Oxley Act, are also requiring banks to reexamine many of their operational processes. To most efficiently comply with these regulations, banks must integrate the finance and risk segments of their businesses. By assessing business performance on a risk-adjusted basis, banks can strengthen their performance goals while meeting the new compliance requirements. Banks need information MICROSTRATEGY: BEST IN BUSINESS INTELLIGENCE

analysis and reporting capabilities to comply with these regulations, manage risk, and grow shareholder value. The intense competition and changing regulatory requirements are also forcing banks to put a greater focus on profitability in order to survive. Banks are looking for ways to differentiate themselves from the competition, and many are focusing on increasing customer revenue to maximize performance. Banks are trying to stand out from the competition by providing top-quality customer service as a way to retain customers and gain new ones. However, expanding their customer bases results in increased diversity in customer preferences and behaviors. This presents banks with the challenge of providing consistent customer service across multiple channels, including Internet banking and call centers. In addition, banks must handle more and varied customer information, making it more difficult for them to understand consumer needs, track trends, identify profitable areas, and monitor consumer credit. Increased customer diversity also means that these companies must keep up with growing consumer demands. Banks must provide low-cost,



personalized, and timely service across multiple channels, or their customers will simply find it elsewhere. The banking industry is also facing growing competition from new outlets, such as online payment services, which are consuming market segments without having to deal with many of the costs and regulations that banks must face.

Industry Factors Driving Business Intelligence Solutions at Banks Each of the challenges stated above require banks to be proactive in managing and utilizing corporate data if they want to keep up with or stay ahead of the competition. That’s where business intelligence comes in. Business intelligence software gives banking enterprises the capability to analyze the vast amounts of information they already have to make the best business decisions. The software allows banks to tap into their huge databases and deliver easy-to-comprehend insight to improve business performance and maintain regulatory compliance. The applications of business intelligence in the banking industry are far-reaching. First, banks must manage large volumes of data from many sources, including a diverse customer base, extensive branch networks, and shareholders. MicroStrategy’s unified information architecture allows companies to easily integrate and cross-reference vast amounts of information from multiple sources, identify relationships among the information, and learn how different factors affect each other and the company’s bottom line. In addition, a bank will have many people in different locations with varied skill levels who need to use this information for varying purposes—everyone from executives who need high-level customized summary data with drill-down capabilities to power s who need to create and design custom reports to data analysts who must identify and communicate market trends. MicroStrategy offers a single, easy-to-use Web interface that allows multiple s to access the information relevant to them. MicroStrategy’s unique and intuitive analytical capabilities allow different s to manipulate the data to glean the most from the information that affects their decision making. MicroStrategy’s unified Web interface also offers extranet capabilities, allowing remote branch operations to access a secure Website where they can utilize MicroStrategy’s extensive analytical and reporting capabilities. There is no software to install or . Branch s simply need access to the Internet and security credentials to use the information that corporate or regional headquarters has designated for them. They can then run easy-to-understand and intuitive reports and analyses. The MicroStrategy architecture provides unique capabilities for banking enterprises to reach branch operation s immediately and securely. Finally, banks must work to increase revenue while maintaining or reducing costs. Business intelligence software

segment analysis, and risk analysis. Banks can grow revenue by maximizing customer value over the long term and improving customer acquisition and retention. At the same time, companies can reduce costs by managing risk and preventing fraud, as well as improving operational efficiency. MicroStrategy’s unique business intelligence architecture simultaneously accesses immense amounts of information, enabling analysis from many sources at once and providing the most thorough and integrated reporting. MicroStrategy then presents this information in -friendly reports, scorecards, and dashboards and allows s to look at the information in different ways, offering the simplest and most useful ways to analyze the information to get the desired results—business strategies that increase profits.



BUSINESS INTELLIGENCE AND Banking

allows banking enterprises to analyze profit and loss, including product sales analysis, campaign management, market

Business Intelligence and Banking

Applying Business Intelligence to the Needs of the Banking Industry Banking enterprises can use business intelligence in many ways, creating smart business solutions across the myriad challenges in the Banking industry.

Financial and operational performance management In order to increase profitability, banks must set corporate performance goals. They then must determine how well their internal and external processes align with corporate strategy and track their progress toward reaching their goals. MicroStrategy’s architecture allows banks to integrate and cross-reference huge amounts of information from multiple sources to determine how the different variables affect each other and the bank’s overall financial health. MicroStrategy’s business intelligence software helps banks set financial performance goals and monitor their financial portfolios. Relevant KPIs: • • • • •

Wealth Management Portfolio Analysis Financial Balance Analysis Headcount Analysis Physical Asset Management

• • • • •

Staffing and Hiring Analysis Employee Performance Management Loss Analysis Complaint Levels Error Corrections

Sample Report : Distribution of Customer Balances (Sample Report):

Distribution of Balances Balances

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Total

Total Balance $

Number of s

Number of Customers

$9,190,334,862

249,957

218,893

($0–$25,000)

$1,732,071,730

124,879

113,074

($25,000– $100,000)

$3,147,394,650

98,310

83,031

($100,000–$500,000)

$3,122,693,552

25,432

21,709

($500,000–$1,000,000)

$780,881,010

1,209

981

>= $1,000,000

$407,293,920

127

98

As part of their ongoing analysis of internal performance and asset tracking, understanding where the money exists within the bank itself is important. The above report gives an idea of the amount of money distributed across different balance levels. Using MicroStrategy’s Custom Group function, the above report explicitly shows the number of s and amount of wealth across all levels within the bank.



Customer profitability management With high customer turnover rates, banks must be able to identify their most profitable customers for targeted retention efforts. MicroStrategy’s in-depth analytical capabilities allow banks to analyze customer profitability by individual, household, type, branch bank, or other factors. Banks can also predict customer attrition rates and develop effective marketing campaigns based on analysis of customers’ behaviors and preferences. In addition, by identifying customers’ service needs, banks can offer and direct customers to the channels and products that best meet those needs, as well as acquire new customers with targeted marketing efforts. Relevant KPIs: • • • • • • •

Single Customer View Customer Sales Opportunities Channel Consistency to Customers Complete Customer Points Prioritization Customer Fees Decision Customer Lifetime Planning

• • • • • •

Customer Lifetime Profitability Customer Channel Prioritization Customer Attrition Customer Retention Daily Transaction Analysis Customer Transaction Trending

Sample Report : Analysis of Customer Types within Customer Segments (Sample Report): All Other 21% Non Core Relationship Managed 3% Starting Out/Over 7%

Classic Builders 37%

Classic Prospects 27%

Banks will often perform customer segmentation at different levels in order to best predict lifetime profitability, target promotions and products, and analyze specific transactions. The above graph shows a breakdown of the type of customer (i.e., Builders vs. Prospects) within a specific customer segment (i.e., Tech Savvy Households).



BUSINESS INTELLIGENCE AND Banking

Branch Builders 5%

Business Intelligence and Banking

Other application areas in the Banking Industry where Business Intelligence enables enhanced competitive standing: Profitability management MicroStrategy’s unified architecture allows actuarial and risk analysis across multiple sources, offering simplified reports and drill-down capabilities for the most in-depth and accurate risk analysis, as well as the analysis of any relationships that indicate risk trends.

Credit analysis Business intelligence provides easy tracking of operational costs, allowing companies to create smart business strategies and set achievable internal goals. Plus, MicroStrategy’s unique centralized istration and security optimizes IT resources and operational efficiency. These capabilities reduce costs and allow companies to easily monitor expenses.

Regulatory compliance Business intelligence allows Banks to identify activities related to fraud and predict potential fraud before it occurs. MicroStrategy’s in-depth analytical capabilities help Banking companies recognize fraud before paying fraudulent charges, reducing losses due to fraud and improving recovery rates.

Operations management Banks can grow their profit margins by increasing the efficiency of their internal operations. MicroStrategy’s unique business intelligence architecture allows banks to analyze employee and branch information across multiple sources to increase productivity and set performance goals. In addition, consolidation allows banks to identify areas where they can streamline processes and cut costs. Banks can also enhance performance and shareholder value with timely reporting and monitoring systems that help them develop the most optimal and realistic budgets and strategic plans. MicroStrategy’s performance scorecards also allow banks to communicate corporate and individual

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performance goals across the many levels of the enterprise with automatic personalization.



banking organization snapshots Enhancing Risk Management at Bank Of The West Bank of the West selected MicroStrategy for risk management reporting and analysis. Based in San Francisco, Bank of the West has 480 banking locations in 16 states and $41.0 billion in assets. To mitigate risk in collections and lending, Bank of the West uses MicroStrategy to glean valuable information from its collections data warehouse, which contains loan default information. With MicroStrategy, Bank of the West personnel can analyze lending and collections data to generate reports that compare risk management strategies, assess effectiveness, and determine optimal risk management policies for the company. “We perform sophisticated analyses to evaluate and enhance our risk management program. With MicroStrategy’s powerful analytics and intuitive web interface, our personnel can create insightful reports that help us to make data-driven decisions that ultimately have a positive impact on our bottom line.”

Improving Financial Reporting & Analysis at Finansbank Finansbank selected the MicroStrategy Business Intelligence Platform to its financial reporting and analysis requirements. Finansbank has 173 local branches, as well as international subsidiaries and s, and operates in 10 countries. MicroStrategy was selected because of its analytical richness, its ability to handle large data volumes, and its single consolidated interface. Within two months of deploying MicroStrategy, Finansbank produced two hundred high quality reports with highly complex calculations. “MicroStrategy enables us to quickly and efficiently disseminate vital financial reports and analysis throughout the organization. With MicroStrategy Report Services, employees can design high quality reports and maintain a common look and feel throughout the entire report set. In addition, MicroStrategy’s data-mart functionality helped us in writing the results of analyses back to a database so that they can be fed to other software within

BUSINESS INTELLIGENCE AND Banking

the corporation including data mining tools.”



Business Intelligence and Banking

MicroStrategy: The Choice of Leading Banking Enterprises At MicroStrategy, we are fully dedicated to helping banking enterprises stay competitive in a challenging industry. We believe that business intelligence properly applied to corporate data provides banks with the insight they need to increase revenue, reduce costs, and comply with industry regulations and standards. Today, seven of the top ten global commercial banks rely on MicroStrategy’s business intelligence architecture for their reporting, analysis, and monitoring of corporate data. MicroStrategy’s unified architecture offers banks farreaching opportunities for ever-expanding business intelligence. Whether starting with one or several applications, banks can evolve to utilize MicroStrategy’s unique capabilities: access for thousands of s, reporting and analysis of tremendous amounts of data across multiple sources, graphical dashboards and boardroom-quality reports, and unconstrained analytical flexibility. MicroStrategy s banking requirements for 24-7 operations, unparalleled data integrity across multiple data sources, and the highest security levels. With the constant changes and increasing challenges in the banking industry, banks need to stay one step ahead of the competition. MicroStrategy equips companies with the tools they need to make the best use of the vast amounts of information available to them, allowing them to operate more efficiently and increase revenue. At MicroStrategy, we are committed to helping your bank increase its competitive advantage by devising smart business solutions and

MICROSTRATEGY: BEST IN BUSINESS INTELLIGENCE

making better business decisions every day.



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