Here's how financial sector leverages Analytics for Data-backed decisions

Representative Image

The estimated size of the analytics industry in the financial sector is USD 1.2 billion in annual revenue, according a study done by Analytics India magazine.

Analytics can aid financial services companies in almost all areas—right from targeting, prospecting, acquiring and retaining its customers.

All business units from risk to marketing and product management benefit from analytics. Improved efficiency (better results at lower costs) and better effectiveness (more bang for the buck) of every task that a financial institution engages in are the key benefits from analytics.

“New models of proactive risk management are being increasingly adopted by major banks and financial institutions. Through data mining and advanced analytics techniques, financial services companies are better equipped to manage market uncertainty, minimize fraud, and control exposure risk,” says Nimilita Chatterjee, SVP, Data and Analytics, Equifax India.

Payu, a fintech company that provides payment technology to online merchants, is a great case in point for how data analytics can be effectively leveraged. Analytics enables PayU to process 1.5 million loans every month with credit decision being made under 1 second!

“Data analytics plays a critical role in serving ‘digital credit’. Customer profiling basis their digital footprints helps identify right segments, understand credit-ability and create appropriate offerings to best serve their credit-needs,” says Chinmay Jain, Associate director, Data Science, PayU India.

Beyond Under-writing, data-backed recommendations have also helped the company enhance all functional aspects – right from product customization to optimal marketing, and efficient collection strategies.

As financial services companies face increasing pressure to stay profitable, understanding customer needs and preferences becomes a critical success factor.

Analytics is inevitable as financial services firms strive to deliver personalized services and experiences to customers. For years, banks and financial institutions have been struggling to transition from their traditional broad-based and non-segmented marketing practices.

Today’s sophisticated analytics tools promise to bring that differentiator to the table. “Through analytics and insights, financial services companies can deep dive on customer behaviors which can be uncovered through multivariate descriptive analytics, as well as through predictive analytics,” says Chatterjee.

Additionally, improvements to risk management, customer understanding, risk and fraud enable banks to maintain and grow a more profitable business. Analytics empowers business with enriched information – that is the single biggest strength of the science, she adds.

In the days to come, data analytics and technology will go hand-in-hand helping each other grow. Analytics would grow with technological advances in data collection and augmentation, faster processing, and robust ML platforms. On the other side, data insights would foster technology utilization with key insights into product flow and process optimization, by solving new problem each day and making customers’ life easier.

“At PayU, we believe to collaborate on both fronts - data and technology - to deliver superior customer experience on Credit platform,” sums up Jain.