Why banks need analytics now more than ever

October 21, 2016 Risk Management

Since the financial crisis, regulators have been putting an extraordinary amount of pressure on banks to remain compliant and control their spending. As compliance costs rise, banks struggle with how to temper that spending, mitigate risk and keep their margins high.

According to a 2013 survey from Aberdeen Analytics, the top challenges banks felt they were facing included an inability to gather customer insight, the slow delivery of information to business users, a lack of visibility into individual branch/agent performance and business processes, and finally, risk management. 

With the rapid development of new financial technologies, however, all of that is becoming easier. 

"Analytics helps banks master things like risk management, performance analytics and compliance."

How data analytics is changing the banking industry 

Data analytics is changing the banking industry for the better. Banks that take advantage of the growing trend become armed with crucial information that helps them make more efficient, effective decisions. According to Banking Exchange, data analytics is no longer reserved for the number-crunching experts of banking institutions' IT departments.

Nowadays, analytics are accessible to decision-makers who can use the information to improve their banking processes. With the user-friendly dashboard solutions available today, data has become easily distributable and digestible for those who need it most. 

Analytics, or business intelligence as it is sometimes called in this market, can help banks master things like risk management, performance analytics and compliance. BizTech magazine explained how banks are using BI tools to determine which customers provide the most value, as well as to budget and price loans more effectively based on a sophisticated analysis of past and present performance.

When it comes to compliance, analytics makes it easier for banks to create reports and keep track of important information. In addition, executive dashboards let decision-makers create customizable interfaces that allow them to view their data in whatever way they need. 

According to the Aberdeen survey, financial services firms using BI tools experienced a 7 percent increase in market share and a 7 percent improvement in cross- and up-sell revenue, compared to a 3 percent increase in both categories for institutions that did not incorporate BI tools. Firms with BI tools saw a 7 percent improvement in customer/member attrition rate compared to a 5 percent decrease for firms not using BI tools. 

Banks need effective analytics solutions to facilitate information delivery and risk management.Banks need effective analytics solutions to facilitate information delivery and risk management.

Banks need analytics to remain competitive 

The future of banking lies in analytics and in financial institutions' ability to harness important data and use it to make better decisions. Banks that can do so successfully will not only be able to remain compliant and increase their margins, but they will also be able to stay competitive in this ever-changing market. As more and more banks adopt sophisticated technology, those that fail to do so will likely struggle to contend. Banks are increasingly abandoning their use of spreadsheets in favor of efficient, easy-to-use analytics solutions like Brilliance's DealPoint technology that help them streamline their pricing processes and make it simpler for both local and international banks to develop consistent pricing models.