Top 3 ways banks use analytics

With analytics, banks can more accurately manage customer profiles.

Big data is clearly a big deal in the financial services industry. However, big data isn't a tool by itself – it takes a keen eye and understanding of analytics in order to put the information to use within an organization. Banks are utilizing insights gained from this data to improve operations and boost their bottom lines.

Let's take a look at a few of the most important ways banks are using analytics to improve their operations and stay competitive in the constantly changing modern financial services landscape:

1. Overcome challenges relating to digital transformation

Banks have several challenges in front of them as they move toward digital transformation. Security, privacy and data quality are only a few of these obstacles, and a recent IDC survey found that only 8 percent of banks are at the highest maturity level in their digital transformation efforts, meaning only these organizations are able to fully support market innovation and agility.

Network World contributor Falk Rieker noted that in light of consumer demand and focus on banking technologies, it isn't enough for banks to simply adopt innovation here and there. To enact real, lasting change within their organizations, maintain customer profitability and operate effectively within the modern era, it's critical for banks to invest in tools that will foster innovation and digital transformation. This can include analytics tools that will allow them to delve into their big data sets and incorporate findings into their operations.

"Once customers find an intuitive, simple digital-banking solution or service, adoption is rapid," Rieker wrote. "Banks need an integrated [line of business]-IT management strategy that can allow for both front-end innovation and the automation of existing back-end processes."

Once big data analytics tools have been adopted and utilized as part of a successful IT management strategy, banks become more agile and better able to evolve with the markets.

"Business intelligence tools offer insights into banking systems, transactions, customers and environments."

2. Maintain compliance

Banks are using big data analytics solutions to remain compliant with many industry regulations, and as even more standards go into effect, it will be essential for companies to remain agile. With solutions like DealPoint from Brilliance Financial Technology, banks have the tools for the analytics job, especially within their compliance efforts. They can support digital transformation strategies, create better loan pricing models, and effectively manage risk, and create accurate audit trails to help improve compliance with key banking industry standards – all by harnessing the power of their data.

3. Loan pricing and risk management

One of the biggest challenges for banks in today's digital realm is making sure risk is taken into account when pricing loans and considering customer profitability. Business intelligence tools offer insights into banking systems, transactions, customers and environments – all of which come together to form a cohesive picture and help banks strengthen risk management strategies. For example, according to BizTech, a bank could gather data about the weather in a certain region, compare that to the age and integrity of the area's buildings, and then use that analysis to determine the risk of offering insurance in that particular market.

Customer data is also a key factor. Analytics solutions can help banks create customer profiles and accurately assess the risk associated with granting loans in any certain situation. This kind of information goes a long way when bank managers are pricing loans.

"[N]o amount of automation will help if banks don't consider their customers by analyzing customer behavior," Rieker stated.

For more information about how big data and analytics are transforming the risk and relationship pricing process within the banking industry, get in touch with the experts at Brilliance today.