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BI & Big data use case for banking - by rully feranata

Big Data and all about its business case in banking industry - how it will change the landscape and how it can be harness in order organization to stay ahead of the game

BI & Big data use case for banking - by rully feranata

  1. 1. Copyright © 2013, Oracle and/or its affiliates. All rights reserved. public1 Managing Information Explosion “Is it challenge or gold mine? how does banks response?” Rully Feranata ASEAN Enterprise Architect for FSI
  2. 2. Copyright © 2013, Oracle and/or its affiliates. All rights reserved. public2
  3. 3. Copyright © 2013, Oracle and/or its affiliates. All rights reserved. public3 JPMorgan Chase 150PB data online 3.5B Chase.Com logins /year 234M Web sites Facebook 500M Users 40M photos per day 30 billion new pieces of content per month 7M New sites in 2010 New York Stock Exchange 1 TB of data per day Web 2.0 147M Blogs and growing Twitter – 12TB of data per day Data is Everywhere! Facts & Figures
  4. 4. Copyright © 2013, Oracle and/or its affiliates. All rights reserved. public4 Value of Corporate Data Still Not Fully Realized 80% Significantly improve their ability to react quickly to market changes and improve customer service 50% Help their company grow revenues 63% Biggest challenge is sharing data across the enterprise 15% Have applied best practices using data strategically 22% Frontline managers have access to data
  5. 5. Copyright © 2013, Oracle and/or its affiliates. All rights reserved. public5 Information Architecture Challenges 5 Processes (Business process change too frequently) Tool (Too many BI tools) Data movement and integration Data Quality (Master Data, Reference Data) How to consolidate BI projects How to develop a BI platform
  6. 6. Copyright © 2013, Oracle and/or its affiliates. All rights reserved. public6 What Can We Do? Challenges of Information Architecture Users Tools Integration Quality Consolidation Governance
  7. 7. Copyright © 2013, Oracle and/or its affiliates. All rights reserved. public7 Security is The Top Most Priority – Customer demands transparency and security – Reputation at stake Regulation, and then some more regulation – BASEL II, III, Dodd-Frank, Volcker Rule, Durbin amendment, KYC, AML, Solvency II, Fraud detection, PCI-DSS .... – Risk Management has elevated to top of heap Rise of The Generation-Y – Consumers are becoming more technology-savvy and mobile Customer Centricity – Needs for insightful metrics on each of customer needs Data Explosion Growth – Structured and Un-Structured data Cost Efficiency and Optimization – Low cost infrastructure that can keep up the pace of business Major Banking Industry Challenge 2013Security on Each Layer of Information: Securing Data on Database Level not only from Application Level Database Security Portfolio from Oracle – Defense in Depth methodology Regulators, Compliance and Risk Management: Oracle has complete application portfolio for Risk Management – includes Market Risk, Operational Risk and Credit Risk as part of Basel Acts requirement, etc. Rise of the Generation - Y: Complete Multichannel solution for banking – Internet, Mobile, etc. to enable banks exploits new experience for customers Customer Centric Approach: Need to have flexible and agile system for CRM on the Operation level – to boost sales and marketing growth Also for exploring new kind opportunity by analyzing customer information through analytics structured data Big Data: Capture hidden treasure from vast, abundant of information from any kind of resource – hence to predict the future Oracle has the complete portfolio for Big Data Platform – either be un Structured or structured data storage. Cost Efficiency and Optimization: Capacity Planning through Standardization and Consolidation Automated provisioning and Management as Virtualized network, compute and storage.
  8. 8. Copyright © 2013, Oracle and/or its affiliates. All rights reserved. public8 The Importance of “Massaging” Data
  9. 9. Copyright © 2013, Oracle and/or its affiliates. All rights reserved. public9 Data from Core Systems Need to have identifiable focus segments Source: Oracle Internal Market Analysis
  10. 10. Copyright © 2013, Oracle and/or its affiliates. All rights reserved. public10 Data From External: Online Shopping Cart Conversion • Analyze abandoned shopping carts • Improve search responses conversion • Improve recommendation engine • Increase up-sell at checkout Business Goals • 20 million page views per day • Weblogs are 10 terabytes per day Challenges
  11. 11. Copyright © 2013, Oracle and/or its affiliates. All rights reserved. public11 Data From External: Bank’s Portal • Top Most/Trending Banking Products Search on Bank’s Portal • Customer Personalized Portal’s Approach for Products Offering Business Goals • Thousands page views per day • Random search for banking products Challenges
  12. 12. Copyright © 2013, Oracle and/or its affiliates. All rights reserved. public12 Data From External: Social Media • Sentiment Analysis for trending products • Introduced new channels • Tap on for new opportunities Business Goals • Millions comments but only few related to specific requirement • Semantic that can profile not only English but also Bahasa Challenges
  13. 13. Copyright © 2013, Oracle and/or its affiliates. All rights reserved. public13 How do Banks Manage The Data and Transformed it Into Useful Information • Identified Customer Segment to Focus on Retail/Commercial Banking • Accurate Marketing or Promotion Using Spending Behavior Analysis • Targeted Cross Sell and Up Sell • Attract and Retain Clients Using Unique Personal Services Business Goals
  14. 14. Copyright © 2013, Oracle and/or its affiliates. All rights reserved. public14 Banking Use Cases
  15. 15. Copyright © 2013, Oracle and/or its affiliates. All rights reserved. public15 Managing Data – The Strategies Find the right models Provide clear target information consumer There’s no one-solution-fit-all – find the right approach with the right objectives not the best. At least it answers three main capabilties: – Pas-Tense Approach: business units focus on making better business decisions by analyzing historical data – Present-Tense Approach: business units harness BI tools and technology to push real-time data to workers to make better business decisions in the moment – Future-Tense Approach: using advanced analytics and data modeling to predict likely future events so business units can plan their behavior accordingly Sample use cases: – Customer Segmentation & Behavior Analytics – Banking the Unbanked – MIS Reports – Regulatory Reporting and Risk Analytics
  16. 16. Copyright © 2013, Oracle and/or its affiliates. All rights reserved. public16 Use Case: Customer Segmentation & Behavior Analytics
  17. 17. Copyright © 2013, Oracle and/or its affiliates. All rights reserved. public17 Result: Three segments Most Suited for Tailored Campaigns Market size and findings identified as potential
  18. 18. Copyright © 2013, Oracle and/or its affiliates. All rights reserved. public18 Result: Segments show distinctive financial asset and behavior (I) Demographic / Geography Segment behavior Transaction behavior • Branch visit • ATM usage Private employeePrivate employee • Avg. age: 36 • 46% in top 7 cities • Like to try new products and services • Knowledgeable consumers "Frequent transactor" • 23% visit branch at least 2x a month • 26% use ATM at least 4x a month Government employeeGovernment employee ProfessionalsProfessionals HousewifeHousewife • Avg. age: 45 • 26% in top 7 cities • Not price sensitive • Prefer to spread deposit across multiple institutions (risk averse) • Care about service "Medium transactor" • 21% visit branch at least 2x a month • 21% use ATM at least 4x a month • Avg. age: 42 • 52% in top 7 cities • Like to try new products and services • Willing to pay extra to save time • Care about service "High branch users" • 33% visit branch at least 2x a month • 19% use ATM at least 4x a month • Avg. age: 40 • 43% in top 7 cities • Limited knowledge about banking products / state of the account • Easily influenced by friends and family "Low transactor" • 19% visit branch at least 2x a month • 14% use ATM at least 4x a month 60 20 10 25Total savings (Tn)
  19. 19. Copyright © 2013, Oracle and/or its affiliates. All rights reserved. public19 Result: Segments show distinctive financial asset and behavior (II) StudentStudent • Avg. age: 20 • 20% in top 7 cities • Price sensitive (both rates and fees) • Attracted to gifts and promotions "Frequent ATM user" • 15% visit branch at least 2x a month • 35% use ATM at least 4x a month RetireeRetiree Fisherman / FarmerFisherman / Farmer • Avg. age: 66 • 39% in top 7 cities • Not price sensitive • Care about service • Unlikely to change / switch "Medium transactor" • 22% visit branch at least 2x a month • 15% use ATM at least 4x a month • Avg. age: 47 • 13% in top 7 cities • Easily influenced by friends and family • Care little about service • Attracted to gifts and promotions "Low transactor" • 13% visit branch at least 2x a month • 19% use ATM at least 4x a month 15 60 30 Demographic / Geography Segment behavior Transaction behavior • Branch visit • ATM usage Total savings (Tn)
  20. 20. Copyright © 2013, Oracle and/or its affiliates. All rights reserved. public20 Result: Targeted Segments for Marketing Housewife Value proposition Value proposition • More confident in the management of household finances • Ensuring the best value for the family / dependents • Special recognition and privilege • Good work deserve its rewards • Most trusted brand in Indonesia Idea conception based on findings from the information sources Idea conception based on findings from the information sources Govt. employee Campaign Product • Free grocery voucher for top-up or new deposits • Free financial advice and planning • Free insurance (e.g. jewelry ) • Incentive bonus or higher interest rates if no withdrawals • Debit card for segment with special discounts (e.g. woman, family card or grocery card) • Family bundled savings program (e.g. free debit card for minor with no high interest rates) • Flexible automatic savings (Standing order to deduct only if a certain balance is reached) Campaign Product • Special privilege for segment (e.g. preferential pricing for Insurance and Deposit products) • Free ATM usage • Incentive bonus or higher interest rates if no withdrawals • Debit card for segment with special discounts • Flexible automatic savings (Standing order to deduct only if a certain balance is reached)
  21. 21. Copyright © 2013, Oracle and/or its affiliates. All rights reserved. public21 Call to Action: Indonesia Market- Calls for Tailored Product Campaign FindingsFindings Indonesia retail personal deposit market is highly competitive • Driven by aggressive marketing campaigns (e.g. BRI Untung Beliung Britama) • Competitors have started to develop tailored campaigns for specific segments Limited number of consumers establish new banking relationship • ~5% of consumers establish new deposit relationship every year Product offering and promotion are cited as key reasons for establishing new relationship Needs to develop tailored marketing to capture attractive personal segments • Beyond traditional mass campaigns StrategyStrategy • Prioritize and target attractive personal sub-segments • Housewife • Government employee • Students & early jobber – Capture deposits at the beginning of the customer life cycle • Understand segments' behavior and develop marketing campaigns • Develop distinct value proposition based on understanding of customer behaviors • Tailor marketing campaigns to priority segments
  22. 22. Copyright © 2013, Oracle and/or its affiliates. All rights reserved. public22 Use Case: Banking The Unbanked
  23. 23. Copyright © 2013, Oracle and/or its affiliates. All rights reserved. public23 Access to Finance – World Population Snapshot
  24. 24. Copyright © 2013, Oracle and/or its affiliates. All rights reserved. public24 Several Facts in Indonesia Population of Indonesia: approx. 240 million GDP per capita : USD2.600 Banking industry holds more than 80 % of financial sector assets More than 90% of banks accounts are less than Rp100 million (less than USD10,000) Number of commercial banks: 123 Number of rural banks: +9.300 Number of cooperatives: +13.000 Number of microfinance institutions: +8.000
  25. 25. Copyright © 2013, Oracle and/or its affiliates. All rights reserved. public25 Unbanked Population in Indonesia
  26. 26. Copyright © 2013, Oracle and/or its affiliates. All rights reserved. public26 Potential Expansion Focus with Identified Market Growth for Deposit Savings market share (19%) Source: Bank Indonesia, Oracle Internal Analysis
  27. 27. Copyright © 2013, Oracle and/or its affiliates. All rights reserved. public27 The Market is There .Waiting . It’s a GOLD MINE !!!
  28. 28. Copyright © 2013, Oracle and/or its affiliates. All rights reserved. public28 Distributors and Suppliers Have the Highest CASA Balances Distributors and retailers have the largest deposits base
  29. 29. Copyright © 2013, Oracle and/or its affiliates. All rights reserved. public29 Branch remains a key channel to perform transactions for self-employed customers
  30. 30. Copyright © 2013, Oracle and/or its affiliates. All rights reserved. public30 Multiple Revenue Drivers Available for Payments
  31. 31. Copyright © 2013, Oracle and/or its affiliates. All rights reserved. public31 Solutions in The Picture There are more than twice as many people in the world with mobile phones than people with bank accounts. This means that mobile has the potential to play a major role in bringing financial services to the world's unbanked population What are the main challenges to mobile meeting the needs of the unbanked? – The challenge is two-fold: first is the need to educate users that there is now - a way for them to access financial services; second (and more importantly), we need to achieve a level of scale so that users can see and feel, wherever they are, that they can access appropriate financial services via mobile Who is best placed to address banking of the unbanked: banks, mobile operators, third-party payment providers or others?
  32. 32. Copyright © 2013, Oracle and/or its affiliates. All rights reserved. public32 Use Case: MIS Reports
  33. 33. Copyright © 2013, Oracle and/or its affiliates. All rights reserved. public33 MIS Reports Business Planning – Report Management
  34. 34. Copyright © 2013, Oracle and/or its affiliates. All rights reserved. public34 MIS Reports Business Planning – Report Management
  35. 35. Copyright © 2013, Oracle and/or its affiliates. All rights reserved. public35 MIS Reports Business Planning – Report Management
  36. 36. Copyright © 2013, Oracle and/or its affiliates. All rights reserved. public36 MIS Reports Business Planning – Budgeting
  37. 37. Copyright © 2013, Oracle and/or its affiliates. All rights reserved. public37 MIS Reports Business Planning – Business Solution
  38. 38. Copyright © 2013, Oracle and/or its affiliates. All rights reserved. public38 Use Case: Regulatory Reporting and Risk Analytics
  39. 39. Copyright © 2013, Oracle and/or its affiliates. All rights reserved. public39 Performance Management Customer Insight Governance & Compliance Risk Management Treasury Risk Credit Risk Governance and ComplianceRegulatory Compliance (Financial Crime) Channel Insight Analytical CRM Anti-Money Laundering Trading ComplianceBroker Compliance Fraud Detection Portfolio Analytics Marketing Analytics Service Analytics Channel Usage Channel Performance Economic Capital Regulatory Capital Economic Capital Advanced (Credit Risk) Operational Risk Economic Capital Performance Management and Finance Activity-Based Costing OFSAA Case Studies Budgeting and Forecasting Hedge Management IFRS 9 – IAS 32/39 Customer Profitability Asset Liability Management Market Risk Basel II Retail Portfolio Risk Models and Pooling Loan Loss Forecasting RAPM Balance Sheet Planning Know Your Customer 39© 2011 Oracle Corporation Accounting HubConsolidationProfitability Funds Transfer Pricing Reconciliation Operational Risk Retail Credit Risk Corporate Credit Risk Liquidity Risk ICAAP Stress Testing Pricing Management Key Client Requirements: • Unification & greater transparency to finance & risk processes within the bank • Present a coherent picture to the regulator in the UK across its risk & finance numbers • Reduce financial close process from 20 days to 5 days Key Client Requirements: • Unification & greater transparency to finance & risk processes within the bank • Present a coherent picture to the regulator in the UK across its risk & finance numbers • Reduce financial close process from 20 days to 5 days
  40. 40. Copyright © 2013, Oracle and/or its affiliates. All rights reserved. public40 Performance Management Customer Insight Governance & Compliance Risk Management Treasury Risk Credit Risk Governance and ComplianceRegulatory Compliance (Financial Crime) Channel Insight Analytical CRM Anti-Money Laundering Trading ComplianceBroker Compliance Fraud Detection Operational Risk Retail Credit Risk Corporate Credit Risk Portfolio Analytics Marketing Analytics Service Analytics Channel Usage Channel Performance Economic Capital Regulatory Capital Liquidity Risk Operational Risk Economic Capital Performance Management and Finance Accounting Hub Activity-Based Costing ConsolidationProfitability OFSAA Case Study Budgeting and Forecasting Hedge Management IFRS 9 – IAS 32/39 Customer Profitability Asset Liability Management Market Risk Basel II Retail Portfolio Risk Models and Pooling Funds Transfer Pricing Loan Loss Forecasting Pricing Management RAPM Balance Sheet Planning Know Your Customer 40© 2011 Oracle Corporation Key Client Requirements: • An enterprise risk data Infrastructure • A unified view of exposures across the bank • Improved stress testing responsiveness • Able to address future risk, treasury, finance use cases • Trustworthy, cleaned and reconciled data • Common understanding of risk across LOBs Key Client Requirements: • An enterprise risk data Infrastructure • A unified view of exposures across the bank • Improved stress testing responsiveness • Able to address future risk, treasury, finance use cases • Trustworthy, cleaned and reconciled data • Common understanding of risk across LOBs Economic Capital Advanced (Credit Risk) ICAAP Stress Testing Reconciliation
  41. 41. Copyright © 2013, Oracle and/or its affiliates. All rights reserved. public41 Performance Management Customer Insight Governance & Compliance Risk Management Treasury Risk Credit Risk Governance and ComplianceRegulatory Compliance (Financial Crime) Channel Insight Analytical CRM Fraud Detection Operational Risk Portfolio Analytics Marketing Analytics Service Analytics Channel Usage Channel Performance Economic Capital Regulatory Capital Liquidity Risk Performance Management and Finance Accounting Hub Activity-Based Costing Consolidation Customer Snapshot Budgeting and Forecasting ICAAP Customer Profitability Market Risk Retail Portfolio Risk Models and Pooling © 2010 Oracle Corporation – Proprietary and Confidential 4 1 Pricing Management Anti-Money Laundering Trading ComplianceBroker Compliance Retail Credit Risk Corporate Credit Risk Basel II Economic Capital Advanced (Credit Risk) Stress Testing Asset Liability Management ProfitabilityStarted here  Added  Added Operational Risk Economic Capital  Added Reconciliation Funds Transfer Pricing  Started here Hedge Management IFRS 9 – IAS 32/39 Loan Loss Forecasting RAPM Balance Sheet Planning  Added
  42. 42. Copyright © 2013, Oracle and/or its affiliates. All rights reserved. public42 Performance Management Customer Insight Governance & Compliance Risk Management Treasury Risk Credit Risk Governance and ComplianceRegulatory Compliance (Financial Crime) Channel Insight Analytical CRM Fraud Detection Portfolio Analytics Marketing Analytics Service Analytics Channel Usage Channel Performance Economic Capital Regulatory Capital Liquidity Risk Operational Risk Economic Capital Performance Management and Finance Activity-Based Costing Customer Snapshot Budgeting and Forecasting Customer Profitability Asset Liability Management Market Risk Retail Portfolio Risk Models and Pooling © 2010 Oracle Corporation – Proprietary and Confidential 42 Anti-Money Laundering Trading ComplianceBroker Compliance Retail Credit Risk Corporate Credit Risk Basel II Economic Capital Advanced (Credit Risk) Operational Risk ICAAP Stress Testing Reconciliation Hedge Management IFRS 9 – IAS 32/39 Loan Loss Forecasting RAPM Balance Sheet Planning Accounting HubConsolidation Pricing Management Funds Transfer PricingProfitability
  43. 43. Copyright © 2013, Oracle and/or its affiliates. All rights reserved. public43 43 How do we manage this complexity ? How do we manage this complexity ?
  44. 44. Copyright © 2013, Oracle and/or its affiliates. All rights reserved. public44 Information Architecture Spectrum Data Realms Structure Volume Security Storage & Retrieval Modeling Integration Consumption Master data Transaction Analytical Metadata Structured Medium - High Database, app, & user access RDBMS / SQL Pre-defined relational or dimensional modeling ETL/ELT, CDC, Replication Message BI & Statistical Tools, Operational Applications Reference data Structured and Semi- Structured Low- Medium Platform security XML / xQuery Flexible & Extensible ETL/ELT, Message System-based data consumption Documents and Content Unstructure d High File system based File System / Search Free Form OS-level file movement Content Mgmt Big Data - Weblogs - Sensors - Social Media Structured Semi- Structured Unstructur ed High File system & database Distributed FS / noSQL Flexible (Key Value) Hadoop, MapReduce, ETL/ELT, Message BI & Statistical Tools Evaluating Economic and Architecture Tradeoffs Todays !!
  45. 45. Copyright © 2013, Oracle and/or its affiliates. All rights reserved. public45 An Architect’s Approach to Enterprise Initiatives Adopt Information Architecture Capability Model Data Realms • Master • Transaction • Reference • Analytical • Metadata • Unstructured • Big Data Diverse Data Realms Sharing & Delivery Sharing & Delivery BI & Data Warehouse BI & Data Warehouse IntegrationIntegration Content Management Content Management Master Data Mgmt Master Data Mgmt Enterprise Data Model Enterprise Data Model GovernanceGovernance SecuritySecurity InfrastructureInfrastructure
  46. 46. Copyright © 2013, Oracle and/or its affiliates. All rights reserved. public46 Best Practices • Adopt Enterprise Architecture Framework for data management • Ensure centralized IT strategy for standards and governance • Use a center of excellence to minimize training and risk Adopt an Enterprise Architecture Approach • Embrace data diversity • Correlate big data and structured data • Provide high performance and scalable analytics Expand Your Information Architecture

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