1. Analytic Engines and Solutions for Banking Ecosystems
Compliance, Risk, Performance and Customer Analytics
Sundip Gorai,
Head of Analytics & BI

2. 2
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The Obvious

3. 3
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What Happened???????
From Hindsight … to Foresight and Insight

4. 4
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Hind Sight Foresight and
Insight
Datawarehouse
and OLAP
Engines
Predictive modeling ,
Data mining and
Advanced Analytics
Predictable Outcomes

5. 5
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Enterprise Analytic Ecosystems

6. 6
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Risk
• Credit
• Market
• Liquidity
• Operations
• Fund Transfer Pricing
• Basel II/III /Dodd Frank
• AML/Fraud
Customer
• Prospecting
• Segmenting
• Cross Sell
• Up Sell
• Attrition
Financial Performance
• Profitability
- Customer
- Account
- Product
• B/S and P/L
• Cost Analysis
Specialized Areas
• Mortgage
• Asset Mgmt. Perf Attribution
• Stock Exchange
• Claims Analytics
Current Analytic Needs in the BFSI world
BFSI World

7. 7
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Current Analytic Enablers in the BFSI World
Rule Engines
Predictive Programming
/OR Language
Packaged
Data mining/Stats/OR
solutions
Simulations
Data warehouses /OLAP
Engines/Packaged Marts
Analytic Layer Data Layer
Data Visualization:
Traditional/ Open
source/In-Memory
Data Sourcing:
ESB/SOA/DI/Big Data
Integrated Data Fabric:
MDM/DQ/DP/ILM
Appliances /In Databases/
Grid Servers

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Current Analytic Enablers in the BFSI World
Rule Engines
Predictive Programming
/OR Language
Packaged
Data mining/Stats/OR
solutions
Simulations
Data warehouses /OLAP
Engines/Packaged Marts
Analytic Layer
Risk
Finance
Customer
Business Areas

9. 9
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Analytic Needs
Credit Risk
Market Risk
Liquidity Risk
Operations Risk
Fund Transfer Pricing
Basel II/III /Dodd
Frank
AML/Fraud
Rule Engine
PD, LGD, Credit Var
Var
Cash Flow
FTP
Op Var
Curve generators
Collateral
Management/ AIRB
Fraud KYC/ SARs
engine
Data Mining/Stat
Credit modeling /
Delinquency
Var/Co Var matrices
Behavour,Prepayment
modeling
Severity /Frequency
Dist.
NA
PD, LGD,
Optimizations
AML –
pattern/sequence
finders
Datawarehousing/
OLAP
Corporate/Retail
/Delinquency/ Facility
/Mortgage
Var by Position, Geo,
Class
Earnings Analysis
Liquidity Risk
Interest Rate Risk
Op Var
FTP and Spread
reporting
ALM/Profitability
reporting
Regulatory Reporting/
Pillar II reporting
Risk Centric
Analytic Needs and Solution Drivers
Simulations / Ops
Research/
Scorecards
Credit decisioning,
scorecards
Monte Carlo
simulation
What if simulations
Scorecards
Multi run Compliance
Calculators

10. 10
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Analytic Needs
Product Profits
Customer Profits
Account Profits
Business Line profits
Reporting line profits
Cost allocation
Budgeting/Planning
Forecasting
Rule Engine
Profitability/Consolidat
ion Engine/Time
aggregates
-do-
-do-
-do-
-do-
Cost allocation
engines
Top down/Bottom up
process flows
Data Mining/Stat
Revenue/ Profitability
optimization
-do-
-do-
-do-
-do-
NA
NA
Datawarehousing/O
LAP
Product profits
Customer profits
Account profits
Business Line profits
Reporting line profits
Expense reporting
Finance Centric
Analytic Needs and Solution Drivers
Simulations / Ops
Research/
Scorecards
Local /Reporting
Natural currency runs
-do-
-do-
-do-
-do-
Direct/Indirect/Propor
tional/ Activity based
costing
Budgeting plan runs

11. 11
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Analytic Needs
Segmentation
Campaign / Target Mails
Cross Sell/Upsell /Cross
Sell timing
Interaction Management
Channel analysis
Marketing optimization
Lifecycle/Behavior
analysis –
Retention/Attrition/New
business/Profile/Prospe
cting
Rule Engine
CHAID/CART
Campaign Flow/
Planning/Execution
NA
Channel interaction
engines
Channel usage
NA
NA
Data Mining/Stat
Segmentation
Trees/Clustering – K
Mean/Decision Trees
Neural Networks
Market Basket
Analysis/Association
Fat Tail analysis
NA
NA
Datawarehousing/O
LAP
Segment analysis
Campaign Analysis
Cross
Sell/Upsell/Cross
product holding
NA
Channel preference
Service Requests
NA
NA
Customer Centric
Analytic Needs and Solution Drivers
Simulations / Ops
Research/
Scorecards
OR models
OR Models

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Disparate pieces to Symphony
Choice of Analytic Artifacts
Data Strategy
Metadata Strategy
Choice of Techniques
Choice of Architecture
Strategic Intent
Business Definition
Need Definition

13. 13
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Customer Analytic Engine…at work
Campaign description
SAS Datasets
Owner of campaign
budget ,costs and
Segmentation other
constraints
2
Campaign objective
• Cross Sell
• Upsell
• Churn
• Retention
• Segmentation
• Customer transition to
higher segment
1
Customer selection
SAS Datasets
Customer attributes –
age/gender/
Relationship details
3
6
Response propensity
score for maximum
likelihood of response
SAS Datasets
SAS
Datasets
Customer selection
Based on other
attributes
Select customers who did
not respond to past
campaign and are poor on
other parameters
Split customer
list
• Data Mining
Techniques
• Model Selection
Filtered customer list
based how old
is relationship
7
8
Tele marketing
Direct mail
Walk in to advisors
Other medium
• Assignment model
• Right product/right
customer/right channel
using SAS linear
programming
SAS Datasets
9
• Campaign effectiveness
• Evaluation model
(response and returns to cost)
SAS
Datasets
Closing the Loop –
Learning Feedback
Reporting AND
analysis (use SAS BI/
MicroStrategy/MS
excel)
Response to
multiple
campaigns
stored as
history
Siebel
schedules
and executes
campaign
10
12
13
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11
• Response propensity
• Purchase score
• Credit score
• Relationship value
• Other business criteria
Business flow of campaign management
• Data Mining Techniques
• Model Selection
SAS Datasets
SAS Datasets
SAS Datasets
SAS
Datasets
Customer
exclusions
criteria
Filtered Customer
List
4
5
n

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Finance Analytic Engine…at work
Profitability Analytics
Revenue
Cost
Analyze by
Time
Channel
Geography
Product
Customer Profile
Customer
Profitability
Profit from
Account 1
Profit from
Account 3
Profit from
Account 2
Account level
Profitability
Asset products
Profitability
Liability
Products
Profitability`
Direct Cost/Int. ExpIndirect cost
Cost allocation engine
Fixed Amount
Fixed Percentage
Unit Costing
Statistical method
Activity based
costing (ABC)
Transaction data from
Channel Analytics
Rev. from FundRev. from Fees
Product processor FTP Engine
FTP Engine
Product
Processor

15. 15
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Risk Analytic Engine…at work:
Asset Liability Management
Yield Curve Generator
Currency Converter
Interpolator
Forward Rate Calculator
Cash Flow
Engine
Cash - Flows
Bucketing
Customer Behavior Product Behavior Time Structuring
Market Feed
SolutionSetUp
Banking Transactions
• Perpetual Products
• Prepayment
• Defaults
• Interest Frequency
• Default Benchmarks
• Interest Rate Risk
• Liquidity Risk
• Financial Cycle
Processes
Liquidity Risk Earnings AnalysisInterest Rate Risk
Input Layer Input Layer Input Layer
Standard Parameters

16. 16
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FTP Manager
Risk Analytic Engine…at work:
Fund Transfer Pricing
Profitability
Measures
Account/Product
Transfer Prices
FTP Extractor
Cash Flow
Engine
Dates & Quantum
Of Cash flows
Interest Accrual
Details Net Interest
Income
Margin
FTP Processing
Term Structure
Application
Methods
Term Structure
Of Interest Rates
1. Pure 2. Hybrid
Interest Rate Risk
Liquidity Risk
Product Profitability
Consumer
Processing
Enterprise Financial
Reporting
E
T
L
CASA
Loans
Investments
Source Systems
User Input
External
Data Sources
Input

17. 17
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Collateral Adjustment
Basel II/ Basel III Calculator
Data Processing
Internal
Source System
External
Source System
Source Systems
M E T A D A T A
RLT
Source
Traceability
Data Quality
Edit & Reload
Audit Trails
Adjusted
Collateral Raw Collateral
H
Optimization
Allocations
Exposure Comp
Data LayoutData Management
Enterprise Wide
Dimensional ModelCommon ETL Layer
Adj.Exposure
CRMT
[Group/Facility]
Exposure
Exposure
Sub Exposure
Allocation
OFCRM
Mapping for
Specialized
Lending
Eligibility Definition
Parameters
Rule Engine
Mapping
Banking
Txns
Collateral
Systems
Value @
Risk
External
Ratings
Market
Data
ETL
ETL
Validation
Data Integrator
ALM
(Market Risk)
Credit Risk
Performance
H H
LEF CCF
Mart Builder
Warehousing
Staging Area
Risk Analytic Engine…at work
Capital Calculator

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The Fab Four of Successful Analytic Ecosystems
• Products/ Architecture
– Unified Platform
– Best of Breed
– Custom In-house
– Build or Buy
• Governance
Models
– In-house
– In-house/External
– Predictive/Datawarehou
sing/ OR Teams
• Methodology
– CRISP DM
– SEMMA
– Agile BI
– Waterfall
• Services
– Strategic Advisory
– Tactical Advisory
– Architecture Advisory
– Implementers

19. 19
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Thank You
Questions?
Sundip Gorai
Hexaware Technologies
sundipg@hexaware.com
goraisundip@gmail.com