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Analy&cs	
  -­‐	
  the	
  new	
  differen&ator	
  
June	
  2015	
  
Jairam	
  Sridharan	
  
President,	
  Retail	
  Lending...
2	
  
Analytics is being used extensively to drive value … applications
are widespread - from commerce to banking, arts to...
3	
  
Organizations now use analytics as a way of doing business, with
an emerging trend of elevating it to the management...
4	
  
Application of analytics spans the entire range - from aiding
business operations to strategic direction setting
A	
...
5	
  
Retail lending credit risk management1	
  
0.0%	
  
2.0%	
  
4.0%	
  
6.0%	
  
8.0%	
  
10.0%	
  
12.0%	
  
14.0%	
 ...
6	
  
Dynamic pricing at Uber2	
  
Uber	
  uses	
  classical	
  Economics	
  101	
  
of	
  price	
  elas;city	
  of	
  dem...
7	
  
Axis bank – Lending portfolio allocation3	
  
Size	
  of	
  bubble	
  represents	
  
weight	
  in	
  por8olio	
  
We...
8	
  
Axis bank new product – Asha Home Loan4	
  
We	
  used	
  data-­‐driven	
  consumer	
  insights	
   …	
  to	
  build...
9	
  
So analytics is permeating more and more of your tactics and
strategies …
… Does that make you an analytic leader?
10	
  
11	
  
Thank you
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NASSCOM Big Data and Analytics Summit 2015: Session I: Short keynote ‘Analytics – The new differentiator’

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Short keynote by Jairam Sridharan, President - Retail Lending and Payments, Axis Bank for NASSCOM Big Data and Analytics Summit 2015

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NASSCOM Big Data and Analytics Summit 2015: Session I: Short keynote ‘Analytics – The new differentiator’

  1. 1. Analy&cs  -­‐  the  new  differen&ator   June  2015   Jairam  Sridharan   President,  Retail  Lending  &  Payments  -­‐  Axis  Bank  
  2. 2. 2   Analytics is being used extensively to drive value … applications are widespread - from commerce to banking, arts to politics Dynamic   Pricing   Instant   Loans   Entertainment   content  
  3. 3. 3   Organizations now use analytics as a way of doing business, with an emerging trend of elevating it to the management table Level  of  Sophis&ca&on        !   DepartmentalOrganizationalInstitutionalized Ins&tu&onaliza&on  of  Analy&cs      !   Spreadsheets Slice & Dice BI Predictive Analytics Optimization Machine learning AI McKinsey   &  Company   Courtesy:    Fractal  Analy1cs   Various  organiza;ons  are  at  different  levels  of   analy;cs  maturity   Chief  Analy;cs  and   Chief  Data  Officer   roles  in  recent  years    
  4. 4. 4   Application of analytics spans the entire range - from aiding business operations to strategic direction setting A  few  case  studies   Credit  risk  management:  Banking       Dynamic  pricing:  Uber       Por8olio  alloca:on:  Axis  Bank       New  product  launch:  Asha  Home  Loans   1   4   2   3  
  5. 5. 5   Retail lending credit risk management1   0.0%   2.0%   4.0%   6.0%   8.0%   10.0%   12.0%   14.0%   16.0%   0%   2%   4%   6%   8%   10%   12%   B1   B2   B3   B4   B5   B6   B7   B8   B9   B10   Personal  Loan  Risk  Ranking   #  Ever  60+  delinq  rate   (LeP  axis)   Applica:ons  distribu:on   (Right  axis)   Risk  score  decile   Approve   Decline   Score   cutoff   Most  credit  bureaus  and  many   banks  develop  scorecards  that   predict  credit  default  risk       …  which  are  then  used  to  make  scorecard   based  underwri;ng  decisions   •  Consumer  data  is  collected  on  historical   loan  payments  and  delinquencies/defaults   •  Risk  predic:on  models  are  built  using   regression  modeling   0%   20%   40%   60%   80%   100%   0%   20%   40%   60%   80%   100%   Personal  Loans  -­‐  Gini  &  LiO  Chart   Model   No  Model  
  6. 6. 6   Dynamic pricing at Uber2   Uber  uses  classical  Economics  101   of  price  elas;city  of  demand   …  to  set  a  ride  price  that   balances  demand  and  supply     “Uber’s  most  important  innova;on  isn’t  a  car  service.   It’s  the  pricing  algorithm.”  –  MIT  Technology  Review   ü  Increases  on-­‐the-­‐road   supply  of  drivers   ü  More  customers  able  to   find  a  ride   ü  More  price  efficiency   and  improved  business   profitability     Mul;ple  benefits  
  7. 7. 7   Axis bank – Lending portfolio allocation3   Size  of  bubble  represents   weight  in  por8olio   We  built  valua;on  models  to  make  efficient   capital  alloca;on  decisions  in  Retail  Lending   Risk  vs.  return  by  product   PorTolio  risk/return  efficient  fron&er   %  NCL ROE 3 1 2 4 Now Recommended   target  portfolio We  simulated  thousands  of  porTolios   to  develop  a  risk/return  efficient   fron;er,  and  then  recommended  a   target  porTolio  mix  
  8. 8. 8   Axis bank new product – Asha Home Loan4   We  used  data-­‐driven  consumer  insights   …  to  build  a  new   product  strategy  for   affordable  housing  Lack  of  proper  access  to   credit  and  hence  unable  to   build  or  buy  a  new  home   “Move  away  from  rent”   without  compromising   other  pleasures  of  life   Source:  Monitor  Deloibe  Report  on   State  of    LIH  –  Urban  Income  pyramid     For  30MM  urban  households  with   income  between  Rs.  8-­‐25K,  owning  a   house  s:ll  an  un-­‐fulfilled  dream   Source:  Nielsen  Study   Consumer  survey  of   households   Asha  home  loans   A  strong  value  proposi:on  for   consumers  with  aspira:on  to   own  a  modest  home  
  9. 9. 9   So analytics is permeating more and more of your tactics and strategies … … Does that make you an analytic leader?
  10. 10. 10  
  11. 11. 11   Thank you

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