"It might have been" – said J.G. Whittier in his poem Maud Muller echoing the thoughts of Maud and the Judge. Although smitten by each other, the two failed to express their love, and the regret lasted for the rest of their lives. I’m sure the poet’s words found resonance with banks when the financial crisis hit in 2008. Surely, things might have been different if they had engaged in some proactive strategizing? And if analytics technologies had been as advanced then as they are now, the crisis might not have arisen in the first place. I think, armed with analytics insights, banks would have lent to the right type of customers, monitored collections better, predicted delinquencies, and kept NPAs in check.
Well, we make mistakes, we learn. Today, I find banks more discerning in their dealings. Many of them make use of analytics to manage their credit risks. I’ve also come across banks harnessing the power of analytics for performing finance and treasury functions such as forecasting NII and keeping tabs on the interest rate risk. I think more banks should use analytics to improve sales, the lifeblood of business. An acquaintance of mine, a bank manager, was complaining about how one of his sales officers had quit after being reprimanded for failure to achieve the desired numbers. In the highly commoditized banking space, I think it is the banks who should guide salespersons
with the help of analytics: consolidate customer information, perform Next Best Offer analytics, place the results in the hands of the sales team and get them going. I also think that studying past behavior patterns would be very useful for approaching existing customers. For instance, a bank can try to sell a mutual fund to a customer who had recently made an ETF investment through his savings account and whose fixed deposit is now nearing maturity. Thanks to analytics, sales teams now know what to sell and to whom, and I see this sure knowledge doing wonders for their motivation and confidence levels. I think banks should also focus on leveraging analytics to improve CRM for better customer retention and customer value enhancement.
Is implementing analytics an option for banks today? I don’t think so. In fact I regard it as a vital weapon that helps banks perform better in a cluttered and competitive market. By 2015, the global technology expenditure of banks is expected to cross USD 130 billion. Will analytics constitute a sizeable chunk of this figure? I certainly hope so!