Financial industry seems to be the ideal setting for advanced business intelligence solutions. The field is in a continuous, fast-paced transactional based interaction and is based on managing and monitoring information. As a recent Gartner study shows, business intelligence and analytics investment will address many technology gaps for the CFO in 2014. Surprising or not, the study also revealed that the CFO prioritizes business applications higher than the CIO does.
This whitepaper’s aim is to help you understand the one clear reason why every organization should develop a strategy for implementing BI solutions, and that is to improve its performance by making better and smarter business decisions.
Business Analytics: Unlock BI’s True Potential to Drive Growth
Operating in the financial field means operating in an environment in which data gathers quickly, but has never been easy to analyze. This makes it mandatory to stop overwhelming people with charts, reports and stacks of paper and start employing technology for facilitating analysis and decision making.
Analytics help you to align your objectives for generating more revenue through:
Providing access to all types of data your organization is gathering everyday;
Optimizing the decision-making process using insights based on analytics;
Optimizing the time span needed to react and allocate resources for situations of business critical importance;
Managing risk and improving business outcomes.
How BI Contributes to Increase the CFOs’ Favorite: Corporate Performance Management ROI for the Financial Sector
CFOs’ Favorite: Corporate Performance Management
Corporate performance management (CPM) projects are the highest on the CFO’s BI initiatives list, according to the same Gartner survey we referred earlier.
The top four priorities in this area are addressed by CPM suites, including performance scorecard; budgeting, planning and forecast; financial consolidation; and profitability management.
The main benefits of implementing a solution for monitoring key aspects of the characteristic variables in a financial institution are:
Integrating an improved perspective on risk factors in the decision-making process
Achieving a holistic view on performance
Connecting key financial processes to core business analytics capabilities
Replacing rigid directions with continuous planning and frequent forecasting
Predictive Analysis: Measuring, Monitoring, and Optimizing Business Processes
Predict what your customers want. Though many are still saying that this is wishful thinking, it is possible to achieve a very high level of predictability in customer behavior by combining the right technological and business analytical skills.
Harnessing the increasing volume of data should help financial institutions to gain deeper insights into business performance and to prepare for taking appropriate actions. With access to critical data, CFOs are able to measure and benchmark divisional performance, monitor trends, and optimize business decisions that help their financial institutions allocate capital, grow assets, better manage risks, and improve profitability.
Achieving this level of data insight means that CFOs are able to visualize key metrics based on aggregated information from disparate data sources and use contextual data to collaborate with business users to drive the appropriate optimized actions.
Implementing a Transparent Risk Management Culture
Enterprise Risk Management is imperative for banks and financial institutions today. Executives, boards, shareholders, and regulators are all demanding more control and better transparency around risk. It is no longer a novelty that financial organizations are facing a mandatory need to determine risk profiles and act in a timely manner to ensure their financial stability.
Capturing Customer Feedback through Sentiment Analysis
Though quite neglected throughout the banking/financial sector, sentiment analysis has the potential of providing great insight for this industry as well.
Consumers today share their thoughts through social media channels just as often as to customer service representatives. When captured and managed, this information provides valuable and unfiltered insights into what customers are thinking. The trust and feedback factor is quite important for financial institutions.
Moving away from traditional sentiment analysis methods of survey research and focus groups, these sentiment analysis tools can give companies innovative ways to improve products and predict customer behavior. They also provide analysis on a real-time basis, allowing fast decision-making and immediate reaction to any negative opinions which might arise.
Challenges in Implementing BI for the Financial Sector
BI requires a lot of foundational work and is an ongoing function within a business. As financial services institutions are evaluating BI, it is important to also establish the value to be derived and to understand the implementation challenges. We highlighted the most common pitfalls needed to be overcome throughout the process.
Justifying the Investment
All the chatter in the field suggests that there is almost no need to argue for the added value BI can provide in driving business growth for a financial institution. Still, the reluctance to change – widely spread in this field – demands a very accurate justification of investments made on a new infrastructure.
Traditional BI deployments were generally based on the development of large IT infrastructures, which delivered information inefficiently. The transition from traditional BI towards more agile dashboard solutions will require an overall new approach. New investments might create a challenge in identifying ROI and whether it outweighs the risks and expenses.
Do Not Neglect the Architected Approach
With all this noise around groundbreaking and innovative technology available today. it is mandatory to remember that there are reasons advocating for the success of the architected BI approaches. An architected BI approach means there is a rational and logical architecture designed and used as our roadmap from project to project. It is an approach that builds upon a sound technological foundation.
CFOs should take into consideration that the unarchitected BI approach is still chaotic, project-focused and results in a much less organized, consistent, reliable or reusable BI environment.
One important thing about the architected approach is that it is a logical or conceptual architecture, and how people physically implement it is up to them. Therefore, the way it is physically implemented varies greatly from organization to organization. It is a roadmap that directs an efficient and productive approach to BI by promoting reusability of data and the sharing of analytics, data and components. It promotes efficiency in the data integration and data quality processes. It’s a very well-documented approach to BI that has been around for more than a decade but is still changing with today’s innovations.
The Road from Strategy to Action
After identifying the key factors and building up plans, organizations have to translate information and strategy into action. The implementation process needs to be aligned with the organization implementation cycle, regardless of whether it is agile, waterfall or hybrid. When managing the process on BI implementation, make sure the following aspects are clearly defined and planned:
Project management and process reporting
Detailed solution design
Implementation of database, data warehouse and data mart
Data integration, data cleansing and data transformation services
Extract, Transform and Load (ETL), Dashboard and Report development
Train and mentor support-staffs
There is one clear reason why every organization that seriously considers improving its performance should develop a strategy for implementing BI solutions: making better and smarter business decisions.
Innovations in BI provide broader analytic capabilities so that everyone has the relevant information they need to drive a business to the next level. Though there’s a lot of noise on the BI solutions market, it’s certain that the more your organization embraces analytics, the greater your chances of outperforming your peers.
No matter what partner or solution you are considering, you should keep in mind that clearly defining your business needs and hiring a professional team for the planning and deployment process are critical factor of success when it comes to adopting BI.