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

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

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

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

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

What Can We Do?
Challenges of Information Architecture
Users
Tools
Integration
Quality
Consolidation
Governance

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.

The Importance of
“Massaging” Data

Data from Core Systems
Need to have identifiable focus segments
Source: Oracle Internal Market Analysis

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

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

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

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

Banking Use Cases

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

Use Case: Customer
Segmentation & Behavior
Analytics

Result: Three segments Most Suited for Tailored
Campaigns
Market size and findings identified as potential

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
• Not price sensitive
• Prefer to spread deposit
across multiple
institutions (risk averse)
• Care about service
"Medium transactor"
2x a month
4x a month
• Avg. age: 42
• Like to try new products
and services
• Willing to pay extra to
save time
"High branch users"
2x a month
4x a month
• Avg. age: 40
• Limited knowledge
about banking products /
state of the account
• Easily influenced by
friends and family
"Low transactor"
2x a month
4x a month
60 20 10 25Total savings
(Tn)

Result: Segments show distinctive financial
asset and behavior (II)
StudentStudent
• Avg. age: 20
• Price sensitive (both
rates and fees)
• Attracted to gifts and
promotions
"Frequent ATM user"
2x a month
4x a month
RetireeRetiree Fisherman / FarmerFisherman / Farmer
• Avg. age: 66
• Not price sensitive
• Unlikely to change /
switch
"Medium transactor"
2x a month
4x a month
• Avg. age: 47
• Easily influenced by
friends and family
• Care little about service
• Attracted to gifts and
promotions
"Low transactor"
2x a month
4x a month
15 60 30
Demographic /
Geography
Segment behavior
Transaction behavior
• Branch visit
• ATM usage
Total savings
(Tn)

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)

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

Use Case: Banking The
Unbanked

Access to Finance – World Population Snapshot

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

Unbanked Population in Indonesia

Potential Expansion Focus with Identified Market
Growth for Deposit
Savings market share (19%)
Source: Bank Indonesia, Oracle Internal Analysis

The Market is There .Waiting .
It’s a GOLD MINE !!!

Distributors and Suppliers Have the Highest CASA
Balances
Distributors and retailers have the largest deposits base

Branch remains a key channel to perform transactions for
self-employed customers

Multiple Revenue Drivers Available for
Payments

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?

Use Case: MIS Reports

MIS Reports
Business Planning – Report Management

MIS Reports

MIS Reports
Business Planning – Budgeting

MIS Reports
Business Planning – Business Solution

Use Case: Regulatory
Reporting and Risk
Analytics

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
• 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

Performance
Management
Customer
Insight
Governance
& Compliance
Risk
Management
Treasury Risk
Credit Risk
Channel Insight
Analytical CRM
Fraud Detection
Operational Risk
Retail Credit Risk
Portfolio Analytics
Marketing Analytics
Service Analytics
Channel Usage
Channel Performance
Economic Capital
Regulatory Capital
Liquidity Risk
Operational Risk
Economic Capital
Accounting Hub
ConsolidationProfitability
OFSAA Case Study
Hedge Management
IFRS 9 – IAS 32/39
Market Risk
Basel II
Retail Portfolio
Funds Transfer Pricing
Loan Loss Forecasting Pricing Management
RAPM
Know Your Customer
40© 2011 Oracle Corporation
• 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
• 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
ICAAP
Stress Testing
Reconciliation

Performance
Management
Customer
Insight
Governance
& Compliance
Risk
Management
Treasury Risk
Credit Risk
Channel Insight
Analytical CRM
Fraud Detection
Operational Risk
Portfolio Analytics
Marketing Analytics
Service Analytics
Channel Usage
Channel Performance
Economic Capital
Regulatory Capital
Liquidity Risk
Accounting Hub
Consolidation
Customer Snapshot
ICAAP
Market Risk
Retail Portfolio
© 2010 Oracle Corporation – Proprietary and Confidential
4
1
Pricing Management
Retail Credit Risk
Basel II
Economic Capital
Stress Testing
ProfitabilityStarted here
 Added
 Added
Operational Risk
Economic Capital  Added
Reconciliation
Funds Transfer Pricing
 Started here
Hedge Management
IFRS 9 – IAS 32/39
RAPM
 Added

Performance
Management
Customer
Insight
Governance
& Compliance
Risk
Management
Treasury Risk
Credit Risk
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
Customer Snapshot
Market Risk
Retail Portfolio
© 2010 Oracle Corporation – Proprietary and Confidential
42
Retail Credit Risk
Basel II
Economic Capital
Operational Risk
ICAAP
Stress Testing
Reconciliation
Hedge Management
IFRS 9 – IAS 32/39
RAPM
Accounting HubConsolidation
Pricing Management
Funds Transfer PricingProfitability

43
How do we manage this
complexity ?
How do we manage this
complexity ?

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
!!

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

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

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

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