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Dr. Subhojit Banerjee
Intitute of Business Management,VBS Purvanchal University, Jaunpur

ISSN – 161
Year: December 2008 Volume 2, Issue 4/4

Abstract: Data warehousing is an emerging technique of data base management which can act as a
strategic differentiator for data intensive sectors like retail banking. The paper starts with briefly explaining
the concept of data warehousing and points out the areas in retail banking which can be most benefited
from data warehousing. The paper also proposes data warehouse architecture to support retail banking
activity. Finally critical issues related to management of the data warehouse which will affect the
usefulness and functioning of the bank has been discussed. The paper is concluded with a futuristic outlook
of data warehousing.
Key-Words: Datawarehousing, Data Mining, Banking, Brands, Strategy

LEVERAGING RETAIL BANKING ‘blissful indifference’ that the Indian

BRANDS USING DATA banks had enjoyed might be coming to
WAREHOUSING an end. From being an organization
which ‘Sells services to the customer’, it
The business environment in the new
has to be an organization which ‘delivers
millennium accentuates change. Retail
services as per the customers needs’. For
banking as we know is no exception to
materializing this paradigm shift,
this rule. Organizations that will survive
bankers in India need to have a deeper
and flourish in this millennium are the
insight in to their customers needs and
ones which are able to analyze, plan and
also continuously monitor the change in
react to changing business conditions in
their need pattern.
a much more rapid fashion. In India
retail banking has taken a myriad To implement this need-based strategy,
change, from limited number of service bankers are in want of more information
branches situated in district headquarters and knowledge than ever before. But this
it has grown to over 30,000 bank offices statement holds true not only for banking
operating across the length and the sector but any business in general. So
breadth of the country1. Similarly the what makes retail banking special in
offered services have also undergone a terms of information and knowledge?
vast change. ATM’s, telephone banking, Banking is an extensively data intensive
internet banking and personalized sector. Large amounts of data pertaining
services are giving way to fluorescent lit to various transactions are generated.
halls, chained entrances and serried This large quantity of data regarding
ranks of cashiers. individual customers saving, earning and
spending pattern can speak volumes
With international banks breathing down
about an individual’s taste and
the neck of Indian Banks, the state of

preferences, habits, family and his Integrated: Data that is gathered in to
personality in general. But most part of the data warehouse from a variety of
these data is locked up in files and sources and merged in to a coherent
computer systems and is exceedingly whole.
difficult to get it. Ken Orr (1996) defines Time Variant: All data in the data
this phenomenon as ‘data in jail’ 2. warehouse are identified with a
Recently a significant concept that has particular time period.
emerged, which addresses to this Non Volatile: Data is stable in a data
problem is ‘data warehousing’. Data warehouse. More data is added, but data
warehousing has grown out of being just is never removed. This enables
a technique of providing efficient, management to gain a consistent picture
precise and flexible data management of the business.
tool to an organization’s most valuable
and critical asset. The ensuing text deals Daniel Amor (2000) defines as a copy of
with the concept of data warehousing in the business transaction data specifically
reference to retail banking and areas structured for query and analysis 4. The
which are most sensitive for data operational system cannot hold their data
warehousing. for infinite times, therefore data is
moved in to the data warehouse.
Bill Inmon (1992) is widely credited for Vivek Gupta (1997) defines data
popularizing the data warehouse concept warehouse as a structured extensible
and terminology. Also known as the environment designed for the analysis of
‘Father of Data warehousing’, defines a non-volatile data, logically and
data warehouse as follows3:- physically transformed from multiple
source applications to align with the
A (data) warehouse is a subject business structure, which is maintained
oriented, integrated, time-variant and and updated for a long time period,
non-volatile collection of data in expressed in simple business terms and
support of management decision- summarized for quick analysis5.
making process
It is clear - from
B the definitions given
above, that data i warehousing largely
deals with storing
l large and varied data
that has been l collected from different
sources, over a period of time and can be
retrieved for I future analysis. The
obvious question n that comes in to one’s
mind is ‘howm is data warehousing
different fromo conventional data base
management systemn (DBMS)’? Subhojit
By way of additional explanation, Inmon Banerjee (2002) states the following
provides these definitions:- distinguishing features of data
warehouse :
Subject- oriented: Data that gives
information about a particular subject 1) Data warehouse is a large
instead of about a company’s on going collection of data, which has
operations. already been executed.

2) All the data that is stored is in target groups. Through this process,
reference to a particular time bankers can really understand who is
frame. subscribing to particular offers and
schemes and how they are reacting to
3) Data is fed in to the data
promotional offers and pricing changes.
warehouse through multiple
Some additional benefits of customer
sources. In other words a data
profiling includes: -
warehouse holds a wide variety
of data pertaining to all the  Selecting target groups for
functions of the company. promotional appeals.
4) As data is fed in to the data  Finding and keeping customers with
warehouse from various sources, a high lifetime value to the bank.
all data are first converted in to a  Understanding the characteristics of
common platform. This enables institutional account holders.
joining of data for query and
analysis.  Customizing the service package to
suit the individual needs of the
5) Data can be recalled from the customers.
data warehouse using various
front-end tools, as the user  Reducing operating costs by
requires. targeting high response customers.
6) Data is updated (New data is fed)
in the data warehouse Identifying High-end Users: Data
periodically. warehousing enables queries which
analyze the Recency, Frequency and
Areas in which Data warehousing Monetary value (RFM analysis) of
techniques will support banking accounts. Since the data that is stored in
activities: As has been mentioned earlier a data warehouse is in reference to a
that banking is an extremely data- time frame, when the last transaction has
intensive sector. Hence data been made can be determined
warehousing has immense potential in (Recency).Next how often transactions
this sector. Data warehousing when are made can also be determined
combined with effective retrieval (frequency) along with the type e.g.
techniques like data mining can reap rich transaction has been made to pay salaries
harvests in retail banking in terms of or to invest in stocks and shares can be
larger deposits, faster clearance of loan known. Third what amount does it
proposals, and accurate prediction of involve (monetary). The advantage of
cash flows which will eventually lead to RFM analysis is that often retail banks
better assessment of loan proposals and take up salary accounts of large
overall reduce NPA and bad debts. Some organization in the esurience of
of the areas in which data warehousing improving upon their ‘deposits’.
technique will support banking activities Apparently these accounts may seem to
are: be large in monetary terms, however
Customer Profiling: Customer profiling many retail banks may find it a bit
uses data warehousing information to difficult to efficiently service the large
help bankers understand the number of salaried employees that the
characteristics and behaviour of specific account may inveigle. RFM analysis can

be useful in identifying such high-end sources can be integrated to accurately
user who are profitable to the bank not forecast future inflows.
only in monetary terms but also in terms Strategic Planning: Data warehouse
of service time and cost. contains data from different areas of the
Fraud Detection: Data warehousing organization dealing with a wide variety
enables forensic analysis. Forensic of subject. Such data might be critical in
analysis is a methodology that aims at representing as a whole, rather than a
finding patterns in the data records and conglomeration of differentiated units.
then uses these patterns to mark out Top management, which is entrusted
anomalous records or records with with the job of forming policies and
abnormal deviations (Kharbanda & giving general direction of the bank,
Parthasarthi)7. Fraud involving loans, may find integrated data representing the
dubious accounts and other such ‘whole organization’ better suited for
fraudulent transactions which plague strategic planning.
retail banking can be detected and
corrective action can be initiated. Strategizing and Designing a data
warehouse for retail banking: Data
Improved Underwriting: Since data ware house is a comprehensive
warehousing collects data from different technology and encompasses the whole
sources, risk assessment which is an enterprise and is best represented as an
essential feature of underwriting can be enterprise-wide framework for managing
improved upon. Moreover through informational data within the
predictive modeling technique, which is organization. For strategizing and
a method employed to look for patterns designing a data warehouse it is essential
in the data set probable risk areas along to initially formulate data warehouse
with their chances of occurrence can be architecture. Data warehouse
calculated. Advanced mathematical tools architecture (DWA) will represent the
and fuzzy logic are often used to get an overall functioning of the data
accurate estimate of the risk factor and warehouse which involves structure,
the involved financial aspect which collection, analysis, communication and
arises due to the risk. presentation of the data. DWA is made
up of a number of interconnected parts.
Quality Control: Retail banking being a A schematic representation of a possible
totally service oriented sector, is not DWA for retail banking is shown in
suited for conventional quality control Figure 1.
measures. Through predictive modeling
technique that has been mentioned Operational Database: Operational
earlier operations can easily be database collects data pertaining to the
standardized and quality control day to day transactions that a bank
techniques like benchmarking can be makes. Operational data in banks are
implemented. generated in terms of routine
transactions such as cheque clearance,
Business Forecasting: Business withdrawls and deposits. Most of the
Forecasting is another area in which data data generated in the hundreds of
warehousing can be greatly useful. Data branches across the country are not
that has been gathered from different available for sharing and even the head

offices had earlier been receiving
condensed reports. Now with the Information Access Layer: This layer
computerization of most of the branches contains the tools which users require to
this issue can be addressed to as soft analyze the data. Some commonly used
copies of the operational data can be tools that are in use are Excel, lotus 1-2-
made accessible. The main objective of 3, Access, statistical analysis system etc.
data warehousing is to create a common This layer will also contain the hardware
platform for users (Branch Managers, and the software, which will help in
Loan disbursement officers etc.) to representation of the data in reports.
access data created from other sources Spreadsheets, Graphs and charts are
(e.g. A branch manager can have data commonly and widely used. The
about a previous loan proposal for a information access layer can be
cottage industry that had been made at expanded enormously, especially as end
Kodaikanal and take decision about a users have access to PC’s and these can
similar proposal at Haldwani) and mix it be networked through LAN.
with external databases such as
demographic, econometric, competitive
and purchasing trends.



Fig 1: Data warehousing Architecture (Source: Data warehousing technology©Copyright

1996 by The Ken Orr Institute; revised edition, 2000

Data Access Layer: This is the portion database and the information access
which contains software which creates layer. The language which will build the
the interface between the operational database is decided upon. One thing that

has to be kept in mind while choosing messaging in general is related to the
upon the language is the user’s transportation of information around the
information need. Hence ideally a organization. Application messaging can
language which is best suited will also be used to collect transactions or
support a wide variety of queries. The messages and deliver them to certain
common data language that has emerged location at certain time.
is SQL. Recent developments in data
access layer has enabled of a series of Data Warehouse (Physical) Layer: This
data access "filters" such as EDA/SQL is the main database where the data is
that make it possible for SQL to access stored. This is stored such that data is
nearly all DBMSs and data file systems, easy to access and is highly flexible.
relational or nonrelational. Commonly data warehouses are built on
Data Directory (Metadata) Layer: Meta- a client/server platform however data
Data is the data about the data within the storing in mainframes is also not
enterprise. In order to provide universal uncommon.
access to end users, some kind of a
directory has to be built. The key issue Data staging Layer: Data staging
here is that a functional data warehouse involves replication (making copies),
collects data from different sources selecting, editing, summarizing and
(internal as well as external). Often these loading the data warehouse with data
data are in different formats and is very from operational/or external databases.
hard to bring them on to common Data staging also encapsulates data
platform. Some banks like Nordea bank quality analysis programs and filters that
of Sweden use more than one platform 8, identify patterns and data structures
but this makes universal access to end within existing operational data.
user difficult and needs more
specialization and training on part of the Managing data warehouse for brand
end user. differentiation: For a data warehouse to
provide meaningful information to users,
Process Management Layer: Process the key issue is the management of your
management layer is responsible for data warehouse. Data warehouse can be
updating and maintenance of the data built in a number of ways depending
warehouse. For retail banks this is a very upon the need of the end user e.g. a large
important component as this involves central data warehouse which has users
maintenance of metadata. With every and sources linked at the same time,
change in the external environment new while there can be distributed
variety of data is generated. This has to warehouses, each one containing
be classified and added to the directory specialized data but interlinked, or there
with the help of standardized protocols can be partitioned data warehouse which
or procedures. has data partitioned on the basis of time.
In any of the warehouse type the optimal
Application Messaging Layer: data warehousing strategy is to select a
Application messaging is also called set of users who will most benefit from a
‘middleware’ as this involves the data warehouse and estimate the value
networking and the various protocols addition it will overall make to the
which govern them. Application organization (long term as well as short

term). An analysis of their issues, changes which will eventually be critical
questions, data needs and training needs for survival in the long run can only be
has to be ascertained. Based on these achieved if deeper insights in to
facts the type of data warehouse strategy customers needs are made. Often needs
has to be built. are small and community or locality
centric. Such subtle needs can be well
detected using data warehouse
Some of the critical issues in data techniques.
warehouse management which can
create a brand differentiation in terms of Increasing Penetration: Data needs in a
improvised services to the customer are: bank does not stop at managerial level.
Data warehouse design may be initiated
Standing out in the crowd: Retail to provide data and information for
banking is full of banks, which are decision makers, but the ultimate
providing similar services. Very little objective that has to be kept in mind is to
differentiation amongst the various provide data at every level including
banks exists. However, now customers customers and external agencies. A data
are looking for more and more warehouse which has little scope for
personalized services. Banks such as expansion and is bound to be redundant
IDBI and HDFC made inroads in to the over a period of time. The figure 2 given
banking market with the introduction of below shows the growth of the data
ATM’s which fuelled the customers warehouse over a period of time.
latent need for having a queue less
deposit and withdrawl operation. Such

Fig 2: Growth of Data warehouse

Current customers, potential customers, investors, Govt agencies etc.


All the staff in all the branches

Asst.managers, officers,
Mngrs &

Internal marketing: Data warehouse new product developments (NPD) must
must support the function of internal be one of the major objectives of the
marketing i.e the task of hiring, training data warehouse. For this the data
and motivating able employees who warehouse should be flexible enough to
want to serve the customer well9.The support a wide variety of application
final aim of the data warehouse is to software and also be susceptible to
provide better and improved service to technological innovations.
the customer. As we have observed that
this involves a large amount of E-Banking and security issues: Retail
commitment from the employees who banking is fast adapting to the
have to transform information in to technological changes that are taking
actions. Data warehouse has to adopt a place. A data warehouse that does not
structure which takes in to consideration support E-banking function will not fully
the skill-set, motivation level and the utilize the potential of data warehouse.
creativity of the employees. If the In a survey conducted by Claus
structure does not commensurate with Nehemzow (2003) of the Online
the employee’s capabilities the whole Banking Association, member
system will collapse and instead of institutions rated security as the most
improving the services may lead to important issue of online banking 10. A
overburdened employees and more data data warehouse should be secure enough
with no meaning. to withstand security breaches and
should ensure customers confidentiality,
Employee Training cost: Employee privacy and security of transactions at all
training is an issue which has been levels.
mentioned earlier in the text. However
the cost which the organization will Channel Integration: Channel
incur is a critical and subjective issue. integration means that an institution
Cost that has to be considered will not presents an identical face to the
only cover the financial cost but also customer-be it in the branch, on the web,
invisible costs of man hour lost and at an ATM or for that matter, through a
employee redundancy has also to be sales representative or a broker. An
considered. Often training is followed up identical face, an identical message. Or
by promotion/redeployment. Either case better still, messages that reinforce each
adds up to the cost. Data warehouse other. If a sales representative tries to
strategy has to be supported by well sell a housing loan, you get e-mail a day
designed Human Resource policy. later reminding you about the loan. An
efficient data warehousing strategy must
New services and NPD: A successful support channel integration as this will
data warehouse will support innovative result in incremental economic activity
thinking and will lead to improved and improved efficiencies of
problem solving throughout the communications.
organization. With the advances in
telecommunication and information Planning for the future: Data
technology, demands for newer products warehousing being a relatively new is
and services in the financial sector are unpredictable as to what the future
on the rise. Addition of new services and developments will be. However it is

clear that data warehousing will evolve technique provides for a new solution in
from being an ocean of ‘free-floating data storing and retrieval and can be the
data sets’ to a more comprehensive basis of a brand differentiator from its
Knowledge providing unit. Already competitors.
areas such as ‘Knowledge Management’
(KM) are emerging out of data Although data ware housing is a
warehousing techniques which promise relatively new concept, but with the ever
newer frontiers. Organizations of lately increasing processing power, wider
have realized that organizations who band-width and improvised storage
cannot be innovative and adaptive will devices, it will not be long before this
perish. Knowledge Management is an technique becomes synonymous to
area which will be a predictable decision making. In the coming few
advancement on data warehousing. years, the growth of data warehousing is
Technologies like artificial intelligence going to be phenomenal with new
(AI) and ‘Blue-tooth’ will soon take over products and technologies coming out
conventional data processing and frequently. In order to get the most out
retrieval techniques. of this period, it is going to be important
that data warehouse planners and
Changes in the hardware front will also developers have a clear idea of what
greatly affect the future shape of data they are looking for and then choose
warehousing. Wireless networking and strategies and methods that will provide
devices which are compatible to a wide them with performance today and
variety of platforms will enhance the flexibility for tomorrow.
capabilities and scope of data
warehousing. Development of parallel References:
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base with improved query engines will 1.
be one of the major developments of the
future. The availability of improved 2. ‘Data warehousing technology’
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Data warehouses may become the future
‘brains’ of the company with advanced 3. As quoted by Lewis, William J
capabilities to take decisions and make (2001), ‘Data warehousing & E-
judgments. commerce’, Prentice Hall NY

Conclusion: The ability of a brand to 4. Amor, Daniel (2000), The E-

add credibility has been proven through business (R) evolution, prentice
various research studies (Carpenter, Hall NY
Glazer and Nakamoto 1994). Retail
Banking in India has come to a point 5. Gupta, Vivek R (1997), An
where brand differentiation in terms of Introduction to Data
improved and customer oriented services warehousing,
has become crucial for long term
survival and growth. Data warehousing

6. Banerjee Subhojit (2000),
‘Emerging Trends In E-
Commerce: Data Warehousing
And Data Mining’, Commerce
Education in the new millennium
(Ed), Prayag Pustak Mahal

7. Kharbanda, Vikas and

Parthasarthi (July-December
2001), Decision, Vol 28, IIM-C

8. Enders Albrecht, ‘From e-

banking to e-business at Nordea
(Scandinavea): The worlds
Click-and -Mortar bank’,
Copyright© 2004 INSEAD,
Fontainbleau, France, Distributed
by European Case Clearing
House, England and USA

9. Kotler Phillip (1999), ‘Marketing

Management’, Millenium
Edition, pg 22, PHI (Indian

10. As quoted by Mishra AK,

‘Internet Banking in India’,

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brands from meaningless
differentiation: The dependence
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