BI and Data Warehousing: How

will banks maximize their returns

out of them effectively?

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Treasury

V Chandrasekhar
Bank of Baroda

Agenda
Banking Scenario
Overview

OLTP
DSS
EDWH
BI

Indian Banking Needs

Issues in Indian Banks
Critical Success Factors

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Banking Scenario

Globalisation
Competition
Reduced Margins
Increased complexity
Problems of Size
M&A
Regulatory Controls - Risk Management
Agility

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Data But No Information

Data .. Data every where but not a bit useful

Inaccuracy
Incomplete
Delays
Fragmented
All human knowledge is captured and
stored way back in 2000 and is doubling
every 18 months

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Need
DSS
BI

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The BI architecture
The three main categories:
1. Operational Insight & Intelligence
2. Strategic Insight & Intelligence
3. Special Situations Insight & Intelligence

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OLTP Systems
For Automating Business Transactions
Enable bookkeeping
Functional silos retail, corporate, treasury
etc they are production data bases
No value for historical data
Data is diverse and complex
User access is complex
User access slows business operations
OLTP systems are not designed for data
analysis

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DSS
Not just individual functional information
but cross functional
Integration relationships between data
elements
Adhoc Queries
Analytical Queries
Multi-Dimensional Views

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Data mart (vs. Data Warehouse)

Functional vs.. Centralised

LOB vs. Enterprise
Restrictive process orientation
No historical data
Departmental
Specialised
Local
Integrate independent data marts in to EDWH
Create independent data marts from EDWH

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Data Marts
No framework
Data quality
Incompleteness of data
High costs of development and running
Manpower, Skills, Systems, Complexity
Redundant efforts

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What is a Data Warehouse?

The classic 1993 definition by Bill
Inmon,
father of data warehousing
A data warehouse is a:

subject oriented
integrated
non-volatile
time variant

collection
of data in
managements decisions.

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of

3 of 3

Data Warehouse Implementation

Mostly for performance reasons, a data
warehouse is:
held in a separate database from the
operational database,
and usually on a separate machine.

Perhaps more important reasons are:

navigation, ease of use, relationship with
business areas

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OLTP Vs DWH

Archived and summarized as opposed to current

Organized by subject as opposed to application
Static until refreshed as opposed to dynamic
Simplified for analysis as opposed to complex for
computation
Accessed and manipulated as opposed to updated
Unstructured for analysis as opposed to structured
for repetitive processing
Data warehouse provides on-line analytical
processing, (OLAP), as opposed to on-line
transaction processing, (OLTP).
One record at a time vs. massive records access
Sub-second response times vs. hours

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DWH
Complex ad-hoc queries are submitted and
executed rapidly because the data is stored in a
consistent format
Queries dont interfere with ongoing operations
because the system is dedicated to serving as a
data warehouse
Data can be organized by useful categories such
as customer or product because the data is
consolidated from multiple sources.
The data warehouse is a single source of
consolidated data, which provides an enterprisewide view of the business.
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EDWH
Never a big bang approach
Have a framework
Start small
Iterate
Architecture driven by business and not
technology
EDWH is part of corporate strategy

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EDWH Model

Users (Transaction Generators )

Txn data
ODS
ETL
EDWH
Populate Departmental warehouses
Corporate / Departmental Business users

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The GDW architecture

App1

Batch ETL

CRM

Batch ETL

HRIS

Batch ETL

App2

Batch ETL

App3

Batch ETL

App4

Real-Time
Messaging

App4

Local
Data
Mart

Batch ETL

HR
Data
Mart

Batch ETL

Local
Data
Mart

Batch ETL

Local
Data
Mart

Global
Data
Warehouse

Batch ETL

Batch ETL

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Data Warehouse Architecture

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Business Intelligence is a
Corporate Activity
Data
Collection

Operational & Administrative Transactions

Information
Extraction

Query & Reporting Tools

Data
Analysis

OLAP & Spreadsheet Analysis

Strategic
Analysis

Planning, Budgeting & Trend Analysis

Performance
Indication

Performance Management, Financial Analysis

Balanced Scorecard

Statistical
Analysis

Data Mining, Cause & Effect Analysis

Forecasting

Business Modeling & Simulation

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BI PROCESS

Transactional systems
Processes
Integration
Consolidation
Intelligence
Strategy modification
Implementation

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Financial Services
Some Statistics
20 % of the customers represent 160% of the profits
A 5% increase in retention can produce an increase in
profits between 25-80%
A customer with one relationship with a bank has a 35%
chance of leaving
A customer with 3 or more relationships has an 85%
change of being with the Financial Institution for 3-5 years.
A shift in the customer mix from 30%(As) 30%(Bs)
40%(Cs) to 40-30-30 can often raise overall profits by as
much as 60%

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Banking Business Focus

Account Centric
Product Centric
Market Centric
Customer Centric

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Bankers Needs
Customer Profiling
Channel Profiling
Profitability Analysis
Performance reporting
Transfer pricing
ALM
Risk Management ( Credit Risk, Market Risk,
Operational Risk)
Wealth / Portfolio Management
HRIS

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Financial Fraud

Money laundering
Syndicated frauds credit card cloning
Internal fraud staff fraud
Merchant fraud
Challenges in identifying fraudulent
transaction before it is too late and
preventing them

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Indian Banking Scenario

Banks are struggling to stop the steady decline in
their margins
In India, many banks are still dependent on interest
income, but the growth and profits is in fee-based
income
Most banks have large customer bases, which could
be gold mines, but have not been adequately tapped
To create Customer value, banks need to think
along 3 dimensions
Relationship numbers
Relationship profitability
Relationship duration
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Banking Scenario

Branch Systems
Size and Spread
Silo Applications
No / Limited Networking
No Centralised Repository
No Centralised Controls

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Bank - Managing Relationships

Manage all aspects of the customer relationships

Have 360 degree view of customer
Identify and retain the most profitable customers
Identify cross sell opportunities
Attract the right customers from the competition
Measure product and business profitability
Track customer preferences
Design new products

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Banking DWH Uses

Enterprise-wide risk management and compliance
reporting for the bank group and both corporate and retail
business divisions

Loan Analysis
Credit Risk
Market Risk
Operational Risk

HR Management
Channel Management
Segmentation
Product / LOB Performance Measurement
MIS & Reporting
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EDWH
Data warehousing provides data quickly and
in a format that greatly enhances the
decision making process.
The data warehouse allows financial
institutions to exploit the potential of
information previously locked in legacy
systems ( which is currently inaccessible to
the business user) or across current silo
systems
Massiveness of Data that needs mining
Complex views / relationships

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Data

In-house G/L
Silo Applications
External Data Sources
DWH Update
Batch
Real-time

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Metadata Major Categories

Technical metadata
Information about data sources
Transformation descriptions
Warehouse object and data structure definitions for data targets
The rules used to perform data cleanup and data enhancement
Data mapping operations when capturing data from source systems and
applying it to the target warehouse database
Access authorization, backup history,data access, etc.

Business metadata
Subject areas and information object type, including queries, reports,
images, video, and/or audio clips.
Internet home pages
Other information to support all data warehousing components.
Data warehouse operational information, e.g., data history, ownership,
extract audit trail, usage data

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Data Mining
The process of extracting valid, previously
unknown, comprehensible, and actionable
information from large databases and using it
to make crucial business decisions
Involves analysis of data and use of software
techniques for finding hidden and unexpected
patterns and relationships in sets of data.
Patterns and relationships are identified by
examining the underlying rules and features
in the data.
Most accurate and reliable results require
large volumes of data
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Data Mining
Retail / Marketing
Identifying buying patterns of customers.
Predicting response to mailing campaigns.

Banking
Detecting patterns of CC fraud
Identifying loyal customers

Insurance
Claims analysis.
Predicting which customers will buy new policies.

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Data Mining Operations

Predictive modelling
Database segmentation
Link analysis
Deviation detection

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Data

How to extract the data

Cleaning the data
Validating the data
Aggregating the data
Integrating the data
Transforming the data

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Data

Incorrect data
Missing data
Lack of sufficient data detail
Insufficient Security and Privacy

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The two BI mega-problems

Misalignment between BI/DW solution and

organizational structure/culture
Primarily, but not exclusively, in enterprise-wide
initiatives
Highly centralized? Totally decentralized? Loosely
coupled? It all depends!

Focusing on the wrong architecture first

Both are important, but the BI architecture should come
first and guide the DW architectureand be
appropriately aligned with the structure/culture

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Data Quality
Data Quality Principles - accurate and consistent data between
trading partners in the consumer products industry
Business not IT owns the data
Managing Data as a Product
Treating Data as an Asset
Optimise Data not Process
Data Quality Best Practices
Keep Data Structures Simple
Use Standard Names and Definitions
Developing Meaningful Definitions
Classification and Report Structures are treated separately
Labels used must be consistent and unique
The Data-Information-Knowledge Continuum

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Data Quality
Improve data quality management in your organisation
Address challenges faced during implementation of
data quality systems
Look at the available technology options and choosing
the right device
Create a strategic vision for data quality management
Leverage from best case examples of effective data
quality management strategies
Streamline your data quality process with the help of
data management
Seek the consultancy of hands-on experience from data
quality management experts

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Data Quality
Ensure your organisation is geared for a data quality
management strategy
Optimise your core data entity through tools and quality
systems
Improve ROI by aligning data quality systems with
business strategies
Implement value-added data quality processes to your
organisation
Learn to effectively master data quality management to
increase your organisation's ROI on EDWH

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BI Strategies
Comprehensive BI strategy and architecture
Short-duration BI mini-strategy offerings
Executive education briefings
Staff training in BI best practices
Assessments of existing BI environments and
implementations
BI project risk assessment, quality assurance
(QA) planning, and project plan/methodology
review

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IT Issues
Technology Islands
Incomplete
information
is
more
damaging than no information
Has the modern era (since 19901991) of BI and DW been successful or
not?

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Sources

Legacy data access

Multiplicity of sources
Storage needs
Integration issues
Multi-dimensional analysis
Technology Gap between where data is
stored and where it is used

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Implementation Issues

Unclear Business Requirements

Multiple Data Sources
ETL
Modeling
Integration
View

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Problems of Data Warehousing

Underestimation of resources for data loading

Hidden problems with source systems
Required data not captured
Increased end-user demands
Data homogenization
High demand for resources
Data ownership
High maintenance
Data Refresh Cycle
Long duration projects
Complexity of integration

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BI Issues

Inflexible reports and queries

Tools that are too difficult to use
Data not available timely enough
Too difficult to add new data sources
Lack of user-oriented metadata
Lack of system-oriented metadata
Inability to intermix ERP, CRM, and other data
Deskbound analytics

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Critical Steps to Success

Business Sponsorship
User Commitment
Data Warehouse Experience
Data Quality Problems
Inability of Users to Easily Analyze the
Data

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BI

Sales
Operations
Finance
HR
Customer service
Supplier relations
Agility not in SW but in people
Helps in refocus organisations
resources
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scarce

Technology
MS DOS etc ushered in an era of
affordable computing
RDBMS, BI , WFL etc came down to
desktops from glass cages
Ubiquitous
Empowerment of customers and
employees
Self Service
Software as Utility
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Thank You
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