Beruflich Dokumente
Kultur Dokumente
Emina urkovi
Article Info:
Management Information Systems,
Vol. 6 (2011), No. 4,
pp. 023-030
Received 18 February 2011
Accepted 28 September 2011
UDC 005.94:336.71 ; 659.23
Application of Business
Intelligence in the Banking
Industry
Summary
A highly dynamic market, changing client demands, fierce competition, the necessity of
strict control and risk management are only some of the characteristics of the business
environment where modern banks conduct their operations. Better management and
better decision-making process make the difference between the successful and the
unsuccessful on the market with these characteristics.
Business intelligence solutions for banks should provide the decision makers from all
business segments of a bank with the ability to manage and exploit information
resources, in order to solve the problems and make timely and high-quality decisions.
Business intelligence systems in banks must be comprehensive and yet simple for the
end user. Business intelligence covers many areas of the bank, and among the most
important are: Customer Relationship Management (CRM), Performance Management
(PM), Risk Management (RM), Asset and Liability Management (ALM), and
Compliance. Data warehouse and online analytical processes (OLAP) form the
informational basis for the application of business intelligence.
Data mining and knowledge retrieval are also important segments of business
intelligence and deal with complex statistical analysis, discovering hidden
relationships between data and forecasting the behaviour trends of business systems.
Keywords
business intelligence, performance management, asset and liability management
1. Introduction
Bogdan Ubiparipovi,
U
Em
mina urkovi
Modern
M
bankks are known to be amongg leaders in
the area off adopting new technollogies and
knowledge,
k
w
which
is exactlyy why they aree the fertile
soil for impllementing succh an infrasttructure. A
special type of databases, referred to
t as data
warehouses
w
(D
DW), are geneerated to meeet the needs
these systemss, where data iis organised in
n a manner
convenient fo
or conductingg analytical prrocesses on
large
l
data setts. A data warrehouse contaains a copy
of data isolaated from op
perational dataabases and
structured sp
pecifically forr reports and
d analyses.
Data
D
wareh
houses andd OnLine Analytical
Processing
P
(O
OLAP) form the informattional basis
for applying business inttelligence (iiri, 2006).
Data
D
mining and knowleedge discoverry are also
important
i
segments of business intelligence,
i
dealing with
h complex sstatistical anaalyses and
discovering hidden
Business
B
inteelligence solutions for ban
nks should
provide
p
the decision maakers from all
a business
segments of the bank witth the ability to manage
and exploit the inform
mation poten
ntial of a
multitude
m
inteernal and exterrnal data resources.
24
Considerring and an
nalysing the total client
relationshipss is vital for suuccessful ban
nk operations
in the cond
ditions of gro
owing compeetition. Most
software so
olutions in the
t
business intelligence
domain aree focussed on
o market seegmentation,
defining a clear
c
picture of the clients and their
relationshipss with banks, defining a cleear picture of
the market potential and
d the banks ability
a
to use
2
this potentiaal (Mosimann & Connelly, 2007):
Segmentaation: a custom
mer segment is
i a group of
client co
omposed based on speccific shared
characterristics;
Customeer profitabilityy: profitabilityy analysis is
the analyysis of clientss in accordan
nce with the
expected impact on th
he banks pro
ofit, and thus
the total return on equuity (ROE);
Cross-sellling and up-selling: these tyypes analysis
enable asssessing clientts in terms of the ability to
use
seeveral
pro
oducts
and
d
services
simultaneeously (loan
ns, deposits, cards, ebanking, etc.);
Collections Analysis
Credit Risk Assessment
Credit Risk Mitigation Assessment
Customer Credit Risk Profile
Debt Restructure Analysis
Involved Party Exposure
Non Performing Loan Analysis
Outstanding Analysis
Portfolio Credit Exposure
Security Analysis
25
26
27
Bogdan Ubiparipovi,
U
Em
mina urkovi
The portfo
olios sensitiviity to possiblee changes in
interest orr currency exxchange ratess, i.e. how
much the portfolios vaalue will changge per basis
point of changing
c
interest rates (In
nterest Rate
Sensitivityy Analysis).
Cash flow analysis calcuulates the valuue of capital
and interest cash
c
flows, an
nd provides information
on the nomin
nal value of ccapital and in
nterest cash
flows, as well as the nett current valuue of cash
fl analysis aalso offers thee possibility
flows. Cash flow
of compiling gap
g analyses.
Interest rate incom
me analysis provides
information
i
o
on:
The averaage amount o
of interest ovver a given
observatio
on period, divvided into cuustom time
intervals within
w
the anallytic scheme;
Average in
nterest rate;
interest ratte
Variation of interest income in relation
r
to
n interest ratees (Net Interrest Margin
changes in
Valiance);
Conditional margin (d
difference beetween the
nts and the
interest raates contracteed with clien
opportunitty interest ratee);
Transform
mation margin
n (difference between
b
the
opportunitty interest ratee on a portfoliio or an
item and th
he base rate o
of interest.
28
Operatio
onal (transacctional) dattabases are
created to meet
m the needss of day-to-daay operation.
Application
A
of Business
B
Intelligence in the Ba
anking Industry
y
The
T banks transactional
t
data processiing system,
i.e.
i OnLine Transaction
T
Prrocessing (OL
LTP) is the
banks
b
basic information system. Its role is to
support daily business transaction activities
payment orderrs, entering
(entering and processing p
and processsing deposit and loan contracts,
recording
r
tran
nsactions, com
mmission proccessing and
interest
i
rate trransactions, ettc.).
The data integration aand transform
mation layer
includes
i
pro
ocesses tran
nsforming data
d
from
operational and
a
external sources intto a form
suitable for daatabase storagge. They are reeferred to
cumulatively as Extract Transform and Load
(ETL) processes.
A data waarehouse (DW
W) is an alayticcal database
used
u
as the baasis for BI sysstems, designeed for large
amounts of data
d in a man
nner enabling simple and
efficient data managementt for purpose of creating
information
i
n the decisiion-making
required in
process.
p
The terrm OLAP (OnLine Analytical
Processing)
P
r
refers
to thee category of
o software
technology enabling
e
useers (such ass analysts,
managers
m
etc..) to gain insigght into data in a quick,
consistent and
d interactive. OLAP is thee databases
interface
i
and
d a form of data processsing which
enables the user
u to extractt data quickly and easily,
and translate them into in
nformation in
n an almost
unlimited
u
num
mber of ways. OLAP reporrts may take
the form of regulatorry status reports
r
or
multidimensio
m
onal analyses,, but they caan also be
presented
p
in particularly effective formats such as
key
k
perform
mance indiccators (the Balanced
Scorecard).
Mana
agement Informa
ation Systems
Vol. 6, 4/2011, pp. 023-030
29
5. Conclusion
Bogdan Ubiparipovi
Emina urkovi
30
References
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http://www.actuaries.org/AFIR/Colloquia/Cairns/Boulier_Chambron.pdf
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