Without business intelligence, the financial services sector would require an army of statisticians equipped with spreadsheets and calculators.
That's according to Christo Bredenkamp, managing director of Cognos partner Synergy Computing. Bredenkamp says that just about every financial services company of any magnitude in South Africa uses business intelligence solutions for a variety of purposes.
"All the big banks are using BI solutions extensively, as are financial services companies such as insurance providers and pension and provident fund administrators. With their masses of data, these companies rely on BI to provide them with necessary insights to support the sales process, manage policy lapses, identify and manage risk and more," he says.
Without BI solutions, Bredenkamp says the effective management of thousands of customer accounts would be practically impossible. "The scale of many financial services companies necessitates the automation of data gathering, analysis and presentation. BI provides these essential tools," he notes.
Pointing out that every one of the top 10 commercial banks in the world uses BI, Bredenkamp goes into further detail about how these organisations are applying these technology tools. "BI is essentially about using company data to its full effect. In the financial services sector, BI can be used to identify, report on, and analyse a range of metrics such as costs of trade, staff performance, risk management, branch profitability, loan performance, and customer profitability," he says. These essential metrics help equip managers to make decisions and influence strategy.
Further, Bredenkamp explains that BI solutions provide for aggregation of the risks encountered by financial services organisations. These include credit, operational, market and country risks. "The data pertaining to these risks tends to reside in multiple silos, diverse business lines, across regions, and across the organisation. BI provides for the assimilation of these diverse data sets to deliver enterprise risk reporting," he notes.
Bredenkamp points out that the purpose-built BI solutions either augment or replace cumbersome spreadsheet-based systems with flexible, connected planning software that reduces forecasting, consolidation, close, and reporting cycles by days or even weeks.
Then there is the issue faced by every financial services sector company - that of the stringent regulatory environments which are in place to protect consumers. "Given the regulatory overhead, which adds cost and administration to the provision of financial services, it is essential that these organisations have the ability to report accurately and in a timely fashion. BI provides the capability to manage multiple reporting and consolidation standards," he explains.
Furthermore, Bredenkamp says BI solutions offer the ability to identify and track trends within large data sets. "For example, it is possible to identify insurance policy lapse trends and analyse the underlying causes. This is a powerful tool which allows the company to devise and implement mitigation strategies to retain customers which might otherwise terminate their policies or services with the financial services provider," he says. "In the same vein, it is also possible to identify cross-selling opportunities to provide additional services to existing clients by analysing available information."
Essentially, Bredenkamp says, BI is a vital set of solutions upon which the financial services sector depends for its effective functioning. "Without BI, the financial services sector would find itself with a potentially crippling administrative overhead and the enormous challenge of managing hundreds of spreadsheets and paper documents. However, given the maturity of the solutions available in the market today, this is not a problem for this industry."
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