BANKING ON ANALYTICS

BANKING ON ANALYTICS: HOW TO LEVERAGE DATA AND AI IN THE FINANCIAL INDUSTRY

September 14, 2021

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WITH YOU TODAYData Analytics Problems faced by lending institutions

Digital Transformation Survey Results

Real-world examples

How to get started

Bill TopelFinancial Services Market LeaderBDO Digital

Rob WellenData Analytics & AI Market LeaderBDO Digital


WELCOME

This webinar is being recorded. CPE credit is not available for this webinar.

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Data Analytics Problems Faced by Lending Institutions


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Key Business Trends & Market Drivers


INTEREST RATES: 50%+ of margin comes from Interest Revenue Margin pressure will force

• Optimization critical processes• Product expansion for new revenue streams• M&A to drive additional top line revenue & add customers

FINTECH DISRUPTION: Market Share Threats New Startups offer rapid innovation

• Digital/Omni Channels options must exist Non-Traditional Players drive middleman out

• Customer/Prospect outreach required

HYBRID WORK: Challenges Infrastructure More online access is driving

• Workplace management and measurement• Virtualization and Application innovation• Cyber & Compliance adjustments

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Lenders are Fighting a Multi-front Digital War


AND THE FRONTIERS ARE SHIFTING

The challenger bank strategy playbook is

expanding

Opening banking to underserved and

unaddressed markets

Taking aim at bank fees and customer

experience

Posing new threats by adopting disruptive technology

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Lending Reimagined


THE NEW FRONTIERS THAT MATTERThe battlefield for Banking, Credit Unions and Financial Services is not exactly about technology – it is about customer experience of which technology is an enabler and a key part. Banks have always been adopters of technology, in many cases

though, the focus has been primarily on cost FinTechs utilized technology differently, by engaging with the

customer better, cutting through red tape, and making the customer’s life better and sometimes, even fun

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Lending Reimagined


EXPERIENTIAL BANKING

Integrate into the lifestyle of the

customer and the outcomes they seeke.g., Not selling a

mortgage by helping “buy a dream home”

OPENBANKING

Increasinglysharing data with

whoever the customer dictates, is

fast becoming the regulatory mandate and a marketplace

imperative

DATAREGULATIONSDealing with

regulations that govern the massive

amounts of customer data a bank retains

while using it in meaningful ways

ECOSYSTEM INNOVATIONS

Banking is being unbundled and marketplace innovations if

integrated right makes a bank

boundary-less, and on the cutting edge

CLOUD

Inherent benefit of a cloud-based model is that it helps create a

flexible and agile base to respond to a

new service opportunity or a new

customer segment

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Digital Transformation Survey Results


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Digital strategies are accelerating

rapidly

Upskilling top strategies for

workforce adoption

Digital capabilities usher in higher

standards for CX

Technology dominates

competitive advantages

Our latest survey explores 100 C-suite executives’ plans around digital adoption, improving the customer experience, change management, competitive differentiators and more. Here’s what we found:

Digitizing Financial Institutions and Specialty Finance Organizations


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Organizations now realize that access to data-driven insights enables faster pivots. Still, Most are in the early stages of data analytics maturity.

Data Analytics Maturity Lags


Use analytics on an ad hoc basis for specific needs

Primarily use analytics for real-

time reporting

Say insights from data exist in

dashboards that few can access

Use advanced analytics, including

forecasting and predictive models

Adopted machine learning and deep learning algorithms

12% 36% 20% 28% 4%

Maturity Level

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34%

42%

43%

46%

54%

Increasing headcount

Comprehensively re-imaginging roles

Decreasing headcount

Developing an AI-enabled workforce strategy

Workforce reorientation toward strategic initiatives

CHANGES TO WORKFORCE STRATEGY IN RESPONSE TO AUTOMATION

Automation is Redefining Jobs, Not Killing Them


Automation will augment the workforce – not eliminate it – either by increasing the speed and quality of work or freeing up employee time to focus on more strategic priorities.

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Data Analytics Emerging Technology Adoption


All Respondents Lower Middle Market Upper Middle Market

Already Implemented

Planning to Implement Total Already

ImplementedPlanning to Implement Total Already

ImplementedPlanning to Implement Total

Cloud computing 83% 13% 96% 78% 20% 98% 87% 7% 94%

Data analytics 79% 19% 98% 85% 13% 98% 74% 24% 98%

Enterprise resource planning software 69% 25% 94% 63% 33% 96% 74% 19% 93%

Internet of things 61% 29% 90% 54% 33% 89% 67% 26% 93%

Artificial intelligences/machine learning

61% 35% 96% 52% 39% 91% 69% 32% 101%

13 BANKING ON ANALYTICS: HOW TO LEVERAGE DATA AND AI IN THE FINANCIAL INDUSTRY

All Respondents Lower Middle Market Upper Middle Market

Already Implemented

Planning to Implement Total Already

ImplementedPlanning to Implement Total Already

ImplementedPlanning to Implement Total

Robotic process automation 47% 40% 87% 50% 37% 87% 44% 43% 87%

Blockchain/digital ledger technology 38% 55% 93% 44% 52% 96% 33% 57% 90%

Virtual/augmented reality 32% 54% 86% 26% 54% 80% 37% 54% 91%

5G 15% 69% 84% 20% 61% 81% 11% 76% 87%

3D printing 13% 17% 30% 15% 20% 35% 11% 15% 26%

Data Analytics Emerging Technology Adoption

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Financing Innovation


HOW ARE YOU PAYING FOR IT?

All Respondents Lower Middle Market

Upper Middle Market

Working capital 58% 52% 63%

Private funding 47% 57% 39%

Public equity 33% 39% 28%

Joint venture 23% 13% 32%

R&D tax credits & incentives 22% 15% 28%

Sale or divestment 15% 13% 17%

Government grants 14% 13% 15%

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Real-world Examples


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Summary – Data Driven Outcomes


AZURE VIRTUAL NETWORK

MasergyMPLs

MasergyMSSP

Services

Secure Private Connectivity

viaExpressRoute/

VPN

Azure PolicyNIST Cybersecurity Framework

Azure Data Factory Azure Synapse

REPORTING

PowerBIReporting Services

Excel

Azure Data Lake Storage

Azure Analysis Services







PRODUCTION VIRTUAL NETWORK

Azure Data Factory Integration Runtime

ADF Private Endpoint

Data Lake Private Endpoint

TEST VIRTUAL NETWORK




DEVELOPMENT VIRTUAL NETWORK




LOGGING AND MONITORING

SOURCE DATA

APIEncompass

ExcelFinastraFiserv

MeridianLink

17 BANKING ON ANALYTICS: HOW TO LEVERAGE DATA AND AI IN THE FINANCIAL INDUSTRY

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Loan Portfolio Overview


Summary Volume Value

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Loan Balance Testing


Detail Testing Payments

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Interest Income Testing


Interest Tolerance

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New Loans Routine


Count Origination

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TDR Loan Analyzer


Loan Volume Rates Ratios

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Credit Grade Analyzer


Score Status

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LTV Summary


Grade Value

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Loan Delinquency Analysis


Outstanding Type

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How to Get Started


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FINANCIAL SERVICES INDUSTRY

To Compete in Fintech, Banks Must Build on Pandemic-Driven Digital Transformation

Paycheck Protection Program (PPP) Loan Forgiveness & Eligibility

2020 Financial Services Digital Transformation Survey

2021 Financial Services Digital Transformation Survey

BUSINESS & DIGITAL TRANSFORMATION

2021 Middle Market CFO Outlook Survey

Expanding our Solutions Through the Addition of DemandGen International, Inc.

2020 Digital Transformation Survey

Develop A Digital Strategy | Business Need

Thought Leadership


https://www.bdo.com/insights/industries/fisf/to-compete-in-fintech-banks-must-build-on-pandemic

https://www.bdo.com/resources/paycheck-protection-program

https://www.bdo.com/insights/industries/financial-services/2020-financial-services-digital-transformation-sur

https://www.bdo.com/insights/industries/financial-services/2021-financial-services-digital-transformation

https://www.bdo.com/insights/industries/industries/2021-middle-market-cfo-outlook-survey

https://www.bdo.com/digital/demandgen

https://www.bdo.com/insights/business-financial-advisory/bdo-digital/digital-transformation-survey

https://www.bdo.com/digital/business-need/digital-strategy

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STEP 1 STEP 2 STEP 3 STEP 4

Deep Dives

Deep dive for 1-2 priority use cases Evaluate current data environment and business needs

Architecture Feasibility

Propose technical architecture

design of Microsoft Azure Cloud components

Workshops

Review business analytics needs

including key users and use cases

Visualization

Storyboard mock-up visual of the prioritized use

cases

RECOMMENDATIONS Business drivers & strategic

objectives 1-2 Focused use cases Functional outline Technical outline &

architecture feasibility Stakeholders & ownership Storyboard mock-up Deployment plan

Data overwhelm is real and getting everyone on the same page is critical. Our practical approach will help you identify the data you really need and deliver the reports you need to make smarter decisions.

Delivery Approach: Rapid Data Assessment


“How can I best leverage my data to make better business decisions?”

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TOTAL | 10-12 Weeks Team makeup - Data Engineer, Data Visualization Specialist, Technical Team Lead, Project Manager

Platform Foundations & Discovery

Platform setup, configuration, data exploration, and discovery.

Data Engineering & Customization

Data processing and replicating calculations in Azure.

Data Visualization

Creation and refinement of PowerBI dashboards. Three use cases can typically be covered in this timeframe.

WEEK 0 WEEKS 1 – 6 WEEKS 5 – 9

A framework to setup, create and manage a lightweight and elastic platform to ingest, transform, and engage your users.

Delivery Approach: HERO Path


CONTACTS

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Bill TopelFinancial Services Market Leader BDO [email protected]

Ways to Engage


Rob WellenData Analytics & AI Market LeaderBDO Digital

[email protected]

Contact BDO Digital www.bdo.com/digital/contact

Real-world client examples:www.bdo.com/services/business-financial-advisory

Insightswww.bdo.com/digital/insights

mailto:[email protected]

mailto:[email protected]

http://www.bdo.com/digital/contact

https://www.bdo.com/services/business-financial-advisory

http://www.bdo.com/digital/insights

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Q&A


Documents

BANKING ON ANALYTICS