IEGROUP Sundip Gorai v3

Analytic Engines and Solutions for Banking Ecosystems

Compliance, Risk, Performance and Customer Analytics

Sundip Gorai,

Head of Analytics & BI

2© Hexaware Technologies. All rights reserved.

The Obvious


What Happened???????

From Hindsight … to Foresight and Insight


Hind Sight Foresight and

Insight

Datawarehouse

and OLAP

Engines

Predictive modeling ,

Data mining and

Advanced Analytics

Predictable Outcomes


Enterprise Analytic Ecosystems


Risk

• Credit

• Market

• Liquidity

• Operations

• Fund Transfer Pricing

• Basel II/III /Dodd Frank

• AML/Fraud

Customer

• Prospecting

• Segmenting

• Cross Sell

• Up Sell

• Attrition

Financial Performance

• Profitability

- Customer

- Account

- Product

• B/S and P/L

• Cost Analysis

Specialized Areas

• Mortgage

• Asset Mgmt. Perf Attribution

• Stock Exchange

• Claims Analytics

Current Analytic Needs in the BFSI world

BFSI World


Current Analytic Enablers in the BFSI World

Rule Engines

Predictive Programming

/OR Language

Packaged

Data mining/Stats/OR

solutions

Simulations

Data warehouses /OLAP

Engines/Packaged Marts

Analytic Layer Data Layer

Data Visualization:

Traditional/ Open

source/In-Memory

Data Sourcing:

ESB/SOA/DI/Big Data

Integrated Data Fabric:

MDM/DQ/DP/ILM

Appliances /In Databases/

Grid Servers


Current Analytic Enablers in the BFSI World

Rule Engines

Predictive Programming

/OR Language

Packaged

Data mining/Stats/OR

solutions

Simulations

Data warehouses /OLAP

Engines/Packaged Marts

Analytic Layer

Risk

Finance

Customer

Business Areas


Analytic Needs

Credit Risk

Market Risk

Liquidity Risk

Operations Risk

Fund Transfer Pricing

Basel II/III /Dodd

Frank

AML/Fraud

Rule Engine

PD, LGD, Credit Var

Var

Cash Flow

FTP

Op Var

Curve generators

Collateral

Management/ AIRB

Fraud KYC/ SARs

engine

Data Mining/Stat

Credit modeling /

Delinquency

Var/Co Var matrices

Behavour,Prepayment

modeling

Severity /Frequency

Dist.

NA

PD, LGD,

Optimizations

AML –

pattern/sequence

finders

Datawarehousing/

OLAP

Corporate/Retail

/Delinquency/ Facility

/Mortgage

Var by Position, Geo,

Class

Earnings Analysis

Liquidity Risk

Interest Rate Risk

Op Var

FTP and Spread

reporting

ALM/Profitability

reporting

Regulatory Reporting/

Pillar II reporting

Risk Centric

Analytic Needs and Solution Drivers

Simulations / Ops

Research/

Scorecards

Credit decisioning,

scorecards

Monte Carlo

simulation

What if simulations

Scorecards

Multi run Compliance

Calculators


Analytic Needs

Product Profits

Customer Profits

Account Profits

Business Line profits

Reporting line profits

Cost allocation

Budgeting/Planning

Forecasting

Rule Engine

Profitability/Consolidat

ion Engine/Time

aggregates

-do-

-do-

-do-

-do-

Cost allocation

engines

Top down/Bottom up

process flows

Data Mining/Stat

Revenue/ Profitability

optimization

-do-

-do-

-do-

-do-

NA

NA

Datawarehousing/O

LAP

Product profits

Customer profits

Account profits

Business Line profits

Reporting line profits

Expense reporting

Finance Centric


Simulations / Ops

Research/

Scorecards

Local /Reporting

Natural currency runs

-do-

-do-

-do-

-do-

Direct/Indirect/Propor

tional/ Activity based

costing

Budgeting plan runs


Analytic Needs

Segmentation

Campaign / Target Mails

Cross Sell/Upsell /Cross

Sell timing

Interaction Management

Channel analysis

Marketing optimization

Lifecycle/Behavior

analysis –

Retention/Attrition/New

business/Profile/Prospe

cting

Rule Engine

CHAID/CART

Campaign Flow/

Planning/Execution

NA

Channel interaction

engines

Channel usage

NA

NA

Data Mining/Stat

Segmentation

Trees/Clustering – K

Mean/Decision Trees

Neural Networks

Market Basket

Analysis/Association

Fat Tail analysis

NA

NA

Datawarehousing/O

LAP

Segment analysis

Campaign Analysis

Cross

Sell/Upsell/Cross

product holding

NA

Channel preference

Service Requests

NA

NA

Customer Centric


Simulations / Ops

Research/

Scorecards

OR models

OR Models


Disparate pieces to Symphony

Choice of Analytic Artifacts

Data Strategy

Metadata Strategy

Choice of Techniques

Choice of Architecture

Strategic Intent

Business Definition

Need Definition


Customer Analytic Engine…at work

Campaign description

SAS Datasets

Owner of campaign

budget ,costs and

Segmentation other

constraints

2

Campaign objective

• Cross Sell

• Upsell

• Churn

• Retention

• Segmentation

• Customer transition to

higher segment

1

Customer selection

SAS Datasets

Customer attributes –

age/gender/

Relationship details

3

6

Response propensity

score for maximum

likelihood of response

SAS Datasets

SAS

Datasets

Customer selection

Based on other

attributes

Select customers who did

not respond to past

campaign and are poor on

other parameters

Split customer

list

• Data Mining

Techniques

• Model Selection

Filtered customer list

based how old

is relationship

7

8

Tele marketing

Direct mail

Walk in to advisors

Other medium

• Assignment model

• Right product/right

customer/right channel

using SAS linear

programming

SAS Datasets

9

• Campaign effectiveness

• Evaluation model

(response and returns to cost)

SAS

Datasets

Closing the Loop –

Learning Feedback

Reporting AND

analysis (use SAS BI/

MicroStrategy/MS

excel)

Response to

multiple

campaigns

stored as

history

Siebel

schedules

and executes

campaign

10

12

13

14

11

• Response propensity

• Purchase score

• Credit score

• Relationship value

• Other business criteria

Business flow of campaign management

• Data Mining Techniques

• Model Selection

SAS Datasets

SAS DatasetsSAS Datasets

SAS

Datasets

Customer

exclusions

criteria

Filtered Customer

List

4

5

n


Finance Analytic Engine…at work

Profitability Analytics

Revenue

Cost

Analyze by

Time

Channel

Geography

Product

Customer Profile

Customer

Profitability

Profit from

Account 1

Profit from

Account 3

Profit from

Account 2

Account level

Profitability

Asset products

Profitability

Liability

Products

Profitability`

Direct Cost/Int. ExpIndirect cost

Cost allocation engine

Fixed Amount

Fixed Percentage

Unit Costing

Statistical method

Activity based

costing (ABC)

Transaction data from

Channel Analytics

Rev. from FundRev. from Fees

Product processor FTP Engine

FTP Engine

Product

Processor


Risk Analytic Engine…at work:

Asset Liability Management

Yield Curve Generator

Currency Converter

Interpolator

Forward Rate Calculator

Cash Flow

Engine

Cash - Flows

Bu

cke

tin

g

Customer Behavior Product Behavior Time Structuring

Market Feed

So

luti

on

Set

Up

Banking Transactions

• Perpetual Products

• Prepayment

• Defaults

• Interest Frequency

• Default Benchmarks

• Interest Rate Risk

• Liquidity Risk

• Financial Cycle

Pro

ce

sse

s

Liquidity Risk Earnings AnalysisInterest Rate Risk

Input Layer Input Layer Input Layer

Standard Parameters


FTP Manager

Risk Analytic Engine…at work:

Fund Transfer Pricing

Profitability

Measures

Account/Product

Transfer Prices

FTP Extractor

Cash Flow

Engine

Dates & Quantum

Of Cash flows

Interest Accrual

Details Net Interest

Income

Margin

FTP Processing

Term Structure

Application

Methods

Term Structure

Of Interest Rates

1. Pure 2. Hybrid

Interest Rate Risk

Liquidity Risk

Product Profitability

Consumer

Processing

Enterprise Financial

Reporting

E

T

L

CASA

Loans

Investments

Source Systems

User Input

External

Data Sources

Input


Collateral Adjustment

Basel II/ Basel III Calculator

Data Processing

Internal

Source System

External

Source System

Source Systems

M E T A D A T A

RLT

Source

Traceability

Data Quality

Edit & Reload

Audit Trails

Adjusted

Collateral Raw Collateral

H

Optimization

Allocations

Exposure Comp

Data LayoutData Management

Enterprise Wide

Dimensional ModelCommon ETL Layer

Adj.Exposure

CRMT

[Group/Facility]

Exposure

Exposure

Sub Exposure

Allocation

OFCRMMapping for

Specialized

Lending

Eligibility Definition

Parameters

Rule Engine

Mapping

Banking

Txns

Collateral

Systems

Value @

Risk

External

Ratings

Market

Data

ETL

ETL

Validation

Data Integrator

ALM

(Market Risk)

Credit Risk

Performance

H H

LEF CCF

Mart Builder

Warehousing

Staging Area

Risk Analytic Engine…at work

Capital Calculator


The Fab Four of Successful Analytic Ecosystems

• Products/ Architecture

– Unified Platform

– Best of Breed

– Custom In-house

– Build or Buy

• Governance

Models– In-house

– In-house/External

– Predictive/Datawarehou

sing/ OR Teams

• Methodology

– CRISP DM

– SEMMA

– Agile BI

– Waterfall

• Services

– Strategic Advisory

– Tactical Advisory

– Architecture Advisory

– Implementers


Thank You

Questions?

Sundip Gorai

Hexaware Technologies

[email protected]

[email protected]

mailto:[email protected]

mailto:[email protected]

Documents

IEGROUP Sundip Gorai v3