qwertyuiopasdfghjklzxcvbnmqwertyui

opasdfghjklzxcvbnmqwertyuiopasdfgh
jklzxcvbnmqwertyuiopasdfghjklzxcvb
nmqwertyuiopasdfghjklzxcvbnmqwer
Business
tyuiopasdfghjklzxcvbnmqwertyuiopas
Intelligence
dfghjklzxcvbnmqwertyuiopasdfghjklzx
In Banking and Finance
cvbnmqwertyuiopasdfghjklzxcvbnmq
Team- Predators
wertyuiopasdfghjklzxcvbnmqwertyuio
Puneet Gupta (09BM8037)
Varun Bajpai (09BM8059)
pasdfghjklzxcvbnmqwertyuiopasdfghj
klzxcvbnmqwertyuiopasdfghjklzxcvbn
mqwertyuiopasdfghjklzxcvbnmqwerty
uiopasdfghjklzxcvbnmqwertyuiopasdf
ghjklzxcvbnmqwertyuiopasdfghjklzxc
vbnmqwertyuiopasdfghjklzxcvbnmrty
uiopasdfghjklzxcvbnmqwertyuiopasdf
ghjklzxcvbnmqwertyuiopasdfghjklzxc
Table of Contents
What is BI ................................................................................................................................................ 3
Why BI..................................................................................................................................................... 4
Without BI, Companies end up with..................................................................................................... 6
BI for Banking Institutions ....................................................................................................................... 8
The challenge is to achieve .................................................................................................................. 8
Achieving Objectives........................................................................................................................... 9
Example ................................................................................................................................................ 11
KPIs for Banking Sector .......................................................................................................................... 12
Income Perspective ............................................................................................................................ 12
Investment return Perspective ............................................................................................................ 12
Cost Perspective ................................................................................................................................ 12
Interest Perspective ............................................................................................................................ 12
Company assets Perspective .............................................................................................................. 12
Risk Perspective ................................................................................................................................ 12
Monthly Account Snapshot Fact ........................................................................................................ 12
Dealing with Multivalve Dimension .................................................................................................. 13
Some touch points ................................................................................................................................ 14
Insurance Sector .................................................................................................................................... 15
Core Processes .................................................................................................................................. 15
KPIs for Insurance Sector ....................................................................................................................... 15
Policy Transaction Fact ..................................................................................................................... 15
Policy Premium Snapshot Fact........................................................................................................... 16
Claims Transaction Fact .................................................................................................................... 16
References ............................................................................................................................................ 18

2|P ag e
What is BI
• Intelligence is the ability to apprehend the interrelationships of presented facts in such a way as to
guide action towards a desired goal.

• Business Intelligence is the use of company data to facilitate decision-making by decision-

makers, which means understanding current functioning and anticipating actions for well-
informed steering of the enterprise.

• Basically we are talking about following transformation: Data  Information

Business Intelligence is a broad field of study. The major focus of business intelligence theory looks at
specific factors in order to make high quality decisions. These factors may include partners, economic
environment, customers, competitors and internal operations. A lucid understanding of how these factors
help business get better:

Competitors: Constant look into the competitors who poach businesses customers. Today’s businesses
must regularly evaluate the strength of their competitors and choose different strategies that not only
control their competitors, but also grow own businesses market.

Customers: Survival of a business is dependent on customers. Business intelligence facilitates businesses

comprehend their looking at customers preferences, understanding them better, helping businesses align
to customers demand.

Business Partners: Business partners are necessary to business, it may be suppliers, customer support
companies, processing companies or delivery companies that help your business throughout its tenure,
and it is significant to ensure that all businesses partners associated with the business are in
synchronization with you.

Internal Operations: Internal operations are typically described as the everyday activities of a business
or organization. If you wish your business to be successful, you should be able to view your business’s
strengths and weaknesses on a regular basis.

3|P ag e
Various mechanisms to analyze operational and historical data are possible with Business Intelligence.
This results in clear understanding and provides intelligence into customer behavior, sales patterns and
products, giving them the best deal while cutting cost on marketing campaigns.

Why BI
There are many drivers as to reason why Business Intelligence is required; these include; handling the
increasing amounts of data from an increasing number of sources, this may include latest technologies
such as RF-ID; the reducing time between creating data and the need to use the data, the ‘respond on
read’ issue; the expectation to be upto legislative requirements and finally the simple need when sharing
resources between partners to be able to get advantage of maximum opportunities, hence being able to
‘optimize’ decisions by using best available data in near real time. These all add up to a need to make BI
analytics a part of both present operational processes via integration with the core enterprise systems, as
well as a support for Real Time computing.

Some instances of key drivers are:

4|P ag e
Corporate Accountability in different industry sectors such as Health, or SarbanesOxley (United States),
and similar elsewhere, was extending a wave of ‘compliance Business Intelligence’ solutions.

Customer Relationship Management updating to real time actionable customer data to initiate individual
dialogue hence optimizing each engagement individually to the customer as well as supplier.

Business Activity Monitoring, as enterprises rapidly become driven by short term reporting of operational
results, and need to be able to handle that is in more places in a more decisive manner.

Data and Storage Management, considering the cost as well as availability issue, through reworking data
warehouses, or data marts, into lower cost, higher impact, and data on demand capabilities.

5|P ag e
Without BI companies are likely to:

o Exceed budgets

o Miss expectations

o Improper usage of funds among various departments

o Miss sales opportunity

o Ignore profitable markets

o Focus on less performing products and services

o Neglect measurable metrics

Companies often find themselves in precarious position due to many factors such as:

o Lacking insight to operational inefficiencies

o take longer to identify and address issues

o Lacking visibility across the enterprise

o difficult to coordinate activities across departments, divisions, partners, and customers

o Lacking depth of analysis

o miss seeing abnormal variances and understanding root causes that have material impact
on earnings

Without BI, Companies end up with

• Multiple versions of the truth

• Misaligned action across the organization

• Difficulty in prioritizing

6|P ag e
 • Inability to perform in-depth analysis

• Not knowing where to concentrate efforts

• Inability to measure departmental performance

• Unable to locate important information

7|P ag e
BI for Banking Institutions
The challenge is to achieve

Meet the corporate needs for powerful analytical capability with ensuring the Delivery of best-of-breed
accounting and operations functionality. Providing users timely access and ease of use should be of
primary importance. Capability to cope with increasing and ever more complex regulatory requirements
such as Basel II and offering simple and seamless integration into existing environments is very
important. The major challenge is to assist with the organizational challenges of data collection and data
consistency and handle multiple and disparate data sources from legacy systems. Also manage large data
volumes (current and historical) with minimum total cost of IT operations.

So if we broadly list down the objectives:

• Increase Customer Base

• Increase Operational Efficiency

• Increase Customer Satisfaction

• Customer Behavior Analysis

• Adherence to guidelines

• Staff Performance Analysis

• Increase Profitability

8|P ag e
Achieving Objectives
o Increase Customer Base
o Analysis by
 Geographical Area

 Industry

 By Category

 By Revenue

 By Profitability

 Demography

The increase of customer base with help of the analysis by Geographical Area, Industry or Demography is
a handy way of applying business intelligence for achieving business objectives. The industry can be
evaluated considering the segregation like Category, Revenue or profitability. All these factors contribute
to a development of core strength for a business. Business Intelligence comes real handy for this reason.

o Increase Operational Efficiency

The operational efficiency of any business defines its competitive advantage. An efficient company can
market its products at much better price than the inefficient competitors. The edge of having a operational
efficiency comes real handy for this reason. Business Intelligence has an important role to play in
improving this efficiency. It is about proper application of the technology and reaping off the wonderful
outcomes.

o Productivity Analysis
o No of transactions – Target Vs Actual

o Inter-departmental delay analysis

o Time Spent Vs Profitability Analysis

9|P ag e
The productivity analysis of any business also describes its competitive advantage. A proper analysis
giving relevant results may be used to make very important decisions. The factors like number of
tractions, comparing the actual with the target are very important. Other can be analysis of
interdepartmental delays or the time spent on an aspect and profitability analysis of the same. It is about
proper application of the technology and reaping off the wonderful outcomes.

o Increase Customer Satisfaction

Survival of a business is dependent on customers. Business intelligence facilitates businesses
comprehend their looking at customers preferences, understanding them better, helping businesses
align to customers demand. With proper analysis drastic improvements can be achieved.

o Suggest alternate investment plans based on past allocation and performance

o For Adherence to Guidelines
o Locating Deviations
o Tracking money trails

Study of past allocation and performance the future strategies can be formulated. Business partners are
necessary to business, it may be suppliers, customer support companies, processing companies or delivery
companies that help your business throughout its tenure, it is significant to ensure that all businesses
partners associated with the business are in synchronization with you. If you wish your business to be
successful, you should be able to view your business’s strengths and weaknesses on a regular basis.

10 | P a g e
Example
• Loan Performance Analysis by

• geographical area

• demographic segments

• industry type, company turnover, profitability, age of company

• amount of loan, period of loan, interest rate

• occupation, duration of occupation, designation

• salary range

• educational qualifications, marital status

• loan product features

The analysis of a loan with help of the analysis by Geographical Area, Industry or Demography is a
handy way of applying business intelligence for achieving business objective in this case. The individual
or the organization can be evaluated considering the segregation like Category, Revenue or profitability.
All these factors contribute to a development of core strength of deciding the loan agreement and all.
Business Intelligence comes real handy for this reason. Factors like industry type, company turnover,
profitability, age of company, amount of loan, period of loan, interest rate, occupation, duration of
occupation, designation, salary range, educational, qualifications, marital status, loan product features can
be easily mapped and evaluated on the basis of historic performance. The comparison and study via
business intelligence tools will facilitate clear directions on the process and decisions involved.

11 | P a g e
KPIs for Banking Sector
Here we will try to list down a few key performance indices that are relevant for the Banking Sector:

Income Perspective
o Non-interest income level
o Fee income level
o Gross profit
o Interest spread

Investment return Perspective

o Return on capital employed
o Return on operating capital
o Return on Equity

Cost Perspective

o Cost to assets ratio

o Overhead cost ratio
o Cost to Income

Interest Perspective
o Profit margin
o Operating margin
o Interest margin

Company assets Perspective

o Non-performing assets
o Reserve requirement
o Return on average assets

Risk Perspective
o Value at risk
o Capital adequacy ratio

Monthly Account Snapshot Fact

Based on the business requirements just listed, the grain and dimensionality of the initial model begin to
emerge. We start with a core fact table that records the primary balances of every account at the end of each
month. Clearly, the grain of the fact table is one row for each account at the end of each month.

12 | P a g e
After study of the bank’s requirements, ultimately the following dimensions are chosen for initial schema:
month end date, account, household, branch, product, and status. As illustrated in Figure below, at the
intersection of these six dimensions, we take a monthly snapshot and record the primary balance and any other
metrics that make sense across all products, such as interest paid, interest charged, and transaction count.
Remember that account balances are just like inventory balances in that they are not additive across any
measure of time. Instead, we must average the account balances by dividing the balance sum by the number of
months.

Dealing with Multivalve Dimension

As we just saw in the John and Mary Smith example, an account can have one, two, or more individual
account holders, or customers, associated with it. Obviously, we cannot merely include the customer as an
account attribute; doing so violates the granularity of the dimension table because more than one individual
can be associated with an account. Likewise, we cannot include customer as an additional dimension in the fact
table; doing so violates the granularity of the fact table (one row per account per month) again because more
than one individual can be associated with any given account. This is a classic example of a multivalued

13 | P a g e
dimension. For now, suffice it to say that to link an individual customer dimension to an account-grained fact
table requires the use of an account-to customer bridge table, as shown in Figure. At a minimum, the primary
key of the bridge table consists of the surrogate account and customer foreign keys. We’ll discuss date/time
stamping of bridge table rows in Chapter 13 to capture relationship changes. In addition, we’ll elaborate on the
use of a weighting factor in the bridge table to enable both correctly weighted reports and impact reports.

Some touch points

 Identification and Retention of most valued accounts

 Accounts can be differentiated based on primary balances and analyzed on that criteria

 Understanding ever dynamic customer behavior based on different parameters

 It may be relevant for the bank to capture and store behavior scores relating to the activity or
characteristics of each account and household

 Snapshot of historical monthly data may be used for defining future products

14 | P a g e
Insurance Sector
Core Processes

 Issue/Renew Policies

 Collect Premium Payments

 Process Claims

KPIs for Insurance Sector

Policy Transaction Fact
 Number of Policy Sale

 Value of policies sold

 Number of policies renewed compared to number of policies sold

 Number of policies sold as compared to quota

The policyholder dimension qualifies as a large dimension with more than 1 million rows. The covered item
dimension likely also falls into this category because most policyholders insure more than one specific item. In
both cases, it is often important to track content values accurately for a subset of attributes. For example, we
need an accurate description of some policyholder and covered item attributes at the time the policy was
created, as well as at the time of any adjustment or claim. The use of minidimensions has an impact on the
efficiency of attribute browsing because users typically want to browse and constrain on these changeable
attributes, as well as on updating. If all possible combinations of the attribute values in the minidimension have
been created already, handling a minidimension change simply means placing a different key in the fact table
row from a certain point in time forward.

15 | P a g e
Policy Premium Snapshot Fact

 Number of missed premiums or lapses compared to total number of policies sold

 Percentage of policies that lapse within the first two years

Claims Transaction Fact

 Total benefits paid as a percentage of premium

 Frequency of claims

 Time taken to process a claim

16 | P a g e
17 | P a g e
References
1. http://www.hr.capgemini.com/m/hr/tl/Executive_Summary__Business_Intelligence_and_Service
_Architectures.pdf
2. HP Intel Solution Center Blueprint - Business Intelligence for Financial Institutions Loan
Performance Selects MicroStrategy for Improved Analysis and Reporting of the Mortgage
Industry Data Trends
3. http://www.microstrategy.com/news/pr_system/press_release.asp?ctry=167&id=1021
4. The data warehousing tool kit- The Complete Guide to Dimensional Modeling by Ralph Kimball

18 | P a g e