Project Management

BI Bankers Hit the Jackpot

Every industry can utilize business intelligence successfully to improve efficiency and build a better dialogue with customers, but perhaps none has the breadth of applications as the financial services industry. The financial services industry has a great deal to gain from the proliferation of BI.



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Let's Start With Simple Applications
BI is the engine that allows stockbrokers and analysts to track their portfolios and stocks over time. BI allows these analysts to monitor industry groups or technology categories of equities, perform measurements and drill down to find out more detail on which equities may have caused changes in specific categories. In commercial banking, BI can allow banks to rank their customers by asset value, types of accounts and number of products held. And in major brokerages, BI can help the firm better understand the number of trades executed, the commissions by broker and customers who execute the highest number of trades. These are all valuable applications within financial services, but they barely scratch the surface!


Moving to More Advanced Applications
Equity researchers can use BI to build models of portfolios and construct what-if scenarios of potential outcomes. This will allow them to potentially hedge risk and maximize return. Similarly, BI can allow traders to identify the performance of stocks under certain conditions and alert them to enact measures if those conditions exist in the marketplace. Trading now moves from a "gut-feel" and human analysis to a more informed analytic decision that is driven by data. In the commercial realm, credit card companies are able to monitor customer activity and detect fraud when behavior becomes aberrant. Similarly, banks may be able to offer a customer a new product based on the behavior of similar customers. These applications are all driven by BI and allow for a more informed decisions.


Bringing It All Together
Perhaps the most lucrative aspect of BI in financial services occurs today as firms consolidate many functions under one umbrella. As Solomon Brothers mergers with Smith-Barney, which is consequently bought by Travelers Group, the customer base of this new entity dramatically increases. Each entity may be able to give information about its own customers, but few firms can present an integrated view of the customer base of the entire entity. The power of this unified customer view is immense. The firm can cross-sell products throughout the three divisions and offer complementary services. It can also look at its most valuable customers, not just within a single division, but across the whole firm. This singular view of the customer allows the company to measure the risk of a customer, their behavior in equities, their behaviors in banking, their behaviors in insurance purchases and their interest in a variety of other financial instruments. By leveraging all of this information together, a company will be in a great position to be the single-source financial provider to a customer and establish a long-term relationship with him.


This unified view of a customer does not come without great cost. It often entails the integration of many databases, contradictory pieces of information and the unraveling of hairy IT messes. The project can take several years and consume significant resources, but the payoff is huge. The company that implements this is in an inherently better position to know its customers and offer better products and services to them. Over a lifetime, this relationship will undoubtedly generate lucrative cash flows for a financial services firm.

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