Big Data in banking - FirstRand · PDF fileUBS 19th Annual Financial Services Conference: The...
Transcript of Big Data in banking - FirstRand · PDF fileUBS 19th Annual Financial Services Conference: The...
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UBS 19th Annual Financial Services Conference: The technology frontier
Big Data in banking
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UBS 19th Annual Financial Services Conference | 13 October 2016 | slide no. 2
Content
Modern Credit, Marketing, Financial Crime, CVM and Operations
Big data enablers
The evolution of Retail and Commercial Banking
Key challenges and what’s next
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UBS 19th Annual Financial Services Conference | 13 October 2016 | slide no. 3
Content
Modern Credit, Marketing, Financial Crime, CVM and Operations
Big data enablers
The evolution of Retail and Commercial Banking
Key challenges and what’s next
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UBS 19th Annual Financial Services Conference | 13 October 2016 | slide no. 4
The evolution of Retail/Commercial Banking
Branch Online
Product Customer
Automated Scoring
Judgmental
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UBS 19th Annual Financial Services Conference | 13 October 2016 | slide no. 5
Evolution from branch to e-channels Number of interactions Millions
0
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
4 500
2010 2011 2012 2013 2014 2015 2016
Online Mobile App ATM POS Branch
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UBS 19th Annual Financial Services Conference | 13 October 2016 | slide no. 6
Evolution – from judgemental to automated credit
0
10
20
30
40
50
60
70
80
90
100
1999 2001 2003 2005 2007 2009 2011 2013 2015
Judgemental decisions Accuracy
% Gini for
‘banked’ customers,
non-banked much lower
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UBS 19th Annual Financial Services Conference | 13 October 2016 | slide no. 7
Evolution from product centric to customer centric view
99.5 95
Customers on CIS* (%)
Individual Juristic
200 220
260 300
375
2012 2013 2014 2015 2016
Number of customer documents on Documentum** (Million)
* Customer Information System ** Central electronic document repository
Customer information management has been
centralised outside of product systems
Customer and product records have been centralised
outside of product systems
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UBS 19th Annual Financial Services Conference | 13 October 2016 | slide no. 8
Content
Modern Credit, Marketing, Financial Crime, CVM and Operations
Big Data enablers
The evolution of Retail and Commercial Banking
Key challenges and what’s next
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UBS 19th Annual Financial Services Conference | 13 October 2016 | slide no. 9
Big Data enablers
Big Data
Comprehensive single view of
customer
Enterprise data warehouse/lake
Analytical capability
Operational decision making
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UBS 19th Annual Financial Services Conference | 13 October 2016 | slide no. 10
Comprehensive single view of customer
FirstRand Citizen
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UBS 19th Annual Financial Services Conference | 13 October 2016 | slide no. 11 First National Bank – a division of FirstRand Bank Limited. An Authorised Financial Services and Credit Provider (NCRCP20).
Risk Marketing & Sales
Financial Crime CVM Operations
Enterprise Data Warehouse/Lake
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UBS 19th Annual Financial Services Conference | 13 October 2016 | slide no. 12
More sophisticated analytical capabilities required to extract value
EXPERT SYSTEMS SIMPLE STATISTICAL MODELS
MORE ADVANCED METHODS
Logistic Regressions Decision Trees Neural Networks
Random Forest
Σ
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UBS 19th Annual Financial Services Conference | 13 October 2016 | slide no. 13
Operationalising decisions Br
anch
Onl
ine
App
Mob
ile
ATM
Integration layer
CIS
IDS
ILP
CAM
S Channels
Customer and Product Systems DATA STREAMS
Actions
Decisions
Estimates
“Analytics without decisions is meaningless”
Ability to deliver Big Data Analytical Decisions
into production systems is key
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UBS 19th Annual Financial Services Conference | 13 October 2016 | slide no. 14
Content
Modern Credit, Marketing, Financial Crime, CVM and Operations
Big Data enablers
The evolution of Retail and Commercial Banking
Key challenges and what’s next
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UBS 19th Annual Financial Services Conference | 13 October 2016 | slide no. 15
Big Data use cases
Risk Financial crime CVM Operations Marketing
and Sales
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UBS 19th Annual Financial Services Conference | 13 October 2016 | slide no. 16
Big Data use cases - Risk
• Enhanced Credit Models
• Integrated view across products, channels, enablers
• Sophisticated behavioural analysis
• Augmented/Derived characteristics
• Risk appetite – optimised at every level
• ICAAP models
• Regulatory Risk/Compliance & Market Conduct
• Insurance
Risk
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UBS 19th Annual Financial Services Conference | 13 October 2016 | slide no. 17
Big Data use cases – Marketing and Sales
• Facilitated by integrated view of customer across products/
accounts/ transactions/ channels and external data
• Needs-based modelling across borrow, transact, deposit and
insure
• Behaviour-based propensity modelling at product level
• Life-event and other specialized models deployed on
experimental basis
• Significant lift in customer product take-up
Marketing and Sales
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UBS 19th Annual Financial Services Conference | 13 October 2016 | slide no. 18
Digital ‘Big-3’ platform instrumental in sales growth
0
500 000
1 000 000
1 500 000
2 000 000
2 500 000
FY13 FY14 FY15 FY16
Borrow
Transact
Investment
Insurance
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UBS 19th Annual Financial Services Conference | 13 October 2016 | slide no. 19
Big Data use cases – Financial crime
• Money-laundering risk modelling pioneered use of Big Data
analytics platforms and combination models
• Fraud modelling combining product, channel, geography, sector
and device behavioural information
• Network analysis used for complex investigative efforts (AML and
Fraud)
Financial crime
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UBS 19th Annual Financial Services Conference | 13 October 2016 | slide no. 20
Big Data use cases - CVM
• Customer profitability modelling allows customer-level
decisioning and strategy guidance across levels
• Retention modelling retains good customers
• Pricing optimisation across multiple dimensions
• Rewards designed to influence customer behaviour
CVM
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UBS 19th Annual Financial Services Conference | 13 October 2016 | slide no. 21
CVM – Deep understanding of profitability
0
5
10
15
20
25
30
35
40
45
Monthly profit per risk grade
NIACC Cost of capital Tax Opex TTC imp
Risk grade Low risk High risk
Million
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UBS 19th Annual Financial Services Conference | 13 October 2016 | slide no. 22
Big Data use cases - Operations
• Operational implementation has taken place to automate a wide
range of credit, marketing, sales, fraud, record keeping, validation
and other tasks
• Call-centres and collections large focus for efficiency and
effectiveness optimisation
• Major focus for channel optimisation going forward and perhaps
area of greatest future opportunity
Operations
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UBS 19th Annual Financial Services Conference | 13 October 2016 | slide no. 23
Modern operations – Contactability is one of many key drivers of efficiency
Aim is to contact the right customer using the right method at the right time with the right message
NPV: TBC
Relevant Contact
Contact language/ message
Contact frequency & priority
Best Time To Contact
Contact Method CONTACTABILITY
01
02
03
04
05
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UBS 19th Annual Financial Services Conference | 13 October 2016 | slide no. 24
Content
Modern Credit, Marketing, Financial Crime, CVM and Operations
Big Data enablers
The evolution of Retail and Commercial Banking
Key challenges and what’s next
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UBS 19th Annual Financial Services Conference | 13 October 2016 | slide no. 25
The modern FI requires new infrastructure and skills
FROM TO
• Silo product approach and systems • Integrated customer approach and systems
• Overnight batch • Real-time streaming
• BI people, IT developers, DB administrators • Data scientists, architects, engineers
• Separate RDB and analytic platforms • Combined data-analytic platforms (e.g. Hadoop)
• Accounting orientation (historical, incurred basis, top-down)
• Analytic orientation (forward-looking, predictive, bottom-up)
• Traditional marketing • One-on-one marketing
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UBS 19th Annual Financial Services Conference | 13 October 2016 | slide no. 26
What’s next
Intelligent agents - robo-advisors, service and sales agents
GAAF (Google, Apple, Amazon & Facebook) & others entering financial services
Integrated Financial services (Lend, Deposit/Invest, Transact, Insure, Telco, …)
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Thank you