RiskCALM₄^® The Future of Banking – E-commerce (Part 3) Digital Transformation

RiskCALM₄^® The Future of Banking – E-commerce (Part 3) Digital Transformation Leveraging Data

How Important is Data?

I suppose that depends on whether you want to compete in today’s business climate, with e-commerce increasing and the era of anonymity and invisible customers.

• How will a financial institution monetize a customer visiting the financial institution’s website?
• How will the institution become part of the e-commerce process and be involved at the time of a transaction?
• Without analytics and technology; finding new customers, increasing customer retention, improving customer service, improving marketing efforts and improving the quality and speed of compliance, would be impossible, during an e-commerce transaction.
• I guess the answer is how important is your business?

Emerging Issues

• The online customer is void of any personal relationship with a financial institution, making trust and loyalty more difficult.
• While the invisible client likes anonymity, they also want the availability of their institution’s personal understanding of their needs.
• They want advice available on financial decisions and products that are relevant.
• A financial institution must get ahead of the online financial transaction, in order to be a player at the time of financing.

Though the Internet levels the playing field for financial institutions, the genesis of success remains innovation, innovative business models utilizing innovative technology. The financial institutions’ two major business processes; lending and account openings/deposits, have been complicated by regulatory policies, such as, IFRS 9 and AML, neither synonymous with convenience and ease, especially on the Internet. So what is the future of banking as financial transactions migrate to the internet and regulatory issues expand, along with customer expectations?

Online Questions

• When your customers enter your website, how will you determine answers for their debt management? Or What lifecycle stage they are in?
• How will you convey the answers?
• What buying cycle are they in?
• What can you give them that says thank you for your business?
• What can you do to attract business customers that differentiates your institution’s offers from other financial institutions?
• How will you cross-sell?
• How will you make the customers journey easy and convenient?
• If your customer is shopping online how will you know they need a loan?
• When your customers do need a loan do you know the PD dynamically and the effect on the ECL, before you approve the loan?

Solution: The leveraging of data through analytics.

Any transformational change in your digital presence is dependent on data. Data is the fundamental requirement in getting to know your customer. Data, when collected and managed and analyzed, can be used to; find new customers, increase customer retention, improve customer service, improve marketing efforts and improve the quality and speed of compliance, all while identifying; lifecycle stage, loan amounts, insurance requirements, employment and industry history, buying cycles, etc.

Leveraging data necessitates managing data, the lineage, sanctity, use and preservation. With cleansed data, financial institutions can assist their customers with; debt management, purchasing, savings, lifecycle financial analysis, etc. RiskCALM₄^® allows a financial institution to maintain a repository of data, complete with history, timestamped with analytic model version. The analytic engine is a certified (IAS Board approved) engine with capabilities required for IFRS 9 and other predictive analytics.

Data accessibility is vital for online solutions, facilitating personal understanding and solutions, utilizing predictive analytics to support the lifecycle stages of the customer, while also facilitating the compliance of regulations. It’s important to understand, as your data grows the purposes of data will continue to evolve. Its use will span compliance of regulatory requirements, sales and marketing and business decisions, through predictive analytics.

Conclusion

Technology is the vehicle, data is the engine and analytics the fuel! Financial institutions without this ability, will be trying to get somewhere while their vehicle is in park, it’s not going to happen! What role does RiskCALM₄^® play?

The Vehicle: The framework for the vehicle is the software, RiskCALM₄^®, a continuum solution, planned and developed for e-commerce and in-branch, with 24/7 accessibility, and open to all channels, managing your policies, integrated risk management, and communicating information to stakeholders, all while completing your two most important business processes, lending and account openings.

The Engine: RiskCALM₄^® is flexible enough to include data elements that each institution wants, whether internal to its operations or from databases outside the organization. It manages the data, maintaining the data sanctity, lineage, use (with version and timestamp) and preservation, making it available for various analytic models.

The Fuel: The analytics are an integral part of the RiskCALM₄^® solution. The primary reason the solution can dynamically calculate PD, LGD, EAD, ECL for IFRS 9 compliance while the customer is online. The analytic engine is certified IASB Board compliant and available for various predictive analytics.

The future is now with RiskCALM₄^® and the features currently within the solution, however; as a continuum solution, RiskCALM₄^® is designed to address paradigm shifts in business models, therefore; planning for artificial intelligence in predictive analytics and processes, innovative business tools, for marketing and promotions and data collaboration chambers, etc., RiskCALM₄^® is already preparing for the next generation!

This white paper series concludes with Part 4: New Customers.