Connect with us

Finance

BIG DATA IN FINANCE: FROM DESCRIPTIVE TO PRESCRIPTIVE ANALYTICS

Companies and consumers are both preoccupied with data. Companies want to know how they can make the best use of the data they gather, while customers try to ensure that companies collect as little data about them as possible. Data is hot and, in our technology-driven world, everyone is engaging with it in one way or another. Business customers and consumers are often reluctant to provide data, yet it is in their interest to do so. So it is also important that companies use data to continually enhance the customer experience. At the Onguard Academy, organised by FinTech company Onguard and commercial data supplier Altares Dun & Bradstreet, finance professionals learned more about the possibilities of big data in finance.

 

Old approach in a new guise
“What we see happening today is not as new as you might think!” The Onguard Academy opened with these words from Joris Peters, a Data Scientist at Altares Dun & Bradstreet. He was referring to credit (risk) management. The importance of credit risk management (also known as receivables management) was recognised back in Ancient Greece. Some 2,300 years ago, the Greek philosopher Aristotle is reported to have said: “Creditors have no specific interest in their debtors, but only desire that they may be preserved, such that they may repay.” In other words Aristotle recommended that creditors treat their debtors well, because it increased the likelihood of payment. And this is still the essence of 21st-century credit management.

 

Martin de Heus

However, the way companies organise credit management has changed and this has to do with the times in which we live. New technology and computing power are the main changes. Today, computers and other devices are capable of highly efficient and more sophisticated data capture. They also have far greater storage capacity. They capture and transmit millions of data units daily.

 

Data is everywhere. It can be easily stored and fed into machine-learning algorithms. Ignoring data is no longer an option. This also applies in the world of credit management where we now have so much information about the individual debtor. It’s time we used this knowledge to improve their customer experience.

From descriptive to prescriptive
The use of data is not new. Though it may have gone unnoticed, we have actually been working with data for many years. By combining large sets of (un)structured data from different sources, it is now possible to use data not only as a basis for informed decisions, but also to predict customer and debtor behaviour.

 

This is what we mean when we talk about ‘big data’. The use of big data involves three dimensions of analytics competency. Ultimately, we want to progress to the third dimension. This enables companies to make a real difference. The three dimensions of data analytics competency are:

  1. Descriptive: The volume of available data allows finance professionals to look at the facts, past and present. At this level, the use of big data is pretty straightforward.
  2. Predictive: It is possible to run analytics on historical (descriptive) data and identify payment patterns. These patterns can be used to predict what might happen tomorrow. At this point we are approaching the final dimension.
  3. Prescriptive: The third and most interesting dimension of big data analytics is the prescriptive level. Once you can predict that a debtor will pay late or default, it is wise to take action. You can then preempt potential problems before they occur. Herein lies the promise of the prescriptive dimension of big data analytics.

 

What does this mean for the credit manager?
Big data can make a difference in organisations, especially in finance departments. Almost half (41%) of finance professionals anticipate that, two years from now, their departments will not be able to operate without big data. This was one of the findings of the annual Onguard FinTech Barometer survey.

 

But what does it mean for the credit manager? The use of big data is causing credit managers to wonder about their future in the industry. The FinTech Barometer survey revealed that 21% believe big data will have a significant impact on employment. This is both logical and inevitable. Jobs are always evolving and big data is a game changer in this respect. By enabling companies to anticipate certain risks well in advance, it can be used to preempt potential problems with customer payments, thereby reducing Days Sales Outstanding and increasing cash flow. Big data also gives companies a complete overview of their business processes and their status, so the senior management and the board can make informed decisions about the future of the company.

 

So, will the use of big data erode the role of the credit manager? Well, that depends on how they approach it. Credit managers are facing a new challenge: they have to assume a more strategic role and they also have to be able to analyse the data so they are a valuable addition to the management. This is how your company can make a difference.

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Finance

AI: CUSTOMER FACING EMPLOYEES’ BEST FRIEND IN THE FINANCIAL SERVICES INDUSTRY

By Ryan Lester, Senior Director, Customer Experience Technologies at LogMeIn

 

We’ve all heard the old saying “money talks.” Well when it comes to customer loyalty and retention, good customer experience talks much louder, with 30% of customers leaving a brand and never returning due to a bad experience.

The truth is, there are a lot of companies with similar products and services, but that doesn’t mean that differentiation is impossible. So, what’s the solution? For financial services, large and small, customer experience is becoming the key competitive differentiator and the best way to deliver an impactful experience is to empower customer-facing employees to do their best work. Artificial intelligence (AI) is enabling these employees to create remarkably better customer experiences, resulting in customer loyalty, advocacy, and overall growth.

For financial institutions that have been considering new strategies for improving the quality and efficiency of their customer experience, here are a few ways AI can enable them to deliver the “human factor” that good customer experience demands whilst ensuring customer facing employees can provide a more positive experience for customers.

 

Increase employee productivity

How much of employees’ time is spent searching for answers to questions? Do they ever have to put customers on hold or even step away to get additional help? AI helps provide front-line employees real-time guidance so they can spend less time looking for information and more time solving problems. An AI-powered chatbot, for example, can be listening in the background of a conversation helping point employees to the right data, solutions, and processes to resolve customer issues faster than ever before.

 

Deliver a consistent customer experience

When banking customers engage with their financial institutions, they measure the speed and accuracy of the service through two criteria. First, how quickly can the system access their account and deliver the correct information? Is it faster than a human could type it in and share it? And second, if they eventually do need to be connected to a live customer support agent, is their information captured and passed along accurately? AI technology takes those general queries off the customer support team’s plate, providing a quick, accurate, and effective response. If a query needs a more in-depth response, AI can hand it off to support staff to address.

Not only this but leveraging a centralised, AI-powered knowledge solution ensures every employee has access to the same, updated information, so no matter who the customer speaks to, they can be assured that employee responses are both consistent and accurate across the board.

 

Accelerating employee training and onboarding

Like any industry, employee turnover is inevitable and can be costly. But, not training new employees correctly or in a timely manner could be much more costly. When it comes to financial services there is a lot to learn, whether it is something simple like the process for checking an account balance to all the nuances associated with mortgage loans. AI can support on-the-job training by helping new employees answer questions confidently, correctly, and much quicker than they could before.

 

Improving employee satisfaction

Today’s banking customer has all kinds of new ideas about their banking experience. “The Amazon Effect” has successfully raised consumer expectations to the extent that a consistent, personal, and relevant experience is the new normal. As a customer, how many times have you been told “I’m sorry, I don’t know the answer?” Customers want solutions to their problems and employees want to be able to deliver those solutions as efficiently and effectively as possible. AI assisting in the background helps minimise those negative moments – making employees job easier, less stressful, and overall more enjoyable.

 

Identify knowledge gaps

Do you know all the questions employees are getting asked? Do you know what’s easily answered and what’s not? Real-time insights allow knowledge managers to keep up to date on frequently asked questions and gaps in current resources. This allows them to strategically improve or add content where needed.

 

Augmenting customer service

Whether talking with an AI chatbot or a personable customer service team member, the modern banking customer has high expectations for convenience, speed, and security. Which means that the technology you choose to deploy and how you deploy it is now just as important as who you hire and how you train them.

Today’s AI solutions won’t replace customer service agents or get in the way of the human factors that drive the customer experience. On the contrary, they augment it, allowing the business to do more without adding human resources. The higher the quality of a AI chatbot solution, the better it will be at taking the routine requests off the plate of customer service agents—giving them more time to provide a personalized and positive experience for customers.

 

Continue Reading

Finance

TIPS TO PROTECT YOUR CASHFLOW DURING THE COVID-19 PANDEMIC

By Rita Cool, Certified Financial Planner at Alexander Forbes Financial Planning Consultants

 

The full impact of the COVID-19 pandemic is as yet unknown, but individuals have already begun to have their lives disrupted by the country’s economic shutdown, with retrenchments, salary cuts and forced unpaid leave making them take stock of their financial position.

The basic principles of financial planning are especially relevant at this time, but in the short term, cash flow is more important to many people.

To help safeguard you and your family’s financial security, here are some tips to follow to make sure you’re making your money work hard for you:

  • Draw up a budget – this is especially relevant if you’re worried about possible retrenchment of yourself or your partner. This will help you know how much you need to cover your basic living expenses and where you can save money. Don’t only look at what you need to spend money on, but also when you think you will need that money. Perhaps you paid school fees upfront at the beginning of the year, or your car registration is only due again next year.

    Rita Cool

  • Check your bank fees. Are you in the best structure for your needs? Are you paying for services that you never use? Consider moving banks to get a better deal.
  • Banks have waived the Saswitch fee payable for withdrawing cash at another ATM other than your own bank, but if you’re doing this, be aware of when this switches back as you can end up paying almost double the bank fees.
  • Did you know that you start paying interest immediately if you draw cash from a credit card and that you do not get three or six months’ interest free?
  • Go through your house while you have extra time and identify potential items which you could sell, as this will free up cash.
  • Where possible, pay cash for items as the interest rate on hire purchase items is very high and you pay around 20% more for those items than the sticker price. If you cannot afford the item and you don’t need it right now, wait.
  • Look around for bargains online rather than driving around. There are some good sales on, and you can support businesses that need your help.
  • At the same time, be aware of spending extra cash you could be saving towards your financial safety net. There are lots of deals available, so balance the need for the 70% off bikini or new laptop with being cautious about the future.
  • Use store coupons and discount vouchers. The main food retailers have loyalty programme structures that can be tailored to your specific spending patterns. Make sure you claim point or vouchers but look out for monthly costs to belong to a rewards program. Ask yourself if your monthly savings validate the cost. Optimally a reward scheme shouldn’t cost you money.
  • Check with your insurance company if your premium can be reduced because you’re driving less during lockdown.
  • Check your current insurances. Do an insurance rebroke. Make sure you are covered for what you need and take things off the list that you do not have any more and add what you have bought since the last update. Make sure you are not under or over insured and that your premium is market related. The cheapest premium isn’t always the best so be aware of exclusions and excesses and make sure you can afford the excess if you need to claim.
  • In most cases you can reduce your monthly insurance premiums by not having a cash pay-out in the future. If you want a pay-out, save the extra premium in an investment product, not a risk product.
  • Be wary of consolidating debt. You might pay a lower interest rate but it might well be over a longer period so the total interest paid will be higher. If you have debt issues, set up a debt plan with dates and goals to reduce the debt little by little. Do not give up.
  • Be aware that payment holidays are not a free loan, you still owe the money and you’re paying interest on it. Check with your service provider.

 

Remember that the pandemic will pass. Try not to panic as this may lead to rash financial decisions, which could have an impact on your finances later down the line.

 

Continue Reading

Magazine

Partner Events

Trending

Finance1 day ago

AI: CUSTOMER FACING EMPLOYEES’ BEST FRIEND IN THE FINANCIAL SERVICES INDUSTRY

By Ryan Lester, Senior Director, Customer Experience Technologies at LogMeIn   We’ve all heard the old saying “money talks.” Well...

Banking1 day ago

HOW IDENTITY IS SECURELY UNLOCKING THE SME BANKING MARKET

By Mike Kiser, senior identity strategist at SailPoint   Have an identification card in your wallet? With a selfie and a...

Business2 days ago

FIVE REASONS WHY YOUR BUSINESS’ PROCUREMENT TEAM SHOULD BE USING A CONTRACT MANAGEMENT SYSTEM

By Daniel Ball, business development director at Wax Digital   Even in today’s digital-first environment some businesses are still storing...

Videos2 days ago

EXEGER – CHANGING THE PERCEPTION OF POWER

   

News2 days ago

FINASTRA GLOBAL SURVEY SHOWS APPETITE FOR OPEN BANKING PICKING UP PACE WORLDWIDE

86% of global banks surveyed are looking to use open APIs to enable Open Banking capabilities in the next 12...

Wealth Management2 days ago

STOCK MARKET ANALYSTS DISCUSS HOW TO INVEST DURING A RECESSION

Online tool looks back at how world markets recovered after the last recession in 2008 Analysts take learnings from previous...

TRUSTS TRUSTS
Business2 days ago

PROTECTING YOURSELF AGAINST A RECESSION

James Turner, Director at Turner Little   The coronavirus outbreak has spread to businesses, leaving many around the world counting...

News2 days ago

LIBERTY BANK REINFORCES ITS FRAUD STRATEGY TO FURTHER PROTECT ITS CUSTOMERS

Liberty Bank, the third largest bank in the Georgia, has reinforced its fraud strategy to address the rising volume of...

News2 days ago

COMMERCIAL FINANCE SPECIALIST IGF NAVIGATES THE LOCKDOWN

Leading independent commercial finance specialist, Independent Growth Finance (IGF), entered the lockdown after a record-breaking financial year came to an end in March. In April, it was accredited by...

News2 days ago

COVID-19 WILL BE THE TIPPING POINT FOR DIGITAL TRANSFORMATION IN PROCUREMENT

Seven in ten organisations in the UK say the global pandemic has increased the need for procurement to digitally transform...

News4 days ago

TRIO OF NEW REGIONAL DIRECTORS HEAD UP TIGERWIT’S GLOBAL EXPANSION

Following the release of their record revenue for the last financial year, award-winning online trading platform, TigerWit, has strengthened their...

Wealth Management4 days ago

SECURING THE EVIDENCE FOR VAT AND TAX

Filippa Jörnstedt, Senior Regulatory Counsel at Sovos   Businesses are almost entirely digital in their nature. With sophisticated technology now...

Finance4 days ago

TIPS TO PROTECT YOUR CASHFLOW DURING THE COVID-19 PANDEMIC

By Rita Cool, Certified Financial Planner at Alexander Forbes Financial Planning Consultants   The full impact of the COVID-19 pandemic is...

News4 days ago

RETAILERS WHO OPEN THEIR DOORS WILL NEED EXTRA HELP

With thousands of retail stores given the green light to open in the next few weeks the government needs to...

News4 days ago

LEADING BANK IN TURKEY USES ONESPAN’S MOBILE APP SECURITY SOLUTION TO HANDLE DOUBLING OF DEMAND FROM COVID-19

OneSpan’s scalability helps DenizBank protect millions of mobile banking users as the coronavirus pandemic drives massive increase in hacking attacks...

News4 days ago

KASKO PARTNERS WITH VIVIUM TO LAUNCH FULLY DIGITAL BIKE INSURANCE IN BELGIUM

Vivium, a member of the P&V Group, turned to the InsurTech provider to build an omni-channel and bilingual insurance product,...

News4 days ago

THE STRATEGIC ALLIANCE BETWEEN MINSAIT AND AURIGA WILL PROVIDE AN INNOVATIVE OMNICHANNEL PLATFORM FOR A SUPERIOR BANKING EXPERIENCE

Minsait, an Indra company, and Auriga have reached a strategic agreement that will strengthen their position in the digital transformation...

News4 days ago

INFORMAL PUBLIC TRANSPORT: FRONT-LINE MOBILITY HEROES

By Devin de Vries, CEO, Where Is My Transport    Every week, 5 billion commuters in emerging markets have no...

Finance7 days ago

FIXING THE FLAWS IN FINANCIAL SERVICES’ DATA MANAGEMENT

Simon Cole, CEO at Automated Intelligence, a cloud-based data compliance and governance solutions provider to the financial services sector, warns FS...

Business1 week ago

FROM MANUAL TO MACHINE LEARNING: HOW TO APPROACH THE RECONCILIATION ‘PROBLEM’

By Christian Nentwich, CEO at Duco   At the start of 2020, before the global coronavirus pandemic changed the world,...

Trending