Sneak Preview: Predictive Analytics in the financial industry

EY VODW
16 jun 2016

Waarom is NU de tijd voor predictive analytics in de financiële branche? Onder de vlag van Mobey Forum, de wereldwijde organisatie die marktleiders uit de bancaire en financiële sector bij elkaar brengt om toonaangevend te zijn in de financiële wereld, schreven Nick Jetten (VODW) en Amir Tabakovic (BigML) de eerste Engelstalige white paper uit een nieuwe serie. Hieronder een sneak preview van de executive summary van de eerste whitepaper: ‘Predictive Analytics in the Financial Industry. The Art of what, how and why’.

Predictive Analytics in the financial industry

This first white paper of the new series discusses the value of predictive analytics for the financial industry and answers the question why this is the right time to start with predictive analytics and how to empower entire organisations to use it.

As mobile technology evolves and everything around us – not just our mobile devices– is becoming connected we are entering a new era of connected experiences. The customer journey in the financial industry is completely digitized. This exponentially increases the number of interactions between a financial service company and its customers. Customers expect banks to understand their context and the challenge for financial industry is to be relevant at all these interactions. Given the gold mine of data that banks have access to, the field of predictive analytics offers a range of untapped opportunities in doing so. When implemented successfully, predictive analytics will lead to vast improvements of existing static business rules and achieve progress like reducing cost, increasing revenues and improving customer experience. Mobey Forum expects that predictive analytics skills will soon be essential for banks to keep their position in the market against non-banks but also other banks that will be using predictive analytics as a competitive weapon. That’s why building skills that go beyond the conventional descriptive analytics and focusing on the question “what will happen?” has to be top priority for every financial institution.

'Given the gold mine of data that banks have access to, the field of predictive analytics offers a range of untapped opportunities.'

To understand the concept of predictive analytics the paper discuss the difference between descriptive and predictive analytics. The majority of business analytics at financial institutions is currently still focussed on the ‘rear view mirror’, resulting in descriptive analytics. The questions more concerned with the future mainly remained unanswered from an analytics point of view. These decisions are often made intuitively and are seldom fact based, often resulting in sub-optimal decisions. With predictive analytics we do identify and address questions concerned with the future. We learn from our experience and predict future behaviour in order to drive better decisions.

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