Harnessing Big Data solutions to address big banking priorities
‘IN 2015, the banking industry will take more decisive steps in creating the ‘cashless society’ that has long been predicted by banking and economic pundits,” says Vuyo Mpako, Head of Innovation and Channel Design at Standard Bank.
This follows what was a watershed year in 2014 for the sector – a year in which the sector introduced new, innovative banking solutions at a rate that surpassed any market-driven retail banking initiatives within the last decade.
Mpako added: “Setting the pace for 2015 and beyond, banks in 2014 embraced the mobile lifestyle led by their customers, placing the emphasis on seamless services and solutions that are available 24/7 and are as close as customers’ laptops, tablets and smart phones.”
According to Wayne Dick, Business Development Manager – Sub-Saharan Africa at Hitachi Data Systems (HDS), a wholly owned subsidiary of Hitachi Ltd, “key among the challenges facing financial services organisations today are risk management, the need to become more innovative, and driving greater customer engagement for improved customer loyalty. Effective big data management addresses all of these priorities”.
Yet when HDS conducted research in the UK recently, it found that 69 percent of the large organisations investing in big data analytics said they did not currently have the infrastructure in place to analyse up to the minute information across all their data sets.
In South Africa, high level research conducted by Strategy Worx on behalf of HDS suggested that while many of South Africa’s large corpora- tions do have the hardware infrastructure in place, the chief information officers within those organisations are generally not currently using big data analytics or systems in any substantive way.
Dick adds: “Legacy infrastructure, silo’d data sets, a lack of high end data analytics skills and a lack of understanding of the true potential for big data may stand in the way of greater adoption.
“By integrating historical, structured transactional and customer data with unstructured data residing in call centre logs, correspondence and social media, and using effective advanced analytics, financial institutions put themselves in a position to identify previously unseen patterns.
“This allows for a better understanding of customer needs and market trends, as well as more effective identification of potential risks.
“Through advanced big data storage, management and analysis, banks are empowered to reduce their operating costs, predict future change and examine ‘what if ’ scenarios to drive innovation and service.”
Dick explains that HDS partners with leading global financial services to field solutions architected to support effective big data management and innovation in banking.
HDS focuses on analytics, integration, intelligence, and big data solutions, delivering the ability to combine structured and unstructured data, manage data as it scales in real time, analyse data to gain valuable insights, and correlate information from multiple sources.
Hitachi information solutions use a single, virtualised platform for all data types to ensure seamless access, protection and management.
For example, HDS powered Credit Union of Australia’s (CUA) brand transformation with solutions including the Hitachi Virtual Storage Platform to overhaul the bank’s data strategy.
The upgrade positioned CUA to effectively compete with Australia’s ‘big 4’ banks, explore new commercial opportunities through new customer insights, replicate all its data securely and safeguard against disaster situations.
Croatia’s Hrvatska poštanska banka (HPB) also turned to HDS for solutions to help speed up batch operations off its legacy storage systems, while at the same time replicating data to the disaster recovery centre, reducing costs, and improving performance and features of the central backup system and supporting the processing of data in a new, efficient way.
Changes currently happening to banking will see the last vestiges of features that were the cornerstone of banking offerings a decade ago being virtually eliminated as South Africans continue to benefit from banking services that are as good, or better, than any others that are available internationally, says Mpako.
“South African banking has long been at the global cuttingedge of financial services. We have led countries like the US and many in Europe.
“We are most often compared to Australia, another leading banking nation, which also has a reputation for the introduction of innovative solutions.
“This began with the introduction of ATMs, then the use of Saswitch which enabled wide use of any ATM in the country.
“The last decade has seen the virtual demise of the traditional cheque book, paperbased accounts and a decrease in the number of people visiting branches.
“This leadership continues today and is apparent through the solutions that are regularly introduced.
“In a competitive industry, innovation for innovation’s sake can occur. Avoiding this requires two tests to be conducted; the first being whether the solution adds value and convenience by meeting customer needs; the second, and most important, whether it is cost efficient.
“It is in the cost arena that the most change has taken place. Keeping costs down has been enabled both by a move away from the need to build more traditional bank branches, and an increased drive to embrace and leverage technology.
“Solutions that can be delivered through smartphones will enhance, broaden and simplify access to banking services in the future,” says Mpako.
Shailendra Singh, Business Director: Africa, Wipro, says: “A key technology to watch for is machine learning and cognitive computing – especially when coupled with natural language processing.
“These technologies have the potential to improve the self-service experience that banks provide via their digital channels – providing routine answers to customer queries or financial advice akin to a human conversation.
“Its impact is not limited to the front-end engagement. It will also get leveraged in business process taking up some of the decisions that were traditionally executed by back-office personnel.”
Fraud is always a major spur to technological innovation and South African companies experience more fraud and bribery than their counterparts elsewhere in the world, the PricewaterhouseCoopers Global Economic Crime Survey 2014 found last year.
According to the South African Banking Risk Information Centre (SABRIC), South Africa lost more than R2.2bn through fraud and related cybercrime in 2013.
Meanwhile, data from the South African Fraud Prevention Services (SAFPS) revealed that the number of identity theft cases reported by the end of April 2014 increased 16 percent year on year.
One recent innovation came when Experian SA launched the National Fraud Prevention Solution (NFPS) to address the significant threat of identity and credit application fraud in South Africa.
Experian SA believes SAFPS figures are only the tip of the iceberg as many frauds still go undetected in the absence of more effective fraud prevention systems.
Experian’s NFPS offers South African credit providers an online, real-time credit application fraud prevention service.
The solution highlights po- tentially fraudulent activity within seconds of someone applying for any loan or credit across a company’s own data or a controlled match against other companies’ credit application data.
The solution compares new applications for credit with previous applications and other data sets to identify inconsistencies and anomalies that indicate the likelihood of fraud occurring.
Sophisticated detection rules are also used to screen for and identify any potential syndicate frauds across the participating companies.
To demonstrate the potential savings to companies and credit providers, David Coleman, Head of Analytics at Experian SA explains: “Prior to the launch of the new solution, we conducted a pilot programme with 12 companies from different sectors – including financial services, telecommunications, retail and automotive.
“The pilot programme identified 1.7 million credit application matches in the shared community pool.
“A total of 138 000 fraudulent and bad applications were identified across the community pool which amounted to approximately R175 million in potentially prevented losses over that three month period”, he says.
A lack of understanding of the true potential for big data may stand in the way of greater adoption According to the SABRIC, South Africa lost more than R2.2bn through fraud and related cybercrime in 2013