With businesses across all sectors gathering more data than ever before, the ability to analyseRead More
How can predictive analytics transform the financial services sector?
With businesses across all sectors gathering more data than ever before, the ability to analyse this and gain insight into customers is rapidly becoming one of the key factors that separate the best-performing firms from their competitors. And one market where this will be particularly true is in financial services.
This is a market that already has to handle huge amounts of information, with every transaction contributing to a permanent record of a customer's profile. It was therefore noted in a recent article for ITBusiness.ca that this presents huge opportunities for firms in this sector.
Writing for the publication, chief executive and founder of SalesChoice Cindy Gordon explained that one of the key changes in this area will be the move from reactive models to predictive analytics solutions that can enable financial services firms to be more proactive in their interactions with customers.
For example, she suggested that a company might use analytics tools to identify a stream of purchases on baby products over a three-month period, which can be used in combination with other customer information to suggest marketing options.
"[If] there is no bank mortgage on file with their customer record, a predictive trigger could recommend that a call from a mortgage advisor to make an offer and pre-empt the inevitable decision to seek a mortgage elsewhere," Ms Gordon stated.
Meanwhile, more advanced solutions could even study obituary information for details used when evaluating the risk profile of customers with certain attributes.
But it is not just learning more about customer profiles that financial services analytics can be used for, as Ms Gordon noted the technology also has a key role to play in areas such as fraud detection.
In the past, an insurance fraud analysis might only be performed every couple of months – by which time a bogus claim may have already been paid and the damage done.
"Now insurance companies run in-database fraud analysis twice a day, catching fraudulent claims within hours, and increasingly within minutes," she said.