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Integrated profitability analytics - The need, struggles and future

 

Introduction:

Banks have enjoyed relatively high profit margins for long time. But the recent trends in Banks profit margins have not been very encouraging.  The recent business developments like changing technological landscape, higher capital requirement on regulatory front and entry of newer payments and banking platform have led to significant decrease in profit margins and highly vulnerable customers.

 

To sustain, grow and compete with new fintech (finance technology) start-ups, financial services enterprises need to continuously evolve and provide more value to their customers at a much lower cost. This requires multidimensional profitability view across the enterprise at the most granular level and timely availability of analytics for key business decision.

Key focus of financial services enterprise

Due to the changes in business environment the focus on enterprise-wide profitability measurement has increased. The focus is more on managing information rather than accounting information - information which can be used to support business decisions based on the granular customer level analytics. This level of information helps to answer key business parameters like which parameters can be changed to increase profitability, how do a product and geography compare with other, which are my highly profitable customers etc?

Challenges on the road to achieving integrated profitability analytics

The key challenge is the complex landscape due to multiple systems operating in silos. This makes it very complex and time consuming process to bring all the data at the granular level together in same format without data quality issues. Other challenges include custom built solution which is difficult to maintain and change, static allocation engine which is very inefficient and cannot take dynamically changing driver data from multiple systems.

Therefore it is imperative to adopt the right solution which can produce the required information accurately and timely to support decision making. The solution should be able to provide a holistic view of profitability across the enterprise at an account and customer level. Typically, enterprises find it difficult to allocate indirect cost. This requires the solution to have robust and dynamic allocation framework adaptable as per business needs.

Infosys Approach for integrated profitability analytics

 

Infosys profitability analytics solution leverages oracle financial services profitability management (OFSAA) to provide integrated profitability analytics. This can be integrated with OFSAA analytics solutions such as enterprise, retail and institutional performance analytics to gain an in-depth view and ready-to-use dashboards. The enables institutions to gain an integrated and multidimensional profitability view across dimensions such as product, channel and even individual customers.

Business benefits of the solution

  • Incorporate risk into business decision making

  • Prioritize customers based on profits generated

  • Achieve a consistent view of performance across the organization

  • Get timely profitability insights for go-to-market strategy

     

Conclusion

With the ever changing business environment, intensified competition and increasing need for personalized products and services, the financial services industry would look for more detailed analytics. This would enable them to offer a bespoke product to cater to the specific needs of a customer. Infosys approach for profitability analytics solution helps enterprise achieve multidimensional integrated profitability analytics at the most granular level. The solution helps the management not only to evaluate and retain the existing avenues but also explore newer opportunities.

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