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Big banks turn to big data to track clients
MUMBAI: India’s banks, which are struggling with rising proportions of non-paying assets (industry euphemism for bad debt), are increasingly taking to big data analytics to track customers and their servicing and product needs — along with faster loan recovery in the case of defaults.
Big data analytics is a process of capturing, managing and analysing massive amounts of data from various sources such as e-mails, websites, voice call logs, internet browsing, cache data, social media and real-time market feeds. In the past, it was viewed as unglamorous and used mostly to formulate marketing campaigns. No longer.
Top banks such as State Bank of India (SBI), ICICI Bank and HDFC Bank are relying on such unstructured data to help them improve business growth.
Shiv Kumar Bhasin, chief technology officer (CTO) at SBI, said, “Traditional data (such as credit score) is limited to structured data.” Big data, he said, has the huge advantage of more data matrices to aid faster and more in-depth analysis.
“The latency time or the analytics lead time gets reduced from T+2 (two days from the day of transactions) to T+a few seconds… Hence we get recovery leads and potential bad loan data immediately which can help us put mitigation in place. The data helps in loan recoveries, especially on student loans and get early warning signals on the corporate and SME (small and medium sector enterprise) clients,” Bhasin said.
ICICI Bank has formed a dedicated credit monitoring group which will leverage analytics, develop predictive models and parameters for early morning signals by day-to-day monitoring of its corporate and SME portfolios.
“The group will use transaction data analytics with advanced and proactive monitoring and compliance for early stress warnings. It will bring more focus and aid recoveries,” Chanda Kochhar, MD and CEO of ICICI bank, said in a conference call. Basically, the bank would have an inkling of potential bad news early enough to try and avoid it.
Such analytics are also helping banks improve their customer service and modify strategies and re-engineer their products to suit demand and better cross-selling.
Vivek Belgavi, FinTech Leader, PwC India, said, “Now, the trend is around digital and the use case is more to serve the right product at the right time base on your location, preference, need, etc. So it is becoming more in line with the process...”
According to Belgavi, many analytics are also based on tieups with e-commerce or telecom companies and hence banks would have a better picture of who the customer is and what it should offer.
IT industry body Nasscom predicts that big data analytics will become a $16-billion (ober ₹1 lakh crore) market in India by 2025. The country is currently among the top 10 data analytics markets in the world.
The buzz notwithstanding, credit score would continue to be the main criterion for loan disbursal, said Rajat Gandhi of Gurgaon-based Faircent, a peer-topeer (P2P) lending platform.