The retail banking
also known as consumer is banking provides services such as savings and
checking account, mortgages, personal loans, debit/credit card to individual
customers through local branches. Banks facilitate transfer of funds between
accounts, currency conversion, auto transfer between accounts, bill payments
etc. The major source of income for banks is the difference between interest
paid by customers for loans and the interest paid to customers for having funds
in savings account. Additionally banks earn revenue from monthly maintenance
fees, conversion charges and fee for various banking activity such as Swift
transfer etc. Banks are regulated by a federal agency and have to abide to
rules and regulations laid down by them. Certain regulations include
maintaining a certain percentage of liquid funds at all times, reporting fraudulent
transaction and customers etc.
As discussed
in the above paragraph banks earn their bread and butter by lending money to
borrowers and pays some part of it to customers who maintain funds in their
savings accounts. One of the important business metrics that the CEO would be
interested in while evaluating performance of a bank is the total funds product
wise in a financial quarter. He would also be interested in evaluating the
number of accounts under each product and the number of active customers for a
quarter. Such data can be used to analyze how the distribution of funds is
spread across various products and help implement strategy to maintain
liquidity. Additional metrics such as number of accounts under each product and
numbers of customers when compared across quarters provides QoQ statistics and
can help business teams to come up with products and promotions to increase
customer base for a particular product or service.
The banking industry
is becoming increasingly dependent on information technology to retain its competitive
edge and adapt to changing market scenarios. Every day as a result of the sheer
volume of transactions that take place in a bank, enormous amounts of data is
produced. Yet most of this data that can be used to gather strategic information
remains locked within archival systems. Dimensional modelling of such
information can be used to generate reports that can be used by corporate heads
while making decisions regarding strategy. Reports can also be generated for
compliance issues. The lack of consistent data restricted the use of model
based decision making.
Dimensional
modelling can help the business processes in the following ways
1.
Collate
data from multiple sources and create a single consistent view.
2. Quick ad hoc queries to support real
business questions
3. Help maintain flexibility and
scalability.
4. Optimize user end to end experience by
encapsulating the underlying model.
Considering
the metrics we earlier described about quarterly information of funds across
products and customer segments, a periodic snap shot fact table would be the
appropriate selection. A snapshot of the account balance for account belonging
to various products and customers will be uploaded at intervals of quarters.
This information can then be used to generate report of the total funds under
each product or customer segment type for a quarter.
A sample
dimensional model is shown below.
The dimensional model shown above provides one way in which
a model can be created to provide quick statistics for decision making.
