A study of Indirect Competition in the BI (Business Intelligence)

Banking Domain

Banking has come to occupy a pivotal position in a nation’s economy. According to

the modern concept, banking is a business which not only deals with borrowings,
lending and remittance of funds, but also an important instrument for fostering
economic growth.

So what is banking? According to the World Wide Web, banking is “the business
activity of accepting and safeguarding money owned by other individuals and
entities, and then lending out this money in order to earn a profit.” The Banking
Regulation Act 1949, defines the term banking as “the accepting for the purpose of
lending or investment of deposits of money from the public or otherwise and
withdraw able by cheque, draft, order or otherwise.”

In relation to the activity, a bank is an institution, approved by the government,

which receives deposits, pays interest on the deposits, offers loans, invests in
securities, collects, certifies and issues checks, drafts and notes. Wikipedia defines
the notion as a financial organization that receives deposits and then refers them to
borrowers.

There are numerous types of banking ranging from retail banking, commercial
banking to merchant banking. However, we focus on retail banking which is typical
mass-market banking in which individual customers use local branches of larger
commercial banks. Services offered include savings and checking accounts,
mortgages, personal loans, debit/credit cards and so forth. This banking allows
banking institutions to execute transactions directly with consumers, rather than
corporations or other banks.

This concept of retail banking brought about a lot of hurdles and bottlenecks; one
simple instance is a customer belonging to a branch of a bank not being able to
perform any transactions in a different branch of the very same bank just because
he does not hold an account in that branch. Hence, the concept of Core Banking
came into being. Core Banking is a general term used to describe the services
provided by a group of networked bank branches. Bank Customers may access their
funds and other simple transactions from any of the member branch offices at real
time. Core banking is another way of saying the core functions of a bank. These
functions represent the essential (core) business of banking which is accepting
deposits and lending money. The most basic level core banking manages financial
transactions and their impact on the accounts of its customers. To achieve this it is
obviously necessary to hold details of the bank’s customers (often called customer
static data - their names and addresses, for example) or to link into another
database that holds that data. Therefore a core banking system will often offer a
basic customer database function.

A core banking system will often provide other routine maintenance activities such
as opening and closing accounts, calculating interest (both due to the customer and
due from the customer), processing customers’ standing orders, providing account
statements and interfacing to outside systems for making and receiving payments.
These core banking systems are provided by many viz Finacle by Infosys, TCS
BaNCS by TCS, FLexCube by Oracle Financial Services Software, etc.

Core banking systems (CBS) offer a huge array of services to banks. However, they
are a huge warehouse or “dumping ground” of a mammoth load of raw and crude
data. This data is “dumped” from the all the numerous branches of the bank. Such
massive data is of no importance as all of it together cannot be comprehended or
can be made into any sense. Even in the midst of such crude though relevant data,
decision making becomes blurred. In order to make sense of this data, it needs to
be extracted from the core banking system, sorted, analyzed and then processed
into information which will aid the managers in optimal decision making. Here
comes the pivotal role of Business Intelligence.

Business intelligence (BI) is a broad category of applications and technologies for

gathering, storing, analyzing, and providing access to data to help enterprise users
make better business decisions. BI applications include the activities of decision
support systems, query and reporting, online analytical processing (OLAP),
statistical analysis, forecasting, and data mining. In other words BI is digging out
data from the vast data resources of the organization, sorting and analyzing and
presenting it for better decision making. The major functions of BI are reporting,
analytics, data mining, predictive analysis/forecasting, business performance
management and so forth.

So, why BI? Business Intelligence systems:

• Help in giving the information to the decision making teams with the proper
information when it is needed and the format in which it is needed.
• Help in integrating data from across the enterprise and in delivering self –
service reporting and analysis.
• Help in reducing the time taken for responding to requests also looking for
the proper information in attending to the requests.

The major players in the BI market are Microsoft, IBM, SAS, SAP, Oracle and others.
iCreate Software is one other formidable BI player.

iCreate is a BI solution provider for the banking domain. Biz$core is iCreate's robust,
quick-to-implement BI, Analytics and Performance Management solution. It has pre-
built operational and analytical reports with the ability to apply predictive analytics
to arrive at insights that can be converted into actions, by defining KPIs.
Preconfigured data adaptors that integrate with standard banking systems ensure
you have a solution in a fifth of the time others take and at the lowest TCO. One of
the value propositions of Biz$core is: Banks can have a fully functional BI solution
running in as little as 100 days with advanced solutions in areas such as Customer
Intelligence, Risk, and Compliance; whereas other BI vendors take a minimum
implementation period of 9-15 months!

iCreate Software has its expertise and acumen in the BI domain. However, there are
many BI vendors like it that face competition from the major players stated above
like IBM, Microsoft, etc. Such indirect competition can capture a huge chunk of the
BI market pie and also be a huge detriment to their growth and future prospects.
This indirect competition should not halt BI vendors like iCreate Software from
adhering to their vision and attaining their mission but it should be viewed as an
opportunity to manufacture differentiators and capture lost market share. Hence,
this study shows how such companies face and differentiate themselves from the
indirect competitors.