How Indian BFSI Firms are Thriving through Data-Driven Strategies
BFSI Data Analysis

How Indian BFSI Firms are Thriving through Data-Driven Strategies

By Rajarshi December 13, 2023 - 102 views

BFSI firms in India are innovatively leveraging data-driven strategies to thrive and flourish in recent times. Online banking has already generated customer expectations regarding cutting-edge services irrespective of location and time. Open banking and embedded finance have also raised the bar further, enabling customers to get credits through non-bank enterprises.

Open banking is also enabling third-party access through APIs to financial information. With the increase in advanced banking operations, customers are steadily expecting their institutions to anticipate their needs better. 

At the same time, another indicator for BFSI firms about using data analytics in BFSI is to enable better customer experiences for future growth. A Salesforce report in 2019 covered 8,000 business customers and buyers globally and reported how 84% of customers feel that customer experiences are as crucial as the services and products offered by any financial institution.

Data shared across multiple touch points and channels have thus opened up several new opportunities for BFSI players throughout the Indian finance sector to flourish amidst a competitive landscape. 

How Data-Driven Strategies are Helping BFSI Firms Flourish 

Data analytics in BFSI and other data-driven strategies are enabling BFSI firms in India to thrive and grow in the present scenario. Here are some pointers worth noting in this regard. 

  • Financial services firms are using data gathered on customers to build more innovative and newer products/services for enhancing their revenue and income streams. This includes using data for collaborating with non-bank firms to create a service network. Banks are already partnering with companies like automobile brands to enable direct vehicle purchases from their websites. Data is also being used to gain insights into customer behaviour. 
  • Data optimisation and gathering are also helping BFSI firms streamline and optimise their operations and processes via AI, ML, and robotics. They are lowering operating expenditure and enhancing performance while using this data to lower operational risks and business processing costs. Automated data is being used to remove procedural problems while AI is boosting automation to make more value judgments. The customer count is also going up by tapping both online and offline channels more effectively. Customers are also being segmented better to gain real-time insights through available data, profiling, analysis of transaction patterns, immediate and past behaviour, and so on. 
  • One of the biggest data-driven strategies employed by BFSI firms is personalisation. They are leveraging data and analytics to offer personalised products and services as per customer requirements. This may cover matching life needs with available services, bespoke pricing models, insights for improving financial well-being, and more. 
  • BFSI companies can also view customer behavioural patterns and market trends by analysing and gathering real-time data. They are gaining competitive advantages since they can anticipate customer needs and get into newer business streams while acquiring and retaining more customers. They can identify the willingness to pay through advanced AI-based data analysis while banks are also refining their pricing models and customising them accordingly. 
  • Financial services firms are also making more informed decisions through optimising and gathering customer information. Data-led prediction enables better fraud detection, risk management and mitigation, credit decisions, collection strategies, forecasting liquidity requirements, and lowering costs. 
  • BFSI firms are also depending on data to steadily offer automated and personalised customer support via Chatbots along with providing recommendations, tips, and guidance along with personalised wealth management solutions. 
  • They can use analytics and AI to enhance cross-selling, building more predictive models for existing data on customer behaviour. 
  • They are lowering compliance-based risks by ensuring trusted data that is needed at regulatory levels. These regulators can easily build and analyse risk profiles to enhance credit management and fraud detection alike. Their data-driven approach is also helping them gain insights through analytics, helping them build customer understanding, make decisions faster, and boost business processes accordingly. 

It is a fast-changing world that necessitates the usage of data-driven strategies across the board for BFSI firms. The digital banking platform segment is already expected to grow by a whopping 11.2% (CAGR or compounded annual growth rate) from 2021 to the year 2026. Bots are leveraging data to provide better customer service across touchpoints without requiring branch visits or conversations with agents. They can service customer requests easily while handling other activities seamlessly. 

Conversational AI platforms are also using NLP that is integrated with IVR systems. These systems can take calls by answering repetitive questions and prevent any customer panic. Customers are assisted in swiftly resolving queries while calls that are complex are transferred to agents. Banks are offering branch-like services with data-driven strategies, building customer profiles/personas, predicting behaviour, and recommending ideal financial services and products.  

Fraud detection and security models are trained on continual incoming data, helping BFSI firms know more about normalised activity levels, transaction anomalies, deviations, and more. Another method is behavior profiling which studies customer data and accounts to build profiles and understand where/what kind of transactions have taken place.

Prescriptive analytics also helps leverage the data that is gathered by predictive analytics to recommend the measures to be taken once fraud is identified. These are some of the many ways in which data-driven approaches are helping BFSI players thrive in an increasingly competitive Indian finance sector. As they say worldwide, data is the new oil and it will soon be the differentiator and competitive advantage that companies in every sector will want to harness, banking and financial services included. 


What key benefits do Indian BFSI firms experience through the adoption of data-driven approaches? 

Data-driven approaches are helping BFSI firms in India obtain several major benefits including the ability to personalise products/services for customers, identify and eliminate fraud, predict risks and manage them accordingly, and a lot more. 

In what ways are data-driven strategies enhancing decision-making within the Indian BFSI sector?

Data-driven strategies are boosting overall decision-making within the Indian BFSI sector. Banks and financial institutions are leveraging data to make better decisions on granting loans or other products, offering personalised services or solutions to customers, identifying and mitigating risks, and so on. 

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