Why Payment Players Need Analytics Apart from Traditional Reporting

Author


Abdul Hameed Ashik

Lead Business Analyst, Opus Consulting
linkedin

With the processing of mammoth volumes of transactions in fractions of a second and the sky-high expectations of consumers and stakeholders, the decision makers — the “players” — in the payments industry need accurate information to support their proactive business decisions. Traditional reporting provides information that describes what has happened or is happening; it presents “snapshots” of operations. Advanced analytics solutions can identify operational trends and correlate external market patterns, providing better insights for managing the business. This communication describes how payments players can leverage traditional reporting with analytics

Limitations of Traditional Reporting

The primary limitation of traditional reporting applications is data latency. The volume of payments transactions produces billions of data bytes that must be processed for the reports, and this takes time. Reporting tools are complicated to use and understand. Players must then read the reports to gain business insights, and so there are “gaps” in understanding of the actual customer experience. In addition, payment players are more interested in answering the “why” and “what if” questions than the “what and where it happened” questions. Traditional reporting can only answer “what and where.” Your senior management, as well as your company’s customers, need more answers and more quickly than what reporting provides.

The Value Added of Analytics

Analytics applications use transaction data in a better way. They provide real- or near-real- time updates without the data-latency issues of traditional reporting. Analytics functionality can help players meet the current cash position, quickly realize the status of the payments, anticipate the availability of funds–automatically, without the need for staff to “deep dive” and produce the information using a reporting tool. Analytics can meet the growing demands of vendors and clients for immediate and accurate payments information.

Chart

What follows are some examples that illustrate why payment players need analytics and the answers to the “why” and “what-If” questions.

The Why Behind Transaction Data for Customer Retention

The transaction overview report will provide insight as to the channels customer use and their transaction frequencies. However, a traditional “Spend Report “ may not be of much use in this fast-moving payments business. An analytics application that processes real-time spend data can correlate the transaction sizes, channels and frequencies, offering greater insights as to why customers are choosing their transaction modes and locations — information that can be used to improve services and customer satisfaction and retention.

Where Revenue Leakage Occurs

Traditional revenue reports can identify where the revenue comes from and when it was booked. It may also provide information that shows where revenue leakage has happened. Analytic applications can search that data and compile all the sources of revenue leakage, large and small, enabling management to act on trends of patterns associated with the majority of leakage sources. It can also use real-time data to make predictions that improve an organization’s ability to anticipate revenue leakage.

The “So What” Answer: Leveraging Social Media ‘Likes’ and ‘Shares’

According to IBM’s State of Marketing 2013 Survey report, ” . . . marketers must orchestrate and adjust their campaign activities across all channels by applying real-time technologies and advanced analytics.” Traditional reporting for marketing has focused on data for insight about webpage load times, page views per visit, and time spent on the website. Analytics can be used to compare the effectiveness of the various online marketing channels — including the effectiveness of social media tags such as Facebook ‘Likes’ and site ‘Shares’ — as well as trend analyses of page visits comprising the company websites.

The “What if” Answers for Enhanced Risk Management

Current risk reports and dashboards commonly present information that describes how the company is performing and its up-to-date risk profile. Other questions remain to be answered. Where are we experiencing problems this week? Where are inventory controls failing? What is our current opportunity cost from empty store shelves?

Using analytics, multi-dimensional Risk Indicators can be developed that are more closely correlated with desired business outcomes; the application can also determine the contribution of a given indicator to overall risk.

Analytics Applications for Payments

In addition to the examples above, analytics use cases for the payments business include tracking money laundering, managing treasury functions, and improving sales. Use cases you may have thought to be impossible are now in production thanks to recent advances in s Big Data and analytics technologies.

The following is a list of analytics application categories and the percentage of analytics projects Opus Consulting has supported.

  • Consumer Behavior Analytics, 50%
  • Operational Analytics, 20%
  • Risk Management Analytics, 25%
  • Miscellaneous Business Operations, 5%

Conclusion

Key Performance Indicators (KPIs) have been utilized heavily in the payments industry for the past fifteen years for decision support. For the reasons we’ve described here, traditional reporting of KPIs can help with “reactive decision-making.” KPIs provide information on “the what,” “the where” and “the how.”

The answers in traditional reports now prompt payments players to ask “why and “what if?” Those companies who invest in Big Data and analytics to answer these additional questions will improve business performance and gain competitive advantage.

Recent Posts

Leave a Comment

Start typing and press Enter to search

Untitled design (8)Untitled design (10)