Reducing Competitive Risk in Indian Banks through Business Intelligence

Reducing Competitive Risk in Indian Banks through Business Intelligence

Dinesh Kumar (Bank of Baroda, Patna, Bihar, India)
Copyright: © 2013 |Pages: 12
DOI: 10.4018/ijrcm.2013070103
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Abstract

Business Intelligence (BI) uses information technology software, in particular Extensible Markup Language (XML), to provide competitive information in support of competitive risk analysis for executive decision making. Research in the Indian banking industry indicated that BI data suffered from time lag, poor quality, lack of customer-specific data, and improper classification of data. Furthermore, after 1995 there was retail boom in India, which increased the number of banking clients, followed by the use of virtual banking through the Internet, thus increasing the number of transactions. The Reserve Bank of India (RBI) directed all banks to eliminate manual interventions for BI data collection and to establish a centralized BI system by December 31, 2013. This was a problem for the majority of banks who used older systems for BI. This action research study examined how banks were implementing BI while complying with the RBI directive. Several best-practice BI models were developed from interviews with the case study organization and based on analysis of project data.
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Literature Review

According to Mircea and Andreescu (2009), a BI system monitors operational transactions (1), integrates BI data (2) for decision analysis (3) across multiple end user platforms (4), as conceptualized in Figure 1. Furthermore, modern BI systems integrate data by utilizing Extensible Markup Language (XML), a tagging methodology which eliminates barriers inherent in proprietary technology products (Mircea & Andreesci, 2009).

Figure 1.

Business intelligence model (adapted from Mircea & Andreesci, 2009, p. 385)

At the heart of a BI system is the BI access method (BAM) which employs Service Oriented Architecture (SOA) as a cross-platform application software communication standard to read, interpret and write BI data using XML (Mircea & Andreesci, 2009). Business Process Software (BPM) is used to apply decision rules for competitive prioritization and risk analysis, including encompassing the requirements needed for compliance with the Reserve Bank of India (RBI) requirements (Jafartarokha & Teymournejada, 2012). The BI data is output to email, workflow systems, and online executive 'dashboard' reports, using XML, as illustrated in Figure 1.

In a typical BI system implementation, on one side, there is a vendor or a system integrator (Zavodny, 2013). On the other side there is a user. Both the vendor and user complete a requirement analysis first to understand the business requirement at the top management level. Then they try to determine how the user can translate these requirements into a software and database design so that BI engine can answer all the questions that a future user might ask (Nandi, 2012).

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