Page 208 - DMGT303_BANKING_AND_INSURANCE

Unit 10: Non-performing Assets

10.6 Converting NPAs to Performing Assets (PA) By Power of Notes
Business Intelligence (BI)

In simplest terms, BI integrates data from multiple data sources and provides analysis capabilities
to better understand customers, markets and risk and gain greater visibility into business
operations. The solution to most of the problems faced by banks lies in implementing business
intelligence (BI) solution.

BI is the technology that unites uncommon corporate data into one resource, groups it as a single
source of company truth, and leverages it to achieve the strategic goals of the organization.
BI does analysis and presents information in such a manner that supports tactical (routine) and
strategic (special) decisions that ultimately affect revenues and profitability of a business.

BI will help the credit/banking industry to handle:

1. The loan origination process,
2. Handle increasing transaction volume,
3. Technology investments to enhance the operational processes,

4. Give timely reports on various categories of assets,
5. Suggest recovery mechanism and report its progress.

A BI solution provides:

1. A single point of access, thereby reducing the costs of identifying, gathering, and processing
data.

2. It ensures that both operational managers and key executives make decisions based on
data that is factual and as per rules.
3. BI can be used to analyse the geographic distribution of advances to better understand
concentration of credit and prepayment risk, based on differences in regional economies,
and to analyse loan portfolios.
4. BI can also be a critical tool to help bankers obtain high credit ratings from the rating
agencies. (A rating agency assesses a banker's ability to meet its debt obligations in the
future and thereof prevent and mitigate losses).
5. The analysis and reporting capability and level of transparency and control provided by
a BI solution could be one of the qualitative factors in support of a higher rating.

According to Dr. K M Bhattacharya, Dean, Centre for Advanced Banking and Finance Studies,
ICFAI Business School,
"The survival, growth and success of banks in today's fiercely competitive business environment
depend on the quality of strategic decisions of the management, in which a robust BI solution
can help".

Did u know? After announcement in the union budget 2002-03, Assets Reconstruction
Companies (ARCs) were established with the participation of public and private sector
banks, financial institutions and multilateral agencies.

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