Definition of Business Intelligence
Business Intelligence consists in a set of procedures used by companies to recover and process data to be analysed, in order to produce a proper disclosure supporting managerial strategic decisions.
Companies have extremely large set of data, which are usually rough and can only provide static but not dynamic information. It is therefore necessary to appropriately process these data, otherwise they will be useless for the company.
Innovative technologies and information extrapolation processes have led to unpredictable results.
Business Analytics, which is a branch of Business Intelligence, proves the evolution of data management system, since it involves processes such as data mining, statistics and forecasts in the company analysis.
Through Business Intelligence, the management can have a complete view of the activities and a scenario of future possibilities. Data mining allows for the identification of possible evolutions, by extracting unknown information within a large dataset. This process can identify and provide the result of links, patterns or anomalies, which are not visible using a traditional extraction process.
Business Intelligence uses data derived from the process above to support the company’s board on operative and strategic decisions. To be effective, the data concerned in the process are required to be adequate from a qualitative perspective. Data governance ensures the production of a correct and appropriate disclosure, that can be used to produce real and consistent reports.
Business Intelligence has evolved over time: at the beginning, it just offered a basic type of analysis, which could be consulted only for certain needs. If there was the need of an analysis with different requests, the cycle had to be completely restarted to produce a new report: an extremely time-consuming process.
Today, thanks also to the transformation of the algorithm that form the basis to technological processes, the system is able to reply to a set of queries presented real-time by the user.
Advantages of Business Intelligence
The use of a BI process has many advantages. Among then, the following are worth noting:
- Data consulting is simple, also for users with no experience on IT;
- The dashboard function provides a user-friendly display of reports;
- Possibility to be integrated in the existing company’s information system;
- Increase of company profitability and performance;
- Improvement of operations;
- Company risk control;
- Compliance monitoring.
Moreover, BI offers the possibility to use univocal data in each company business area, identify of any weaknesses and address them, fastening and improving the efficiency of the decisional process, through information support.
Importance of Business Intelligence in the banking sector
Business Intelligence is useful especially in the banking sector where, besides strategic and commercial needs, there are also compliance and risk management issues. The financial market is becoming more and more competitive and take decisions to improve profitability could be very challenging.
For what it refers strategic and commercial needs, thanks to BI, credit institutions can identify client behavioural patterns, make a comparison with competitors (analysing system feedback) and identify potential market scenarios.
Relating to compliance and risk control functions, BI allows to display company conditions and to forecast possible risks that could be incurred by the institution, or modify certain behaviour responsible for the non-compliance with relevant regulations.
Relationship with clients and their needs are the key elements. A large set of data containing information related to each customer can be used to carry out analysis, forecasting future needs or possible related risks.
BI technology is the real engine of the process that allows banks to address these challenges and satisfy each request by the board, regulatory and supervisory authority.
Business Intelligence and technology
BI founds on specific elaboration algorithms, the application of which – following a processing of large sets of data, also from different sources – allows for the production of real-time updated reports and statistics of easy consultation, thanks to dedicated dashboards.
The data included in the reports results from analysis and procedures with different level of complexity, to provide useful information to high managers and the control department.
Save Consulting created a module of the TIGREARM suite dedicated to BI: MidaBI
The business intelligence module, managing the data set related to regulatory reporting, allows for an in-depth and cross control of data quality (i.e. an actual data governance)
Advantages for users:
- Easy to use and display of any inconsistencies among surveys;
- Positive prociclicality in the identification of differences and their adjustments, and in the achievement of effective management objectives;
- Wide range of reports, both with pre-determined and free formats, by producing indicators, value classes and relevant analysis (data mining) of time mismatches;
- Power what-if engine to simulate value classes, aggregates and/or indicators in an extremely simple way.
The module dedicated to Bank of Italy feedback of the TIGREARM suite also uses the Business Intelligence process
The module Bank of Italy feedback includes:
- Probability of default – default rate in 1 year
- Probability of default – multiple periods
- FINREP feedback
- Negative trend monitoring of bank loans
It should be noted that the system (based on Business Intelligence) is also designed to manage other disclosures.
The main advantages refer to a two-folded possibility:
- data surfing (drill-down from synthesis data to elementary ones)
- setting of qualitative benchmarks for internal analysis (data mining) on data set and the positioning of the bank for such dimensions.
Like all other TigreArm modules, it is web-based and it can be used also for remote working