Why Financial Institutions Need an Analytics Sandbox

The appetite for businesses incorporating big data is growing significantly as the data universe continues to expand at an astronomical rate. In fact, according to a recent Accenture study, 79% of enterprise executives agree that companies that do not embrace big data will lose their competitive position and could face extinction. Especially for financial institutions who capture and consume an incredible amount of data, the challenge becomes how to make sense of it. How can banks, credit unions, and other lenders use data to innovate? To gain a competitive advantage?

This is where analytics sandboxes come in.

A sandbox is an innovation playground and every data-consuming organizations’ dream come true. More specifically, it’s a platform where you can easily access and manipulate data, and build predictive models for all kinds of micro and macro-level scenarios. This sounds great, right? Unfortunately, even with the amount of data that surrounds financial services organizations, a surprising number of them aren’t playing in the sandbox today, but they need to be. Here’s why:

Infinite actionable insights at your fingertips
One of the main reasons lenders need a sandbox environment is because it allows you to analyze and model many decisioning scenarios simultaneously. Analysts can build multiple predictive models that address different aspects of business operations and conduct research and development projects to find answers that drive informed decisions for each case. It’s not uncommon to see a financial services organization use the sandbox to simultaneously:

  • Analyze borrowing trends by type of business to develop prospecting strategies
  • Perform wallet-share and competitive insight analyses to benchmark their position against the market
  • Validate business credit scores to improve risk mitigation strategies
  • Evaluate the propensity to repay and recover when designing collection strategies

A sandbox eliminates the need to wait on internal prioritization and funding to dictate which projects to focus on and when. It also enables businesses to stay nimble and run ad-hoc analyses on the fly to support immediate decisions.

Speed to decision
Data and the rapid pace of innovation makes it possible for nimble companies to make fast, accurate decisions. For organizations that struggle with slow decision-making and speed to market, an analytics sandbox can be a game changer. With all your data sources integrated and accessible via a single point, you won’t need to spend hours trying to break down the data silos for every project. In fact, when compared to the traditional archive data pull, a sandbox can help you get from business problem identification to strategy implementation up to 30% faster, as seen with Experian’s Analytical Sandbox:

Analytical_sandbox


Cost effective analytics

Building your own internal data archive with effective business intelligence tools can be expensive, time-consuming and resource-intensive. This leaves many smaller financial services at a disadvantage; but sandboxes are not just for big companies with big budgets. An alternative solution that many are starting to explore is remotely hosted sandboxes. Without having to invest in internal infrastructure, this means fast, data-driven decisions with little to no disruption to normal business, fast onboarding, and no overhead to maintain.

For financial institutions capturing and consuming large amounts of data, having an analytical sandbox is a necessity. Not only can you build what you want, when you want to address all types of analyses, you’ll have the insights to support business decisions faster and cheaper too. They prove that effective and efficient problem solving IS possible!

CMA offers solutions, such as Experian and other bureau credit reports, Industry Credit Groups and more to help companies determine how much business credit to extend. For more information on how we can help your company, contact Credit Management Association at 818-972-5300 or visit www.CreditManagementAssociation.org.

This article originally appeared here and has been reprinted with permission.

Why A/R Analytics Matter, by Mark Wilson

In today’s business world, virtually every department in every company uses analytics to create efficiencies, make better decisions, and improve results. For example, a sales manager is no longer basing the sales team’s success solely on the number of sales made—that person is utilizing technology that looks at a number of metrics beyond those final sales. Why? For multiple reasons. Analytics can provide any business area with information that helps them stay competitive, streamline processes, hold their team accountable, and keep their customers satisfied.

Credit and collections teams should be utilizing this same type of technology to track metrics relating to their business area, however two obstacles often arise: (1) many credit professionals don’t know this technology even exists, and (2) those that do know it exists assume that implementation is an expensive and grueling process that requires a lot of IT support.

So, what if you had an easy way to go beyond DSO and track metrics that will transform your company’s A/R into a strategic and value-driven operation? Would you be interested? What metrics would matter? What if there was a free trial of a software that would let you do this so that you could decide if this was a valuable tool?

My company, TermSync, offers a cost-effective accounts receivable software, that is easy to integrate and use. By offering a program exclusive to CMA members, we’d like to make it even easier for you to track important AR metrics. CMA members can use TermSync for FREE until the end of 2015 if you sign up before September 30.

As a Preferred Partner with NACM National, the TermSync team has come to realize how innovative NACM members are and how much they really care about improving their credit and collection processes, especially those in the CMA chapter.

If you’re interested in learning more, join our free webinar on Thursday, September 10, at 9am PST surrounding The 6 Metrics You Should Be Tracking to Guarantee Success. Register here!

Mark Wilson, a former CFO, is the President of TermSync, a cloud-based accounts receivable software company owned by Esker, Inc. Mark will present this topic at his webinar on September 10. Register here.

Using Predictive Analysis to Create Collection Management Strategies, by Christopher Rios

Traditionally, debt collection involved little more than picking up the phone and convincing the debtor why they need to pay for the products/services sooner rather than later. Today, credit and collection professionals are being asked to adopt more sophisticated techniques. One of the newer techniques utilizes predictive analytics to create collection management strategies. Predictive analytics permits creditors to identify at-risk A/R and focuses collection efforts on those customers with the greatest propensity for paying slow. This combination of historical AR data and predictive attributes will allow creditor companies to review and optimize their resource allocation, provide improved customer service, and to accelerate cash inflows. By doing so, creditor companies potentially reduce unnecessary costs across the credit to cash cycle and accelerate payments from high risk customers.

Inevitably, even the best collection strategies fall short at times. An organization’s fail-safe shouldn’t be to write off uncollectible receivables against its bad debt provision and move on. What is sometimes overlooked is the need for and the benefit of having a robust third party process for dealing with debtors that cannot or will not pay. Third party strategies should include bankruptcy administration, pre-litigation, litigation and mediation strategies.

Establishing a solid process that provides prescriptive treatment for dealing with non-paying, financially distressed customers will help creditor companies maximize the benefits of the third party services being provided. Ensuring you’re maximizing your return on investment and increasing the chances of recovering unpaid accounts receivable are two benefits of partnering with the right service provider.

This topic will be covered at the upcoming CreditScape Fall Summit, September 17-18 at the Tropicana in Las Vegas as I lead the discussion on creating a robust third-party collections process. For more information about the conference, visit www.creditscapeconference.com. I hope to see you there.

Christopher Rios is the Group Leader – Finance Operations for Dun & Bradstreet. He will be speaking at the CreditScape Fall Summit, September 17-18, at the Tropicana in Las Vegas.