7 Big Data Analytics Use Cases for Financial Institutions

Big Data Analytics
Big Data Analytics

Recently we hear a lot about Big Data Analytics’ ability to deliver usable insight – but what does this mean exactly for the financial service industry?

While much of the Big Data activity in the market up to now has been experimenting about Big Data technologies and proof-of-concept projects, I like to show in this post seven issues banks and insurances can address with Big Data Analytics:

1. Dynamic 360º View of the Customer:
Extend your existing customer views by incorporating dynamic internal and external information sources. Gain a full understanding of customers – what makes them tick, why they buy, how they prefer to shop, why they switch, what they’ll buy next, and what factors lead them to recommend a company to others.

2. Enhanced Commercial Scorecard Design and Implementation:
Financial institutions use Big Data solutions to analyze commercial loan origination, developing scorecards and scoring, and ultimately improving accuracy as well as optimizing price and risk management.

3. Risk Concentration Identification and Management:
Identify risk concentration hotspots by decomposing risk into customized insights. Clearly see factor contribution to risks and gain allocation consensus through downside risk budgeting.

4. Next Best Action Recommendations:
Make “next best action” an integral part of your marketing strategy and proactive customer care. With analytical insight from Big Data, you can answer such questions as: What approach will get the most out of the customer relationship? Is selling more important than retention?

5. Fraud Detection Optimization:
Preventing fraud is a major priority for all financial services organizations. But to deal with the escalating volumes of financial
transaction data, statisticians need better ways to mine data for insight. Optimization for your current fraud detection techniques help to leverage your existing fraud detection assets.

6. Data and Insights Monetization:
Use your customer transaction data to improve targeting of cross-sell offers. Partners are increasingly promoting merchant based reward programs which leverage a bank’s or credit card issuer’s data and provide discounts to customers at the same time.

7. Regulatory and Data Retention Requirements:
The need for more robust regulatory and data retention management is a legal requirement for financial services organizations across the globe to comply with the myriad of local, federal, and international laws (such as Basel III) that mandate the retention of certain types of data.

Data Science Toolbox: How to use R with Tableau

Recently Tableau released an exciting new feature: R integration via RServe. Tableau with R seems to bring my data science toolbox to the next level! In this tutorial I’m going to walk you through the installation and connecting Tableau with RServe. I will also give you an example of calling an R function with a parameter from Tableau to visualize the results in Tableau.

1. Install and start R and RServe

You can download base R from r-project.org. Next, invoke R from the terminal to install and run the RServe package:

> install.packages("Rserve")
> library(Rserve)
> Rserve()

To ensure RServe is running, you can try Telnet to connect to it:

Telnet

Protip: If you prefer an IDE for R, I can highly recommend you to install RStudio.

2. Connecting Tableau to RServe

Now let’s open Tableau and set up the connection:

Tableau 10 Help menu

Tableau 10 External Service Connection

3. Adding R code to a Calculated Field

You can invoke R scripts in Tableau’s Calculated Fields, such as k-means clustering controlled by an interactive parameter slider:

Calculated Field in Tableau 10

4. Use Calculated Field in Tableau

You can now use your R calculation as an alternate Calculated Field in your Tableau worksheet:

Tableau 10 showing k-means clustering

Feel free to download the Tableau Packaged Workbook (twbx) here.

Further reading: Hands-On with R

[Update 26 Jun 2016]: Tableau 8.1 screenshots were updated with Tableau 10.0 (Beta) screenshots due to my upcoming Advanced Analytics session at TC16, which is going to reference back to this blog post.

Challenges of Big Data Analytics in High-Energy Physics

Challenges of Big Data Analytics: volume, variety, velocity and veracity
Screenshot of CERN Big Data Analytics presentation

There are four key issues to overcome if you want to tame Big Data: volume (quantity of data), variety (different forms of data), velocity (how fast the data is generated and processed) and veracity (variation in quality of data). You have to be able to deal with lots and lots, of all kinds of data, moving really quickly.

That is why Big Data Analytics has a huge impact on how we plan CERN’s overall technology strategy as well as specific strategies for High-Energy Physics analysis. We want to profit from our data investment and extract the knowledge. This has to be done in a proactive, predictive and intelligent way.

The following presentation shows you how we use Big Data Analytics to improve the operation of the Large Hardron Collider.

CERN: Where Big Bang Theory meets Big Data Analytics

Screenshot of SQL Plan Baselines with Oracle Enterprise Manager at CERN
Screenshot of SQL Plan Baselines with Oracle Enterprise Manager at CERN

The volume, variety, velocity and veracity of data generated by the LHC experiments at CERN continue to reach unprecedented levels: some 22 petabyte of data this year, after throwing away 99% of what is recorded by the LHC detectors. This phenomenal growth means that not only must we understand Big Data in order to decipher the information that really counts, but we also must understand the opportunities of what we can achieve with Big Data Analytics.

The raw data from the experiments is stored in structured files (using CERN’s ROOT Framework), which are better suited to physics analysis. Transactional relational databases (Oracle 11g with Real Application Clusters) store metadata information that is used to manage that raw data. For metadata residing on the Oracle Database, Oracle TimesTen serves as an in-memory cache database. The raw data is analysed on PROOF (Parallel ROOT Facility) clusters. Hadoop Distributed File System (HDFS), however, is used to store the monitoring data.

Just as in the CERN example, there are some significant trends in Big Data Analytics:

  • Descriptive Analytics, such as standard business reports, dashboards and data visualization, have been widely used for some time, and are the core applications of traditional Business Intelligence. This ad hoc analysis looks at the static past and reveal what has occurred. One recent trend, however, is to include the findings from Predictive Analytics, such as forecasts of sales on the dashboard.
  • Predictive Analytics identify trends, spot weaknesses or determine conditions for making decisions about the future. The methods for Predictive Analytics such as machine learning, predictive modeling, text mining, neural networks and statistical analysis have existed for some time. Software products such as SAS Enterprise Miner have made these methods much easier to use.
  • Discovery Analytics is the ability to analyse new data sources. This creates additional opportunities for insights and is especially important for organizations with massive amounts of various data.
  • Prescriptive Analytics suggests what to do and can identify optimal solutions, often for the allocation of scarce resources. Prescriptive Analytics has been researched at CERN for a long time but is now finding wider use in practice.
  • Semantic Analytics suggests what you are looking for and provides a richer response, bringing some human level into Analytics that we have not necessarily been getting out of raw data streams before.

As these trends bear fruit, new ecosystems and markets are being created for broad cross-enterprise Big Data Analytics. Use cases like the CERN’s LHC experiments provide us with greater insight into how important Big Data Analytics is in the scientific community as well as to businesses.

Data Science: Enabling Research at CERN with Big Data

Wow, time flies. One year has passed since I started to work at CERN as a data scientist. CERN, surrounded by snow-capped mountains and Lake Geneva, is known for its particle accelerator Large Hadron Collider (LHC) and its adventure in search of the Higgs boson. Underneath the research there is an tremendous amount of data that are analysed by data scientists.

Filters, known as High Level Triggers, reduce the flow of data from a petabyte (PB) a second to a gigabyte per second, which is then transferred from the detectors to the LHC Computing Grid. Once there, the data is stored on about 50PB of tape storage and 20PB of disk storage. The disks are managed as a cloud service (Hadoop), on which up to two millions of tasks are performed every day.

High Level Trigger data flow
High Level Trigger data flow, as applied in the ALICE experiment

CERN relies on software engineers and data scientists to streamline the management and operation of its particle accelerator. It is crucial for research to allow real-time analysis. Data extractions need to remain scalable and predictive. Machine learning is applied to identify new correlations between variables (LHC data and external data) that were not previously connected.

So what is coming up next? Scalability remains a very important area, as the CERN’s data will continue to grow exponentially. However, the role of data scientists goes much further. We need to transfer knowledge throughout the organisation and enable a data-driven culture. In addition, we need to evaluate and incorporate new innovative technologies for data analysis that are appropriate for our use cases.