Weekly Writeup for AC233 Database Communication and Management

E-banking

The recent hype of local banks going online has signalled a new era of banking services and customer relationships. In the US, many of their financial institutions have already adopt electronic business strategies to augment their profit margin and customer service. Singapore is now stepping into this new digital arena to similarly achieve goals of US counterparts and also to fend off competitors and penetrate new markets.

Outlined below are the various technological strategies and business strategies that they may have adopted in line with bring their services on the Internet.

· Data warehouse applications

Typical uses of data warehousing in banking institutions are profitability analysis, risk management and customer relationship management. Profitability analysis provides bankers with the ability to analyse profitabilities in three different dimensions: organisation, product, and customer. With this knowledge, bankers will be able to develop strategies that make the best use of resources to achieve higher performance.

· Risk Management

Due to motivations from regulators as well as their desire to enable better capital allocation, most banks are enhancing their risk management processes. Some banks have started looking at implementing enterprise risk management systems that allow them to measure risks (for example, interest rate, foreign exchange and market risks) more accurately. Related to interest rate and liquidity risk management is asset liability management (ALM).

· Customer Relationship Management

With increased competition, banks are recognising the importance of retaining good customers with high revenue potential. Proactive customer relationship management (CRM) is a key business imperative for increasing value to customers.Fundamental to CRM is the understanding of customers' needs, behaviour, revenue potential and risks. This is achieved by analysing customer information in the data warehouse.

With this knowledge, a bank can undertake effective cross-selling, target marketing, one-to-one marketing and life-event marketing to increase it's share of the customers' wallet. In addition, these can be used to select customers of certain characteristics or behaviour for target marketing.

These core areas are deeply ingrain in any bank's business process and if they leverage such processes with the use of technology they will no doubt succeed. However, success depends on how well these processes are amalgamated and managed with technology.