I can see clearly now

Posted by Mark Brousseau

Recent advances in technology are raising the bar for payments analytics capabilities. Some of these technology enablers include: higher capacity and more affordable disk storage; database management systems with data partitioning; and evolving data warehouse capabilities. Leilani Doyle (ldoyle@usdataworks.com), product manager with US Dataworks (www.usdataworks.com) says these advances couldn't have come at a better time:

As a result of the recession, enterprises are under pressure to predict the internal performance of the organization more precisely than ever before. For organizations that do this well, the payoff includes lower costs, higher customer retention, increased responsiveness, a reduction in fraud, increased productivity and ultimately, increased profitability, explains David White of Aberdeen Group.

An Aberdeen Group benchmark report found that Best-in-Class companies used analytics solutions to improve their ability to detect risk by two and a half times, and that 76 percent of Best-in-Class organizations enjoyed a customer retention rate of 90 percent or better, thanks in part to analytics.

Drawn by these benefits, more organizations are evaluating analytics solutions, particularly for payments environments. Twenty-four percent of organizations plan to adopt analytics technologies within the next year, reports Aberdeen Group. "The fundamental drivers of adoption remain strong," says Dan Vesset, program vice president for IDC's Business Analytics Solutions Research service, adding that even during the recession, the business analytics software market continued to grow.

In payments, demands for information reporting and analysis have never been greater. Key decisions depend on the ability to accurately monitor, measure and predict operational needs and payment trends. Most organizations try to bridge legacy payment silos, only to find themselves left wanting -- despite a tremendous effort expended to integrate, report and analyze data across payment channels.

The Case for Analytics
Several trends are driving demand from payments processors for business analytics solutions:

• The need to predict the future. All operations managers, treasury executives and risk managers rely on historical data in order to properly plan for the future. The more timely and more complete the data these individuals have at their disposal, the better the predictive models can be. The same concept holds true for predicting consumer buying behaviors.

• Increasing complexity of payment types. New payment channels have emerged over the last few years, and we are certain to see the evolution of mobile payments during the next year or so. There's no question that consumers and businesses alike are rapidly changing the way they make payments. In the past, consolidating this data for analytical purposes was extremely difficult, if not impossible. Today's advanced analytics tools solve this problem.

• Fraud detection. When it comes to payments, fraudsters are becoming more sophisticated, and the economic downturn has made them more desperate than ever. Businesses need to protect their assets with superior fraud detection. A key element of any fraud detection program is the early and accurate identification of unusual patterns and behaviors. Today's advanced analytics tools give organizations the ability to analyze payments data across channels and produce actionable assessments that can prevent or stop fraudulent activity.

• Staff management. Using analytics to identify changes in peak processing windows enables organizations to better manage their staff, which have been stretched thin after the recession.

• Reduced cost. Consolidating data with an enterprise analytics solution enables organizations to decommission redundant systems, some of which are maintained only for their archived data; some large companies are sitting on old, out-of-production systems for this very reason.

The Bottom Line
Today, financial institutions, corporate billers, and government entities are challenged to manage images and data from multiple payments channels, and to provide a high-level of data protection, data accessibility, and data tracking and reporting for compliance. Adding to these challenges are ever-increasing demands for real-time analytics to improve corporate agility and customer responsiveness. Traditional siloed payment archives are too costly, too inefficient and too fragmented to be effective. The answer lies in emerging payments analytics solutions.

Using analytics solutions, organizations can finally get a clear and timely view of their operations.

What do you think?