Business Intelligence (BI) is expected to take up a bigger part of banks’ IT budget in the coming years with Basel II compliance and customer analytics as its driving force.  Growing competitive pressures and Basel II are forcing banks to undertake a host of IT projects such as core banking systems replacement. For some time now, vendors have been touting yet another solution to help banks manage their data holistically, rather than generalized methods of reporting from business lines – business intelligence (BI). A senior banker told us, “Basel II is driving the business case for BI, it is more difficult to justify the investment without citing compliance.”

What is BI? Vendors say it is a broad set of applications for gathering, storing and analyzing data to create better statistical analysis, forecasting and data mining. With BI’s main demands coming from the consumer banking segment and risk management divisions in banks, spend is expected to rise, as are integration challenges.  The road to BI success, however, can be paved with potholes. For one, costs will increase, not only for the actual BI software, but also for the people implementing and running the system. Gartner, the research firm, expects staff numbers on BI projects to triple in the four-year period to 2008.  Gartner, however, believes that spending on BI will surpass that of security in 2006, with budgets expected to increase by an average of 4.8 percent, as BI is touted to help with compliance requirements, thus Basel II is around the corner for Singapore, Hong Kong and the Philippines in 2007. 

BIIA Comment:  All discussions seem to center around IT systems.  Little is being said about data.  An Indian banker commented some time ago that Asian Banks had no data collection culture.  An opportunity for credit information firms to get involved in.

BIIA Newsletter September – 2006 Issue