What is Card Analytics?
The credit card portfolio within financial services and banking organizations typically generates large volumes of data, which if effectively leveraged, can garner deep insights that help improve profitability, better manage risk and make data-driven marketing and product decisions.
Card analytics is a specific genre of analytics used by various teams within financial organizations, including:
Risk Management: To evaluate the probability of customer default and analyze cardholder payment patterns to predict and prevent delinquency and fraud. These teams also monitor changing patterns and continually adjust parameters to determine how much credit should be issued to an individual. Changing economics can impact customer credit quality in relatively short periods of time, and ongoing risk analytics becomes crucial to maintain profitability.
Finance: To analyze data on interest and fees to gauge profitability by product type, channels, and other parameters. Card issuers make money by charging interest, merchant fees, exchange fees, and other fees on credit card accounts, and understanding the revenues coming from various sources can help maximize profitability.
Marketing: To understand the performance of different acquisition processes, including where new customers are coming from and customer performance based on source. The marketing team also looks at key metrics by product type and category spends to develop new promotions and sales strategies.
Customer Service and Rewards: Reward programs have almost become synonymous with credit cards, so much so that many non-banking entities have entered the credit card segment specifically to offer rewards to their customers. Reward analytics requires in-depth insight into what customers are purchasing, so that rewards can be optimized to keep customers loyal.
Background and Problem
Card analytics platforms are subject to stringent security compliance and must have systems in place for risk management, reporting and analytics. Our client, a mid-sized Canadian non-banking credit card issuer, was looking for a card analytics system that not only fulfilled their all their business analytics needs but was also cost-effective.
Large card issuers typically have in-house teams of analysts and engineers and rely on an internal data warehouse for analytics. However, for small and mid-size organizations like our client, available analytics systems such as TSYS analytics can be prohibitively expensive. The upfront cost of building their own card analytics platform would have been upwards of $1.5 million dollars.
Moreover, the client wanted the ability to conduct trend analysis and change analysis, which was not possible in TSYS. Lastly, they were looking for a managed services provider to host, maintain, support, and operate the solution and the data warehouse platform.
Adastra has demonstrated expertise in the financial services and card analytics segment and we understood the client’s business and problem areas. Based on our 20-year track record as a leader in the data and analytics space, the client recognized us as the right partner for their business.
When we onboarded the client in 2014, we created a two-pronged solution to meet their needs: The Card Analytics product and the Managed Services component.
Adastra’s Card Analytics Solution is built on our financial services data model hosted on Microsoft Azure. The solution has proven to be instrumental in meeting the client’s needs and is fully PCI compliant.
One of the major advantages of Adastra’s solution is that, from the very beginning, we could acquire data from their credit card processor (TSYS), in addition to their back office systems and their credit bureau (TransUnion) and import it into our data warehouse. Other card analytics solutions like TSYS do not offer this capability and flexibility. By integrating information, our solution allows for advanced analytics for effective risk management and forecasting. It also has customizable data marts to support product management, marketing, finance, and risk management functions and provides easy-to-use reporting dashboards for various functions to drive informed decision-making.
Our solution encompassed modern data warehouse concepts, including historical analysis capabilities, so the client could look at trends emerging or changing over long periods of time.
Managed Services serve to provide operational, infrastructure, application maintenance and enhancement, and timely support. Our support responsibilities are clearly defined in the form of strict Service Level Agreements (SLAs).
The Adastra Card Analytics solution is a turnkey solution, with our teams managing both the cloud data platform and the application. Some of our ongoing managed services for the client include:
Operations and platform management: On an ongoing basis, Adastra is responsible for daily backups, database management, and capacity management to ensure flexibility for scaling. We also provide operations management, in terms of platform and process management, and batch processes are run every day with strict data onboarding objectives and timelines. This involves interfacing with the vendors to get files on time to prevent delays in the process.
Platform improvement: As the client’s business evolves, the needs from their data warehouse change. Adastra designs and implements solutions to accommodate changes and additions to the platform, such as addition of new products or services and data sources, as needed, to keep it current and best suited to the client’s requirements.
Service and support: The environment has grown in terms of scope and complexity since its inception. We help the client navigate this increased complexity by means of a formalized service and support process which includes a 24X7 help-desk, a ticketing system whereby the client can request information, raise incidents, and initiate Change Requests (CRs). There is set process to review and evaluate client requests from an infrastructure standpoint, getting approvals and triggering the workstream. Regular business reviews are in place to ensure that all work items are tracked, reported, and completed successfully.
Maintaining PCI compliance: The PCI Compliance standard (PCI DSS) requires card issuers, merchants, and service providers to process, store and transmit cardholder data in a manner that meets global data security standards. Maintaining compliance is an ongoing process and requires annual audits to ensure that the processes for designing, configuring, updating, and maintaining of systems adheres to set standards and policies. Evolving compliance requirements often require extensive changes that need to be managed as separate projects according to a strict change management process. Other ongoing requirements may include patching, firewall upgrades and networking changes.
Given the broad nature of our engagement, Adastra is not only responsible for the development and infrastructure services, but also for data processing to ensure that the output of the work we are providing meets the highest quality standards and fulfills the client’s business needs. We guarantee that the data being used for the application is error-free, accurate and complete, allowing the client to make accurate business decisions.
As part of our contractual agreement, Adastra ensures that the client’s environment stays up for 99.9% of the time. We are also responsible for executing time-critical batch processing within 5 hours of receiving the data. By doing this, we prevent potentially costly downtime and delays in the client’s work.
In addition to the almost $1 million savings that accrued to the client by choosing Adastra’s Card Analytics Solution over building their own, Adastra’s team optimizes the client’s cost on an ongoing basis through effective use of Azure resources and services. Moreover, by outsourcing these services to us, the client eliminated the need for a dedicated 8 to 10 member team of developers, operations, database administrators, and compliance experts to manage the platform and solution.
Regulations and standards in the financial services space are constantly evolving, and all card issuers require their environments and processes to be PCI DSS compliant. Adastra’s team is well-versed in these requirements and our prior experience in the sector meant that we were compliance-ready from the get-go, which significantly reduced the solution deployment time for the client.
Moreover, our managed services solution gave our client the flexibility and scalability to support business and data volume growth in a way that would have been difficult in-house.
By bringing the cards analytics solution together with the managed services component, the client has been able to extract the maximum value from their data through the use of advanced analytics to support strategic business objectives, mitigate risk and maximize profitability, without burdening themselves with an in-house solution and team. At every step of the way, Adastra’s experts have ensured that the solution evolves and improves with the client’s business needs and that they have all the support they require to deliver timely, accurate insights to help their business grow.
Six years and counting into our partnership, the client continues to expand scope and functionality of our Card Analytics platform. We now also process the files they need for their anti-money laundering vendor, for client onboarding and other purposes, and are their IT partner for all data and data management needs.
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