Data Mining in Banking and Finance: a Note for Bankers

Currently, huge electronic data repositories are being maintained by banks and other financial institutions. Valuable bits of information are embedded in these data repositories. The huge size of these data sources make it impossible for a human analyst to come up with interesting information (or patterns) that will help in the decision making process. A number of commercial enterprises have been quick to recognize the value of this concept, as a consequence of which the software market itself for data mining is expected to be in excess of 10 billion USD. This note is intended for bankers, who would like to get aware of the possible applications of data mining to enhance the performance of some of their core business processes. In this note, the author discusses broad areas of application, like risk management, portfolio management, trading, customer profiling and customer care, where data mining techniques can be used in banks and other financial institutions to enhance their business performance.