Data mining application in banking sector with clustering and classification methods (original) (raw)

Data Mining. Concepts And Applications In Banking Sector

2018

The concept of banking refers to the multitude of services and products that commercial banks offer to clients and include besides transactional accounts both passive and active products. Due to the increased competitiveness in banking, the relationship between the bank and the client has become an essential factor for the strategy in order to increase customer satisfaction. Currently the banking system is able to store impressive amounts of data that they collect daily, from customer data and transaction details to data on their transactional or risk profile. The process through which large amounts of data are analyzed, extracted, identified and the information obtained using mathematical and statistical models are interpreted is known as data mining. The discovery of knowledge from data involves identifying some models, some patterns with which certain events or possible risks are anticipated. This process helps banks to develop strategies in areas such as customer retention and l...

Data Mining Techniques and its Applications in Banking Sector

Data mining is becoming strategically important area for many business organizations including banking sector. It is a process of analyzing the data from various perspectives and summarizing it into valuable information. Data mining assists the banks to look for hidden pattern in a group and discover unknown relationship in the data. Today, customers have so many opinions with regard to where they can choose to do their business. Early data analysis techniques were oriented toward extracting quantitative and statistical data characteristics. These techniques facilitate useful data interpretations for the banking sector to avoid customer attrition. Customer retention is the most important factor to be analyzed in today's competitive business environment. And also fraud is a significant problem in banking sector. Detecting and preventing fraud is difficult, because fraudsters develop new schemes all the time, and the schemes grow more and more sophisticated to elude easy detection. This paper analyzes the data mining techniques and its applications in banking sector like fraud prevention and detection, customer retention, marketing and risk management.

A Review on Data Mining in Banking Sector

American Journal of Applied Sciences, 2013

The banking industry has undergone various changes in the way they conduct the business and focus on modern technologies to compete the market. The banking industry has started realizing the importance of creating the knowledge base and its utilization for the benefits of the bank in the area of strategic planning to survive in the competitive market. In the modern era, the technologies are advanced and it facilitates to generate, capture and store data are increased enormously. Data is the most valuable asset, especially in financial industries. The value of this asset can be evaluated only if the organization can extract the valuable knowledge hidden in raw data. The increase in the huge volume of data as a part of day to day operations and through other internal and external sources, forces information technology industries to use technologies like data mining to transform knowledge from data. Data mining technology provides the facility to access the right information at the right time from huge volumes of raw data. Banking industries adopt the data mining technologies in various areas especially in customer segmentation and profitability, Predictions on Prices/Values of different investment products, money market business, fraudulent transaction detections, risk predictions, default prediction on pricing. It is a valuable tool which identifies potentially useful information from large amount of data, from which organization can gain a clear advantage over its competitors. This study shows the significance of data mining technologies and its advantages in the banking and financial sectors.

Use of Data Mining in Banking

In today"s globalization and cut throat competition the banks are struggling to gain a competitive edge over each other. Apart from execution of business processes, the creation of knowledge base and its utilization for the benefit of the bank is becoming a strategy tool to compete. In recent years the ability to generate, capture and store data has increased enormously. The information contained in this data can be very important. The wide availability of huge amounts of data and the need for transforming such data into knowledge encourage IT industry to use data mining. The banking industry around the world has undergone a tremendous change in the way business is conducted. The banking industry has started realizing the need of the techniques like data mining which can help them to compete in the market. Leading banks are using Data Mining (DM) tools for customer segmentation and profitability, credit scoring and approval, predicting payment default, marketing, detecting fraudulent transactions, etc. This paper provides an overview of the concept of DM and highlights the applications of data mining to enhance the performance of some of the core business processes in banking industry.

Effectiveness of Data mining in Banking Industry: An empirical study

International Journal of Advanced Research in Computer Science, 2017

Data mining is becoming important area for many corporate firms including banking industry. It is a process of analyzing the data from numerous perspective and finally summarize it into meaningful information, so data mining assist the bankers to take concrete decision. This paper is an attempt to analyse the data mining technique and its useful application in banking industry like marketing and retail management, CRM, risk management and fraud detection.

Data Mining Application in Predicting Bank Loan Defaulters

International Journal of Innovative Technology and Exploring Engineering, 2020

Data mining is the key tools for discoveries of knowledge from large data set. Nowadays, most of the organizations using this technology to maintain their data. This paper focuses on the Bank sector in Risk management specifically, detecting Bank loan defaulters through the data mining application to examine the patterns of different attribute which would contribute for detecting and predicting defaulters thus preventing wrong loans. This process can be done without change the current systems and the data. Then it helps to distinguish borrowers who repay loans promptly from those who don’t and avoid wrong loan allotment. In order to show the results of the study Classification model is implemented in order to find interesting patterns among attributes of customer. A total of 20461 sample data were taken by data base admin randomly from 3 consecutive years from the Bank database to build and test the model. In this research we used Classification model of decision tree and Naïve Baye...

APPLICATION OF DATA MINING IN BANKING AND FINANCE

Presently, banks and other financial institutions have to preserve the huge electronic data through fixation of reliable information in the data warehouses. It is illogical to detect the trend or pattern buy a human being so as to know the required information available from the huge data sources. The big giants in this field are very much fast in diagnosing this concept, resultantly the software market worldwide for data mining is expected to surpass ten billion United states dollar. This message is proposed for the financial institutions who would like to know the probable applications of data mining so as to increase their core business performance. In this paper, the wide application of data mining techniques say fraud detection, risk management, client profiling and consumer care has been discussed, where artificial intelligence techniques may be applied by banks to work efficiently.

Classification of Customer Loans Using Hybrid Data Mining

JUITA: Jurnal Informatika

At this time, loans are one of the products offered by banks to their customers. BPR is an abbreviation of Bank Perkreditan Rakyat. BPR is one of the banks that provide loans to their customers. The problem that occurs is that the number of loans given to customers is often not on target and does not meet the criteria. We propose a hybrid data mining method which consists of two phases, first, we will cluster the eligibility of customers to be given a loan using the k-means algorithm, second, we will classify the loan amount using data from the clustering of eligible customers using k-nearest neighbors. As a result of this study, we were able to cluster 25 customers into 2 clusters, 10 customers into the "Not Feasible" cluster, 15 customers into the "Feasible" cluster. Then we also succeeded in classifying customers who applied for new loans with occupation is Entrepreneur, salary is ≥ IDR 5000000, loan guarantees Proof of Vehicle Owner, account balance is < ...

Effective Use of Data Mining in Banking.

International Journal of Engineering Sciences & Research Technology, 2014

Data mining is one of the tasks in the process of knowledge discovery from the database. In the corporate world every organization is competing the other organization in terms of their value towards the business and the financial growth. Apart from execution of business processes, the creation of knowledge base and its utilization for the benefit of the organization is becoming a strategy tool to compete. In this paper we discuss about the basic details of data mining and the the use of knowledge discovery process and the new techniques from the business point of view.In our approach we make an efficient system so that the organization will get the right information at the right time and right to access the necessary information for their growth.The growth of the organization depends on the quality of service, competing with the other organizations,provide required information to the customers,satisfaction of the employees working in the organization. In the banking sector all the financial work can be done in the computers and their connectivity through World Wide Web the softwares get automatically updated in time,use of internet banking and ATM makes the big change in the banking sector. The banks have realized that their biggest asset is the knowledge and the planning to implement the right knowledge at the right time,the financial resources and the techniques of datamining for customer segmentation and profitability, marketing, risk management and customer relationship management and the fraud detection.

Review-Calculation of client credit risk prediction in banking sector using data mining

International Journal of Advance Research, Ideas and Innovations in Technology, 2019

Data Mining is a competent section of data exploration which seeks to eliminate realistic data from the implausible extent of comprehensive data. The massive measurement of these data grounds formulates it impractical for a human predictor to come up with stirring in turn that will help out in the judgment conception process. A numeral of commercial endeavour has been hasty to be proverbial with the attraction of this deliberation. The explanation of this dissertation is to manner a relation erudition on the precision of categorization models and their cost can be smoothly comprehended and they can be realistic on both specific and ceaseless data. Many data mining techniques is intended to bulge admire attaining plight that everybody has some significance and limitations another way. The aim of this interpretation is affordable that an entire evaluation associated with sensible data mining process in credit scoring condition. Such direction can support the superintendent to be cognizant of most usual practice in recognition scoring measurement, determine their boundaries, get superior then and recommend a new system with the enhanced facility.