Posted April 5, 2012 by Team AnalyticpediA in Analytics

Financial analytics: Do we need it Really?

Financial Analytics
Financial Analytics

What it’s all about

Financial analytics is a process by which the various internal and external business finance information is leveraged to create intelligent reports. Financial analytics is increasingly finding popularity among companies that are looking to better their financial value proposition and optimise business performance. There are financial analysts who focus on getting relevant and timely financial information to make better decisions and take actions proactively to improve the company’s performance. What these financial analysts do is to integrate critical internal and external data from across the enterprise value chain and transform it into timely, actionable information, ultimately improving business performance. Financial Models are being prepared to tackle most of these issues. Financial modelling refers to the preparation of specific models used for decision making related to financial aspects of a company.

Have enough databases, what next?

In the present scenario financial institutions especially banks are struggling under the weight of large unstructured data, what they need now is to start asking better questions in order to get value from the stored information. Financial analytics tools offer them the opportunity to more closely examine their assets and liabilities. It’s with the help of financial analytics that these giants Institutions are going to get useful inputs out of their giant databases. Leading financial services firms have been early users of financial analytics and have made investments in this area to address their business needs. These could be around building a credit line strategy for a consumer banking scenario; developing a robust equity research model by using various fundamental analyses and cash flow analyses; doing claims’ severity and frequency analysis in the insurance sector; or building fraud detection models. Analyzing cash flows, research on equity participation, conduction feasibility studies on mergers and acquisitions are some of the areas that financial analytics deal with.

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