Payments Analytics – Analytics to Make Decisions

PABLO PICASSO ONCE SAID: “Computers are useless. They can only give you answers.”

One interpretation I like about this quote is that it isn’t the answers which are important or hard. Answers could be seen as being relatively easy, once you know the question. Asking original questions takes creativity and insight, and pushes the frontiers of our world further.

Businesses are now realizing that they have to move from the era of “generic data visualization” to that of “insightful questioning”.

Decision-driven data analytics emphasizes the importance of asking questions and thus the importance of judgment. The question we ponder about in our real life is – if I do X, can I get Y? Insightful analytics is all about questions and data helping make decisions.

Analytics is normally just done with the data at hand. However that data may be incomplete.

Imagine a gym which has developed a rich data set that describes past and current customers along various dimensions, such as location, timing of attendance, duration, and nature of fitness classes. The gym has also gone beyond the tradition and has developed a predictive algorithm that uses this information to quantify the likelihood when a member is going to be inactive. One can reason that we don’t need algorithms and grey hair wisdom will tell you that membership is high during New Year resolutions phase and tapers down gradually.

However, jokes apart, the fundamental question that the gym business owner should answer is “What incentive can I offer to the member so he does not churn?”.

This question may not be answered based on the data the gym has already gathered and would require further data collection and analysis.

To make this decision, the gym needs to do a sampling, a randomtest … and then apply the algorithm. So while data is important, it is super important that we find data for a purpose rather than find a purpose for the data ( Cited from Decision Driven Analytics)

Shifting our focus to fintech, let us see the ROI of analytics on payment transactions.