Market responsiveness is pivotal for a bank's success in today's customer-centric world. Banks can elevate their market-driven approach by harnessing the power of location data to understand customers' geographical contexts comprehensively.
Here, the convergence of core banking solutions and Geographic Information System (GIS) technology emerges as a game-changing solution. The fusion of location-based analytics with the best core banking software can provide invaluable insights into customer behavior, transaction patterns, and branch network management.
In 2022, natural disasters, exacerbated by climate change, led to staggering global economic losses of $313 billion, with less than half insured, creating a substantial protection gap of 58%. It highlights the critical need for core banking system providers to leverage GIS technology in assessing risk exposure for loan portfolios and insurance offerings, enabling proactive and informed risk management decisions.
Besides, GIS technology offers immense untapped potential in revolutionizing the banking industry. Let's understand the significance of GIS in the core banking system and how it empowers more intelligent planning and decision-making.
Why Does GIS Technology Matter in Core Banking Systems?
Incorporating GIS into core banking is no longer just an option. It is essential to understand the benefits and future scope of GIS-driven ecosystems offered by core banking system providers:
Expansion of Customer Base
GIS technology enables banks to identify untapped markets, optimize branch locations, and gain insights into customer demographics for targeted customer acquisition.
Increased Consumer Satisfaction
GIS integration with the best core banking software empowers banks to offer personalized services and location-specific offers, ensuring higher customer satisfaction and loyalty.
Profitability Boost
GIS-driven risk assessment and resource management help banks optimize operations, leading to cost savings and increased profitability.
Effective Operations Management
GIS technology helps banks monitor and manage branch networks, ATM locations, and other operational assets.
Risk Mitigation and Compliance
GIS-driven risk assessment allows banks to identify high-risk areas and assess potential exposures.
Digital core banking solutions are game changers in the banking industry. These solutions leverage digital technologies to transform the core operations of a bank, including customer accounts, transactions, and other essential banking functions.
GIS Technology in Core Banking: 7 Key Applications for Smarter Decision-making & Planning
Market, Customer, and Competitor Analysis for Network Optimization
GIS-based marketing analysis enables banks to understand their markets and potential customers more accurately by pinpointing demand and supply factors to specific geographical locations. Customer analysis utilizing GIS facilitates the identification of customer characteristics and catchment areas for branches.
Competitor analysis through GIS identifies competitor locations and customer distribution, offering crucial intelligence for gaining a competitive edge. Core banking system providers facilitate network optimization by enabling banks to make informed decisions on branch movements, closures, and service type adjustments based on factors like service points, competitor proximity, and travel patterns.
Selecting Sites for the Establishment of New Bank Branches and ATMs
Integrating GIS in core banking solutions empowers retail banks to select sites for optimal expansion strategically. Banks can identify underserved areas and potential market opportunities by analyzing demographic attributes and socio-economic conditions.
GIS data also aids in assessing land value, commercial and residential areas, road networks, and proximity to existing branches to expand branch networks with precision. For ATM placement, geospatial analysis considers existing ATM centers, population density, debit/credit card holders, and security centers to ensure practical accessibility and service coverage.
Focused Marketing
Banks can efficiently advertise access points online, ensuring customers can quickly locate the nearest and most suitable financial access point based on their specific needs. GIS analysis aids FSPs in determining optimal locations for above-the-line advertising, such as billboards, by considering commuter data, income levels, and market penetration.
For example, a leading insurance company can use the best core banking software to strategically position highway billboards, targeting high-income commuters with personalized content based on their travel routes and demographic data.
Bank Asset Management
Decision-makers can use GIS's advanced analytical tools to assess different scenarios, balancing investment levels with asset longevity. For instance, banks can strategically locate ATMs in areas with high foot traffic and analyze maintenance costs to ensure cost-effective operations.
Performance Monitoring
Banks can monitor performance through GIS-based core banking solutions to optimize operations and set realistic targets. GIS information helps adjust performance expectations for each access point based on local geographical context, considering income levels, industries, foot traffic predictions, and mobile coverage. For example, in Tanzania, financial access maps pinpointed the most productive mobile money agents located surprisingly in an industrial area, prompting further analysis to understand the drivers behind their success.
Security and Cash Distribution
Fleet management of cash vans poses challenges in bigger cities, with many vans performing repetitive trips, and any failure to ensure timely operations can lead to cash run-offs at ATMs, impacting customer services and damaging the bank's reputation. However, core banking solution providers can offer a cost-effective solution by utilizing GIS information to optimize cash delivery routes, considering safety, road conditions, and traffic congestion.
Evaluating Credit Risk
Credit providers can assess the risk associated with loans with greater precision and accuracy using GIS data. For instance, when evaluating agricultural loans, GIS-based digital core banking platform can provide information on rainfall patterns and the area's typology, which serves as critical inputs for credit applications. Comprehensive information about the area surrounding the commercial enterprise and property values allows credit providers to determine risk factors and the probability of loan repayment.
The Future of Banking Starts Here: Invest in GIS-based Digital Core Banking Platform
The convergence of the core banking system and GIS technology is a strategic imperative for banks seeking to thrive in today's customer-centric landscape. Embracing GIS in core banking empowers smarter decision-making and planning, driving superior customer experiences and competitive advantages. GIS-based core banking solutions open doors to untapped potential and growth opportunities, from network optimization and site selection to risk assessment and marketing strategies. Amidst rising customer expectations, mounting competition, and rapidly evolving regulatory landscapes, banks must seize the moment to harness the power of GIS-driven insights to stay resilient and competitive.
Panamax's digital Core Banking Solution transforms banking functions with real-time decision-making and regulatory compliance for the BFSI industry. Schedule a demo now to experience the cost-effective, secure, multi-channel integrated banking solution with 24/7 accessibility.
