Application of data mining techniques in the financial sector for profitable customer relationship management

Abstract

The paper presents the benefits of applying data mining (DM) techniques in customer relationship management (CRM) of the financial sectors like banking, forecasting stock market, currency exchange rate and bank bankruptcies. The competition in the financial sector of the business is growing and the firms find it very difficult to sustain the ever-changing behaviour of the customer. To sustain in the competitive world, firms are taking the advantage of the CRM, the new emerging concept in the business world. DM is helping the firms to achieve profitable and efficient CRM by providing them with advance techniques to analyse the already existing data in the databases of the firms using the complex modelling algorithms The paper demonstrates the ability of the data mining to automate the process of searching the mountain of customer's related data to find patterns that are good predictors of the behaviours of the customer which help achieve successful CRM. The paper gives an idea of how data mining capabilities can provide the increased customer retention and minimises the risk involved in the financial sectors to achieve competitive advantage and concludes by providing the limitations and opportunities in this field.