Problem Definition

a1

Financial Instructions

Financial institutions try to predict the actual possibilities of certain events happening based on previous experience and processing of historical data, in order to calculate future costs. Continuous false prediction of future costs affects the economic growth of a company and therefore a major cause of concern. The recent increase in the availability of large datasets (Big Data) from a variety of sources has opened a new dimension in predictive analytics space, enabling financial institutions to take advantage of such large volume of data to gain useful insights that can reap commercial, business and IT benefits to the companies and to their customers.

The predictive analytics market is growing rapidly as a result of the incorporation of advanced algorithms andtechniques. It is estimated to grow from $1.70 billion in 2013 to $5.24 billion in 2018 at a CAGR of 25.2% from 2013 to 2018. In terms of regions, North America is expected to be the biggest market in terms of revenue contribution, while emerging economies such as Asia Pacific, Middle East and Africa, and Latin America are expected to experience increased market traction with high CAGRs, in the due course.

a2

Insurance Sector

The financial and insurance services sector is looking for predictive analytics solutions to develop more effective methods to manage customer relationship, predict buying behavior, improve the customer loyalty and retention as well as estimate the risk involved in every transaction. Predictive analytics is being embraced at an increasing rate by organizations that need to gain actionable and forward-looking insight from their data. Companies want to better understand and predict the behavior of their customers (e.g. claim requests). They want to better predict failures in their infrastructure. The uses for predictive analytics are extensive and growing.

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