Data mining and financial data analysis

Introduction:

Most marketers understand the value of collecting financial data, but they also realize the challenges of harnessing this knowledge to create smart, proactive pathways back to the customer. Data mining, technologies and techniques for recognizing and tracking patterns within data, help companies sift through layers of seemingly unrelated data to gain meaningful relationships, where they can anticipate, rather than simply react to, the needs of customers. customers and financial needs. In this accessible introduction, we provide a business and technology overview of data mining and describe how, along with sound business processes and complementary technologies, data mining can empower and redefine financial analysis.

Objective:

1. The main goal of mining techniques is to discuss how custom data mining tools should be developed for financial data analysis.

2. Pattern of use, in terms of the purpose can be categories according to the need for financial analysis.

3. Develop a financial analysis tool using data mining techniques.

Data processing:

Data mining is the procedure to extract or extract knowledge from a large amount of data or we can say data mining is “knowledge extraction for data” or we can also say Knowledge Discovery in Database (KDD). Data mining means: data collection, database creation, data management, data analysis and understanding.

There are some steps in the knowledge discovery process in the database, such as

1. Data cleaning. (To remove nose and inconsistent data)

2. Data integration. (Where multiple data sources can be combined).

3. Data selection. (When data relevant to the analysis task is retrieved from the database).

4. Data processing. (Where the data is transformed or consolidated into forms suitable for mining by performing summary or aggregation operations, for example)

5. Data mining. (An essential process where intelligent methods are applied to extract data patterns).

6. Pattern evaluation. (To identify the really interesting patterns that represent knowledge based on some interesting measurements).

7. Knowledge presentation (where visualization and knowledge representation techniques are used to present the extracted knowledge to the user).

Data store:

A data warehouse is a repository of information collected from multiple sources, stored under a unified schema, and typically residing in a single location.

Text:

Most banks and financial institutions offer a wide variety of banking services, such as checking, savings, commercial and individual customer transactions, credit and investment services such as mutual funds, etc. Some also offer insurance services and stock investment services.

There are different types of analysis available, but in this case we want to give an analysis known as “Evolution Analysis”.

Data evolution analysis is used for the object whose behavior changes over time. Although this may include characterization, discrimination, association, classification or grouping of data related to time, it means that we can say that this analysis of evolution is done through the analysis of time series data, sequence or periodicity pattern matching and analysis. data based on similarity.

Data collection from the banking and financial sectors is often relatively complete, reliable, and of high quality, which facilitates data mining and analysis. Here we discuss some cases like,

Ex. 1. Suppose we have stock market data for recent years. And we would like to invest in shares of the best companies. A stock market data mining study can identify stock performance regularities for stocks in general and for stocks of particular companies. Such regularities can help predict future trends in stock market prices, aiding our decision-making regarding stock investments.

For example, 2. One may want to see the change in debt and income by month, by region, and by other factors along with minimum, maximum, total, average, and other statistical information. Data warehouses, providing the facility for benchmarking and outlier analysis, all play an important role in financial data mining and analysis.

For example, 3. Loan payment prediction and customer credit analysis are critical to the bank’s business. There are many factors that can strongly influence loan repayment performance and a customer’s credit rating. Data mining can help identify important factors and eliminate irrelevant ones.

Factors related to the risk of loan payments, such as loan term, debt ratio, payment-to-income ratio, credit history, and many more. Banks then decide whose profile shows relatively low risks based on critical factor analysis.

We can get the job done faster and create a more sophisticated presentation with financial analysis software. These products condense complex data analysis into easy-to-understand graphical presentations. And there is an advantage: such software can take our practice to a more advanced level of business consulting and help us attract new clients.

To help us find the program that best suits our needs and budget, we looked at some of the leading packages that represent, according to vendor estimates, more than 90% of the market. Although all packages are marketed as financial analysis software, not all of them perform all the functions necessary for full spectrum analysis. It should allow us to provide a unique service to customers.

The products:

ACCPAC CFO (Comprehensive Financial Optimizer) is designed for small and medium-sized businesses and can help make business planning decisions by modeling the impact of various options. This is achieved by demonstrating the hypothetical results of small changes. A preview function prepares budgets or forecast reports in minutes. The program also generates a financial dashboard of information and key financial indicators.

BizBench’s custom financial analysis provides financial benchmarking to determine how a company compares to others in its industry using the Risk Management Association (RMA) database. It also highlights key ratios that need improvement and year-over-year trend analysis. A unique feature, Back Calculation, calculates profit targets or the appropriate asset base to support existing sales and profitability. His analysis of the DuPont model demonstrates how each index affects return on equity.

Financial Analysis CS reviews and compares a client’s financial position against its trading peers or industry standards. You can also compare multiple locations of a single business to determine which ones are more profitable. Users who subscribe to the RMA option can integrate with Financial Analysis CS, which then allows them to provide industry-standard or peer-aggregated financial indicators, showing clients how their businesses compare.

iLumen periodically collects a client’s financial information to provide ongoing analysis. It also provides comparative information, comparing the client’s financial performance with industry peers. The system is web-based and can monitor a client’s performance on a monthly, quarterly and yearly basis. The network can load a trial balance file directly from any accounting software program and provide tables, graphs, and ratios that demonstrate a company’s performance over the period. Analytics tools are displayed through custom dashboards.

New Horizon Technologies’ PlanGuru can generate integrated client-ready balance sheets, income statements and cash flow statements. The program includes tools to analyze data, make projections, forecasts and budgets. It also supports multiple resulting scenarios. The system can calculate up to 21 financial ratios as well as the break-even point. PlanGuru uses a spreadsheet-style interface and wizards that guide users through data entry. You can import from Excel, QuickBooks, Peachtree, and plain text files. It comes in professional and consulting editions. A plugin, called Business Analyzer, calculates benchmarks.

ProfitCents by Sageworks is web-based, so no software or updates are required. Integrates with QuickBooks, CCH, Caseware, Creative Solutions and Best Software applications. It also provides a wide variety of business analytics for nonprofits and individual businesses. The company offers free consulting, training, and customer support. It is also available in Spanish.

ProfitSystem fx Profit Driver from CCH Tax and Accounting provides a wide range of financial diagnostics and analysis. It provides data in spreadsheet form and can calculate benchmarking against industry standards. The program can track up to 40 periods.