Collaborative-demographic hybrid for financial: product recommendation

Abstract

Internship Report presented as the partial requirement for obtaining a Master's degree in Data Science and Advanced AnalyticsDue to the increased availability of mature data mining and analysis technologies supporting CRM processes, several financial institutions are striving to leverage customer data and integrate insights regarding customer behaviour, needs, and preferences into their marketing approach. As decision support systems assisting marketing and commercial efforts, Recommender Systems applied to the financial domain have been gaining increased attention. This thesis studies a Collaborative- Demographic Hybrid Recommendation System, applied to the financial services sector, based on real data provided by a Portuguese private commercial bank. This work establishes a framework to support account managers’ advice on which financial product is most suitable for each of the bank’s corporate clients. The recommendation problem is further developed by conducting a performance comparison for both multi-output regression and multiclass classification prediction approaches. Experimental results indicate that multiclass architectures are better suited for the prediction task, outperforming alternative multi-output regression models on the evaluation metrics considered. Withal, multiclass Feed-Forward Neural Networks, combined with Recursive Feature Elimination, is identified as the topperforming algorithm, yielding a 10-fold cross-validated F1 Measure of 83.16%, and achieving corresponding values of Precision and Recall of 84.34%, and 85.29%, respectively. Overall, this study provides important contributions for positioning the bank’s commercial efforts around customers’ future requirements. By allowing for a better understanding of customers’ needs and preferences, the proposed Recommender allows for more personalized and targeted marketing contacts, leading to higher conversion rates, corporate profitability, and customer satisfaction and loyalty