FINANCIAL CHURN

MODELING
Guidance By PRESENTED BY
Information available in audio.
Mrs. M. RAMA PRIYA M.Sc., M.Phil., S. Janani
Assistant Professor of Reg No: P 22278104
Computer Science
 1 ABSTRACT

2 EXISTING SYSTEM

3 PROPOSED SYSTEM

AGENDA 4 SYSTEM REQUIREMENTS

5 IMPLEMENTATION

6 LITERATURE SURVEY

7 REFERENCE
ABSTRACT

Financial churn modeling refers to the analysis and prediction of customer attrition or churn in the banking sector.
Customer retention is a critical aspect of the banking industry, and understanding the factors that lead to customer
churn can help financial institutions implement effective strategies for retaining valuable customers. This study
focuses on developing a predictive model for identifying potential churners by analyzing historical data, customer
behaviors and machine learning algorithms

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SYSTEM ANALYSIS

EXISTING SYSTEM:
In the existing system, traditional methods of customer retention are employed, often relying on post-facto analysis and
reactive measures. These methods may include customer feedback surveys, periodic reviews, and generic marketing
campaigns. However, these approaches may not be efficient in proactively identifying customers at risk of churn.
The limitations of the existing system include:
 Reactivity
 Limited Personalization
 Insufficient Data Utilization

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PROPOSED SYSTEM
The proposed system aims to address the shortcomings of the existing system by incorporating advanced analytics,
machine learning, and data-driven decision-making. Key features of the proposed system include:
 Predictive Modeling
 Real-time Monitoring
 Customer Segmentation
 Feedback Loop
 Automation
The proposed system aims to enhance customer retention efforts by combining advanced analytics with a proactive and
personalized approach, ultimately contributing to improved customer satisfaction and long-term loyalty in the banking
sector.

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 FUTURE ENHANCEMENT

Sure, here's a simplified version of the potential future enhancement using NLP and sentiment analysis for banking churn
modelling:
Sentiment Analysis of Customer Interactions: Analyze how customers feel when they interact with the bank through
emails, chats, or social media to spot issues or dissatisfaction.
Feedback Analysis: Use sentiment analysis to categorize feedback as positive, neutral, or negative, helping prioritize and
address critical concerns.
Personalized Communication: Tailor communication based on customer sentiments, such as addressing dissatisfied
customers with personalized solutions to improve their experience.
Product and Service Improvement: Identify areas for improvement by analyzing sentiment trends related to specific bank
products or services, leading to better offerings and higher customer satisfaction.
Competitor Analysis, Risk Prediction Enhancement and Ethical Considerations

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ARCHITECTURE DIAGRAM

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DATA FLOW DIAGRAM
Data Preprocessing

Data Collection

Feature Engineering &

Selection

Model Training &

Evaluation

Model Deployment

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SYSTEM REQUIREMENTS

HARDWARE REQUIREMENTS:

 System : Pentium IV 2.4 GHz.

 Hard Disk : 40 GB.

 Monitor : 15 inch VGA Color.

 Mouse : Logitech Mouse.

 Ram : 512 MB

 Keyboard : Standard Keyboard

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SYSTEM REQUIREMENTS

SOFTWARE REQUIREMENTS:

 Operating System : Windows 10.

 Platform : PYTHON TECHNOLOGY

 Tool : Python 3.6

 Front End : Python anaconda script

 Back End : Spyder

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IMPLEMENTATION

Machine Learning and it’s Algorithm

Machine learning is a subfield of artificial intelligence (AI) that uses algorithms trained on data sets to
create self-learning models that are capable of predicting outcomes and classifying information without
human intervention

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Machine Learning Alogorithms:
 Logistic Regression
 Decision Tree
 Random Forest
Logistic Regression Algorithm:
Logistic regression is a supervised machine learning algorithm that accomplishes binary classification tasks by
predicting the probability of an outcome, event, or observation. The model delivers a binary or dichotomous
outcome limited to two possible outcomes: yes/no, 0/1, or true/false.

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Decision Tree Algorithm:
A decision tree algorithm is a machine learning algorithm that uses a decision tree to make predictions. It follows a
tree-like model of decisions and their possible consequences. The algorithm works by recursively splitting the data
into subsets based on the most significant feature at each node of the tree.

Logistic Regression
Decision Tree

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Random Forest Algorithm:
Random forest algorithm is an ensemble learning technique combining numerous classifiers to enhance a model's
performance. Random Forest is a supervised machine-learning algorithm made up of decision trees. It is used for

both classification and regression problems.

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SCREENSHOT

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 LITERATURE OF SURVEY
[1] Predicting customers churning in banking industry: A machine learning approach
ADVANTAGES
• Advanced Models: Using RF, AdaBoost, and SVM enables accurate churn prediction by analyzing complex customer
behavior patterns.
• Improved Performance: Techniques like SMOTE enhance model accuracy by addressing imbalanced datasets.
DISADVANTAGES
• Complex Implementation: Implementing RF, AdaBoost, and SVM requires substantial resources and expertise.
• Data Quality Dependency: Model accuracy relies on high-quality, unbiased data, which may not always be available.
• Interpretability Issues: Models may lack interpretability, hindering stakeholders' understanding of churn factors.

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[2] An Ensemble Model for Predicting Retail Banking Churn in the Youth Segment of
Customers
ADVANTAGES:
• Accurate Prediction: Machine learning accurately predicts churn, helping banks spot potential churners early.
• Identifying Critical Factors: Machine learning identifies key reasons for churn, enabling banks to improve services
accordingly.
• Proactive Strategy: Predictions allow banks to preempt churn with tailored incentives or service enhancements.
• Enhanced Business Value: Reduced churn boosts revenue and profitability for banks.
DISADVANTAGES:
• Data Quality Dependence: Model accuracy hinges on high-quality, unbiased data.
• Interpretability Challenge: Understanding why the model predicts churn can be difficult.

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REFERENCE
1. Gürpınar, E., Ayvaz, S., & Akbilgic, O. (2019). Predicting customer churn in banking industry using machine learning
techniques. Journal of Big Data, 6(1), 68.
2. Bayraktaroglu, A. E., Erden, M., & Özdemir, S. (2019). Customer churn prediction in banking industry: A comparative
study with machine learning techniques. Procedia Computer Science, 158, 216-225.
3. Zhang, Y., Zhu, Z., & Liu, J. (2020). A novel ensemble method for bank customer churn prediction. Computers &
Industrial Engineering, 143, 106393.
4. Saini, G., Singh, J., & Verma, A. (2021). Bank customer churn prediction using deep learning and balanced random
forests. Expert Systems with Applications, 165, 113890.
5. Passaro, R., Croce, G., & Zaccaro, A. (2020). Customer churn prediction in retail banking: A case study in the Italian
market. Future Internet, 12(12), 208.
6. Kumar, A., Gupta, N., & Jain, V. (2020). Predicting customer churn in banking industry using machine learning
algorithms: A case study of XYZ Bank. International Journal of Information Management, 50, 65-74.
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