Development of a Customer Churn Model for Banking Industry Based on Hard and Soft Data Fusion

There has been an increase in customer churn over the past few years-customers decide not to continue purchasing products or services from an organization. Customers' data lie in two categories: soft and hard. The term "hard data" refers to the records generated by various devices and programs, including but not limited to smartphones, computers, sensors, smart meters, fleet management systems, call detail records (CDRs), and consumer bank transaction data. On the other hand, information that is subject to interpretation and viewpoint is known as "soft data." Fusing these two types of data leads to better customer's behavior analysis. This paper uses a supervised machine learning algorithm, namely a decision tree (DT), and the change mining method to model hard data. K-means clustering, an unsupervised machine learning algorithm, is also used along with the data preprocessing techniques. This paper also considers the Dempster-Shafer theory and other steps for soft data modeling. By fusing soft and hard data, the churn rate of customers compared with each other can be calculated. Besides, the customers' banking data are leveraged for data modeling. The results show that the banking industry will gain a more dynamic and efficient customer relationship management system by using this model.