Big Data 06 September 2022

How to use Big Data in Financial Service

Big Data - a treasure trove to enhance financial service efficiency

A wide range of cutting-edge technologies, like artificial intelligence and blockchain, are making financial services more convenient. But Big Data, which can be used for both customers and internal processes, can also impact the financial sector. Because of this, Digital Ventures wants to show how businesses can get the most out of Big Data.

 

Benefits of Big Data for Financial Institutions 

Big Data can be used to manage vast volumes of data that are too large to be handled using standard methods. Data can be stored and managed effectively within a vast digital infrastructure. As a result, data may be collected and evaluated in an organized manner to gain new insights and improve the accuracy of future predictions where the future of business will be driven. 
As a result, Big Data is an ideal fit for the financial services industry, now that customer and transaction data is uploaded on digital platforms. In 2017, leading worldwide market intelligence provider International Data Corporation (IDC) predicted that the combined revenues of big data and business analytics companies would exceed USD 203 billion by 2020. By making use of big data, financial institutions and service providers are able to reap enormous profits. 

  • Reduce the risk of financial business: When financial service companies analyze data, they will see insights that lead to better risk management.  An excellent example is the use of data to assess the risks posed by loan clients, the use of transaction data to monitor irregular activities, or the assessment of crime areas in order to install cameras or other protective equipment where necessary which can help save operational costs.  
  • Reduce operating costs: The term "big data" refers to massive, difficult-to-manage volumes of data – both structured and unstructured – spread across multiple sources. Effective data collecting results in an agile operation and directly minimizes the business's costs. For example, utilizing client information to develop services that are more responsive to customers or to generate management reports.
  • Increase credibility and customer satisfaction: Effective data management improves customer service by enabling faster, more accurate, and more secure service delivery. This contributes to the development of credibility and increases client pleasure.

 

How to turn into a data-driven financial service company

In light of the above benefits, it is clear that big data can help improve the financial sector in terms of both services and operations. But even when these benefits are readily apparent, not every firm can easily change into a data-driven financial service company. As a result, we offer the following three techniques to consider when bringing Big Data to Financial Services:

  • Develop data strategies that align with the business: One of the reasons businesses struggle to shift to becoming data-driven organizations is that they focus exclusively on the short-term use of big data and halt development immediately following completion of a project. Businesses should begin by planning their big data development around their strategies and business models. This will enable projects to continue growing and provide possibilities to collaborate with partners whose strategies align with the organization's in order to achieve their goal of becoming a data-driven enterprise. 
  • Choose a flexible, scalable, and secure platform: Big data is a technology that relies on digital platforms, so businesses should choose platforms with flexible features that support expansion and are highly secure from the first day of operations. Scalability enables companies to store an increasing amount of data. While flexibility enables modification to fit the database's size and requirements, security is a must for large data operations. Data breaches must be avoided, and businesses' data usage must be traceable.
  • Begin by utilizing data to solve a single problem before branching out to other areas: When pursuing the goal of becoming a data-driven organization, many firms initiate many projects concurrently. This increases the likelihood of failure. As a result, the use of big data should begin with resolving an initial problem before applying acquired lessons to other problems. This enables enterprises to recognize the benefits of big data and have a better understanding of how information is used, while also minimizing the risks involved with running multiple initiatives simultaneously. 

 

Big data is expected to have a significant impact on the financial services industry. When all data is converted to digital form, we will be able to see a greater variety of uses for big data in the future.

 

Information courtesy of mapr.com, datafloq.com, and eiopa.europa.eu.

 

Sources: 
https://mapr.com/blog/how-financial-services-industry-is-winning-with-big-data/
https://datafloq.com/read/financial-services-industry-use-big-data/125
https://eiopa.europa.eu/Publications/Other%20Documents/Big%20Data%20Factsheet-final.pdf

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