Data is expected to grow exponentially
The rise is Big Data has been staggering. In fact, according to some research, by the early 2010s, 90% of all data had been generated within the last two years. That is more data than most financial institutions knew how to deal with. We can see this by looking at the speed at which traditional institutions have adapted versus how quickly Fintech has evolved to make use of how technology is changing the financial landscape. And if we look at more recent data, we can see that the amount of data is expected to grow exponentially.
One of the important things to point out about this graph is the amount of unstructured data that will continue to travel between devices. This is significant because it means that companies will be required to structure and analyze this data in some way or be left behind, opening the door to competitors. Traditional institutions have already been feeling this pressure from Fintech, but have slowly started to catch up.
The main goal of sifting through all this data is making more informed business decisions that will hopefully increase the company’s profits. Data scientists, predictive modelers, and other professionals in analytics all work together to analyze large amounts of data. They do this with many objectives in mind. Many uses of Big Data impact specific aspects of the financial industry as well as consumers.
Big Data is unavoidable. It has touched almost every aspect of the financial sector and will only increase its impact in the near future.
In order to combat fraud, financial institutions need to analyze every transaction and compare it with known information. This can be a very tedious task, which is why fraud sometimes goes unnoticed. Big Data has helped with this as it can provide in-the-moment investigations and continuous analysis. Systems can quickly search records for gaps, duplicates, or other anomalies.
Big Data has helped financial institutions all over the world increase their security and protect themselves from cyber threats.
Compliance is the often hated but very necessary process that companies need to go through if they want to keep accreditation and consumer trust. Big Data helps companies keep up with changing standards and regulations by using tools that partitions data, analyze it, and send it to the exact place it is needed in the report.
4. Risk Management
Using Big Data, companies are getting better at risk management. Predictive analysis and other advanced statistical methods, along with the increasing amount of data and computing power, makes it easier for institutions to identify risks, reduce the time it takes to intervene, and make more accurate decisions about managing risk.
Big Data allows companies to personalize the experience for each customer. For example, credit card companies often give specialized offers and discounts on certain products based on their previous purchases. In e-commerce, ads are targeted to people based on website visits and previous purchases. This is only possible with the help of Big Data.
Related to personalization, businesses are also using Big Data to segment their customers in order to deliver targeted services. This could be based on demographic information, behaviors, past transactions, and other data.
Big Data in use
Financial institutions and external companies alike have been working hard to harness the power of Big Data.
This Fintech software company has created a Big Data solution for financial institutions. They have created a compliance platform that helps companies manage their data so that it can be effectively used for compliance reporting.
MIT has led the way in Big Data development with IDSS, the Institute for Data, Systems, and Society. The work with agencies like the Consortium for Systemic Risk Analytics (CSRA) to create solutions for the management and analysis of data. Due to the crash of 2008, IDSS, the Laboratory for Financial Engineering, the Center for Finance and Policy, and CSRA have been working on creating open-source software and a public-access risk dashboard to help manage risk and provide early warning systems.
Founded in 2013, this company is working on ways to help financial institutions manage fraud. Their cloud-based service can analyze data in real time and notice when payment information is being stolen.
The nPlatform from Elsen is specifically made to help financial institutions analyze data and gain insights they can use for strategy improvement.
5. Diamond Y’ello
Diamond Bank, MTN, and Women’s World Bank have been working together to create a better service for customers. While the bank has a lot of customer data, without analysis, it means nothing. Through the collaboration, Diamond Y’ello analyze the data it has on its customers so that it can offer specific services to women based on various demographics.
Banco Bilbao Vizcaya Argentaria (BBVA) created Commerce360, a tool that helps businesses with transactions. The tool uses AI to analyze data from transactions so that business owners can use it to improve their strategies.
Finance needs to keep up!
Big Data is already impacting many aspects of finance: fraud, security, risk management, and services. With the amount of data increasing every year, the size of the impact is sure to grow as software companies, academic institutes, and financial institutions work together to make the most of the data while providing safety and security.