Written by: Deepak Sachdeva is an Internet Marketer and digital consultant. Loves exploring new online marketing techniques and helping businesses build online brands. He likes writing on topics like Digital Marketing and Education. In education, his favourite space is Big Data Analytics, Artificial Intelligence and Cloud Computing.
Statistics concerning big data are surprising. More than 87% have established big data analytics in their daily operations while 90% of the companies think they will lose in the fierce competition among rivals if they are lacking in efficient big data analytics. Recently, Forbes stated that big data which was earlier on the cloud has now entered everyday operations of users and customers. Companies in every sector use big data to reduce operation cost and proportionally increase profit which includes healthcare facility, Telecom industry, constructions, and even banks. Financial institutions are largely dependent on the big data acquired using safe and legal data mining techniques in order to provide what the customers actually need and want. If anyone is contesting for the management position in banks, then knowledge of big data can maximize the chances of getting the job right away.
What’s Big Data & Why Is Big Data So Important?
Talking explicitly about the banking sector, organizations acquired data from their customers and clients using a number of channels and techniques. Banking sector abides the various regulations and privacy restrictions while collecting this data by the technique called data mining and sort which helps generate the preferences of the customers and what they actually need. Big data helps organizations in determining the customer’s demand how to provide supplies accordingly. Financial institutions fetch data related to fraud, user interactions, the pattern of recurring transactions facilitating in decision-making.
Financial institutions and Banks use data to analyze the risk of fraud. Banks conduct a detailed analysis of any business before providing financial services which further reduces financial damages. Other benefits because of Big Data Analytics is that it finds patterns in transactions which hints towards if the borrower whether it is an individual or group or a business is legit and would pay the premium and interest of the amount borrow or services obtained back in time. The data further helps in marketing purposes for every sector. Companies have started creating customer-centric products and services after studying the customers and their needs better.
Banks and financial institutions use segment-based marketing techniques after analyzing data obtained from customer’s buying habits and spending paradigm. This enables banks to make a decision on where to invest and spend to get the maximum profit. Another benefit of data analytics is the management of risk. Since financial institutions are not the ordinary organizations as they deal with the massive amount of money in and out, it takes advanced risk management protocol that works best for both the banks and the customers.
Big Data Analytics plays a crucial role in the banking sector and there are few roles of them. First of all, banks can now use the data obtained through numerous channels into evaluating their progress. The big data is in turn used by banks to monitor the real-time behavior of the clients and customers. The data also enables the banks to provide for increasing customer volume since with the ongoing real-time monitoring, they can evaluate the services that need a boost or upgrade and those which aren’t useful for the brand.
With the increasing customer volume, a problem arises where the data is being fed to each and every customer which might pose a problem. However, with big data analytics, banks can culminate the data acquired from different sources but belong to any particular individual thus eliminating the problem which could affect the customers and clients later. For instance, by keeping a real-time record on the spending habits of any customer using their credit cards, banks can provide additional limit or inhibit them from spending much.
How Does Banking Sector Use Big Data Analytics?
Banks acquired a huge amount of data that piles up every day. Nowadays, banks use big data analytics to efficiently use the data available. According to the statistics, a 26% of growth was reported from 2015 to 2019 in big data spends by financial institutions. Around 71% of the banking services believe that analytics is important while 41% of the banks have already started using it with a number of tools available. As per the data, companies use the data to reap off benefits in the form of return on data at 60% aggregate and it is ever growing. This is a small picture of how big data has massively changed banking services on a large scale.
Banking Sector is an elaborate sector where millions of dollars are in rotation at any given time. Big Data Analytics has proven its prowess over other similar methods since it takes data and provides insights making it easy to decide the fate. It also provides immediate service delivery to the consumers making it consumer-centric. Moreover, Big Data Analytics takes input from large sources and produces output in terms of numbers and probabilities. For instance, it tracks the buying pattern of any consumer or client which can be compared with others consumers that will enable the banks to decide whether to whom they should lend the money in order to get maximum profit. It also prevents these financial services for any fraud through its efficient risk management. These all advantages and benefits combined together make big data analytics a favorable technique for the banking sector in India and other countries of the world.