Big Data and its role in the evolution of Fintech
- Sep 10, 2018
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The financial services industry has been revolutionized by technological advances. The way banks and financial companies operate today has been fundamentally modified. When we talk about technology and banking, people think first about online transactions, applications and, of course, Internet banking. But the ways in which technology has changed the industry go even further: they begin to use a large scale in all the internal processes of an alternative banking institution and services, or even banks, through small-scale outsourced services and the world banking system on a large scale.
The change comes from the data generated by electronic devices. From smartphones to laptops, to our homes and appliances, everything stores data for our habits and preferences. And this data can easily be used by the Fintech industry to offer more reliable services and products to all customers, but also to reduce the risks to which banking institutions and financial institutions are exposed.
Big Data and Fintech
In the Fintech industry, Big Data can be used to anticipate customer behavior, but also to create strategies and protection policies for banks and financial institutions around the world. Every day, around the world, approximately 2.5 quintiles of bytes of data are generated. And this rate is expected to grow even more in the future. All of this data can be used in a number of valuable ways, with the help of appropriate tools and algorithms. But how can Big Data be used in the banking and financial technology sectors?
Financial technology companies are well known for being customer focused, and customer segmentation is one of their areas of interest. The financial sector focuses on dividing its customers according to age, gender, online behavior, economic status, and geographic coordinates. In this sense, fintech companies can easily analyze consumer habits, depending on age, sex and social class. They can also easily customize their alternative banking services and products to meet the demand and needs of each segment. The most valuable customers, that is, those who spend the most money, can also be identified - which will generate higher levels of customer satisfaction.
Another advantage of using Big Data in the financial sector is the prospect of fraud detection. Obviously, with the increase in online banking transactions, companies in the industry and their customers are more likely to be victims of fraud. Big Data helps banks and other financial institutions better understand each customer's consumption habits, but also their online standards. In this case, when an unusual activity is detected by the company, the account holder can be easily contacted and informed about a transaction that seems suspicious.
In banking and finance, like many others, offering personalized services is one of the best marketing tools available. Financial technology companies, such as the Contis Group, say that more and more customers are looking for customized services and packages. Banking institutions have begun to use the services of fintech companies to improve their services and offer more personalized packages, but also a better, more comprehensive and faster infrastructure that contributes to creating a personalized and easy experience for the final consumer. Not only can Fintech companies identify spending patterns to make bank recommendations, but they can also use them to help the end user save more money. Unlike traditional banking institutions, fintech companies focus more on creating customized financial services that meet very specific consumer demands, and that is where Big Data comes into the discussion.
Better compliance features
Companies that offer financial services always need to follow specific rules. This requires frequent audits and compliance controls to meet industry-specific demands for security, privacy, data, and finance. Big Data contributes to providing these companies with valuable information in terms of consumer needs and expectations in relation to them. Using cloud-based data, these companies can now use analytical packages and integrate them into their systems, allowing them to take a more actionable view in that regard. In addition, fintech companies offering customized financing options can now analyze and detect where a financial crisis is most likely to occur and adapt their strategies to follow some precautionary measures.
The financial technology industry is evolving at an accelerated pace, and from the Internet banking services, companies in the industry have increased their capabilities and the financial services offered. Machine learning and artificial intelligence seem to open new avenues in all sectors, and the alternative financial sector also seems to benefit greatly from this. Ultimately, this translates into better and more personalized services for B2B and B2C consumers.