The power of data cannot be ignored or underrated. The valuable and immense volume of data stored by banks for decades is now being randomly utilized for various analyses in terms of transactions, till now the financial services which have the reservoir of data were not exploiting it to meet the customer expectations whereas customers expect banks & financial organization to deal with them based on the data they provide. The potential of Big Data to unlock the various aspects in favour of customers & bank is now accepted and is used globally by many countries.
Citigroup providing financial services in 160 countries with over 200 million customer accounts has now adopted the Big Data–driven approach for their own business growth & customer’s benefit. There are certain impacts Big Data can bring into the banking & financial system.
Easy Customer Segmentation/Profiling
With so many complexities & potential risks involved in the banking industry, it is important to understand customer’s behavior & categorize them accordingly. This helps in targeting customers as per the bank’s requirements for business growth. There could be various kinds of product need segmentations involving personal behavior, demographic, and transaction details but all possible with the help of Big Data analysis. Such real time analysis can enhance the growth cycle.
Personalized Product Offerings
Once the categorization is done the data from e-commerce profiles are used to target individuals on their browsing and buying habits. Customer’s interests observed through his actions are later targeted for personalized marketing & to get sale leads.
Risk & Fraud Management
The risk is another side of the coin but financial service’s need to manage fraud & risks is larger than any other industry. Big data allows the bank to avoid bad loans or failed investments through historical data & get a real time alert. Now because of various regulatory requirements and need of time has made many financial firms to implement big data projects to obtain an advantage over their competitors. Big data analysis can make banks to block any transaction seeing the irregular payment transactions on any account. It then helps to prevent any fraud before happening.
When most of the industries are running with a customer centric approach it then becomes important for the banks & credit services to meet customer’s expectations and understand their preferences. According to a report of McKinsey marketing decisions based on good data analysis can increase the productivity by 15-20%. Though it requires an additional investment of infrastructure for implementation with an output of increased growth, revenue & customer satisfaction its worth paying.
Implementing Big Data improves the flow of overall system with improvements in effectiveness & response time, increased number of automated processes, cost savings, meeting precise requirements instantly, detecting fraud transactions or signals, and different factors which are related to financial risks.
With the help of Big Data analytics, not only the top performers but those employees who are either not happy or are struggling can be acknowledged. Instead of following traditional ways to find the details using right analytics by employees helps in bringing out the employee’s performance, accepting the common goal as a team & the overall culture of an organization also improves.
With the digitization increasing day by day, the impact of Big Data on banking & financial services can also be significant.