Data is indeed the new gold, and businesses across all industries, including Fintech, continue to have a great interest in data pools. Succinctly put, Big Data, in various ways, has become fundamental to the success of so many businesses.
The “Big” In Big Data
The concept of gathering data and leveraging it to improve customer experiences is not a new one. However, the expansive data lake that is Big Data provides enterprises with customer information that has the potential to do so much.
Big Data is a collection of structured and unstructured data. In Fintech, the structured data comes from information maintained within the financial institutions. On the other hand, unstructured data comes from various sources and applications.
The value-add of Big Data is expected to only get better with the Internet of Things (IoT) and other technological advances.
Three fundamental V-characteristics define big data as follows:
- Volume: A big data platform is capable of holding and processing massive amounts of data at any one time.
- Velocity: Enterprises need processed data in the here and now. Big data platforms provide the required real-time data processing.
- Variety: There is a wide range of data sources, and the data is also available in various formats. From status updates across social media platforms to videos, a robust big data platform should be capable of handling various data formats.
Big Data In Fintech
Big Data analytics involves applying techniques and tools to analyze data lakes to uncover patterns, trends, and any correlations that will inform decisions. These analytics are crucial to any enterprise looking to stand out in a space that is as competitive as Fintech.
Players in the Fintech industry are using Big Data to get valuable insights into how to provide better and more user-oriented products and services. Additionally, these insights are crucial in informing how fintech companies develop their business models. Putting it differently, the insights from Big Data fundamentally drive business decisions in the Fintech industry.
Benefits Of Big Data In Fintech
Fintechs can leverage Big Data analytics and benefit in the following ways.
1. Customer Segmentation And Orientation
The more an institution understands its customers, the better it can serve them. Big Data analytics helps Fintechs to create user profiles and appropriately segment their clientele. This segmentation helps develop and deliver targeted services and products that meet the customers’ needs. The institution can then offer more personalized offers to its clients based on their profiles.
2. Better Risk Assessment
Big Data analysis looks at data from various sources to help with risk assessment. These insights can save an institution from a bad investment or the risk of dealing with customers who may have been flagged. It helps institutions move forward with better financial certainty.
3. Enhanced Security
Fintech institutions can use Big Data analysis to develop a fraud detection system or model. Based on historical and transactional history, geolocation, and a robust record-keeping system, the analytics can detect an odd transaction and trigger an alarm. This creates a secure financial environment for everyone.
4. Optimized Operations
Chatbots allow for 24/7 interactivity. These virtual assistants can help customers in different ways, helping to optimize operations. Robotic process automation leaves the repetitive tasks to bots with no human intervention. Not only does it improve customer experience, but it also frees up members of the team to handle other tasks.
Final Thoughts
Big Data continues to grow in demand in Fintech for various reasons. Competition is stiff, and every institution looks to stand out by meeting and surpassing customer expectations. Big Data is big now and will only get bigger as Fintech institutions look to enhance customer experience and optimize their operations with the insights Big Data offers.
