Banking analytics has become increasingly important as financial institutions look for better ways to use the enormous amounts of data generated through everyday customer interactions and transactions. Banks have long relied on data to support lending and other financial decisions, but advances in analytics are expanding how that information can be used throughout the organization.
By applying analytics to customer segmentation, product development, operational efficiency, risk management, and fraud prevention, banks can turn existing data into more actionable insights. As these capabilities become widely available through technology providers and processors, financial institutions that fail to adopt them risk falling behind competitors that are already putting their data to work.
Banks have always been big data businesses. They have traditionally gathered large amounts of information on their customers and used it to make decisions about lending, investment and other financial services. In recent years, however, the advent of big data analytics has taken this to a whole new level. Banks are now able to gather and process vast amounts of data from a wide range of sources, including social media, retail transactions and financial markets. This allows them to gain a far deeper understanding of their customers and their needs.
Big Data Expands Across Banking Operations
This article in BBN Times identifies how banks utilize big data to segment and market to its customers, improve products and increase operational efficiencies, and better manage risk and mitigate fraud. Each solution described here is already available through dedicated 3rd party products and pre-integrated into the offerings of most well established 3rd party processors. If your financial institution hasn’t already selected big data solutions to deploy then it is well behind the deployment curve. This article begins with an introduction that explains the importance of big data analytics in the financial services market:
“Throughout years, the banking industry has improved its service delivery thanks to technological innovation. Services are critical components in daily activities as most transactions are undertaken through the banking sector. The number of customers served in the banking sector has increased exponentially. Each transaction in the banking sector amounts to data creation and collection. The banking industry produces a large volume of data on a day to day activities. The adoption of big data analytics will revolutionise banking at present and in the future.”
Analytics Could Shape the Future of Banking
It continues with a small drill down for Customer Segmentation, Improvement of Products and Services, Operational Efficiency, Risk Management and then how all of these will impact the Future of Banking.
The growing volume of banking data creates opportunities that extend well beyond traditional financial analysis. Customer information and transaction data can help financial institutions understand customer behavior, improve products and services, streamline operations, and identify potential risks more effectively.
Many of the technologies required to achieve these goals are already available through established third-party providers and processors. As adoption increases, banking analytics is likely to become less of a differentiator and more of an essential capability. Financial institutions that effectively integrate these tools into their operations can be better positioned to use their existing data to improve decision-making and compete in an increasingly data-driven industry.
Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group
Read the full story here
