Big data is swiftly growing to be the most effective technology tool.
Over the years, there has been a significant shift in how businesses make critical decisions. Traditional intelligence and assumptions have given way to data-driven, fact-based decision making, which has made big data solutions common. This is the next transformative step in the evolution of data management and analysis. Many businesses employ data technology to analyse information.
Although big data technology and services have become widespread across industries, the financial sector is at the forefront of their adoption. The sheer volume of data generated daily has necessitated holistic data monitoring, gathering and analysis solutions.
Some of the critical challenges facing the BFSI sector include unorganised data, fraud identification and operational inefficiency. The use of big data technology and services has assuaged some of these challenges.
Big data is swiftly growing to be the most effective technology tool. IDC predicts that global revenues of big data and business analytics will grow from $130.1 billion in 2016 to more than $203 billion in 2020 at a CAGR of 11.7%. Banking accounted for 13.1% of total revenues in 2016, and is expected to witness the fastest spending growth in the forecast period.
Banking has taken a paradigm shift with this revolution. As new technologies emerge, they are effecting a host of changes to the industry. Data analytics has become the key determinant in matters pertaining to core operations, risk projection and customer relationship management. Data-fuelled technology, such as blockchain, will allow banks and collaborators to share data, leverage it between different databases, countries, users and counter-parties. This could make data-driven services more powerful. Data can precisely map demographics, individual preferences and financial tendencies that help risk projection and customer relationship management.
Here are some ways in which big data analytics is helping the BFSI sector:
Historical transaction records can be used as an effective input for forecasting and future strategic planning. Big data can benefit companies to track market developments and plan future targets. The analysis can also be interpreted to highlight the risks associated with the day-to-day work of an organisation.
Cybercrime is a daily challenge for the BFSI sector. Despite stringent security laws, organisations face attacks and threats regularly. With big data analytics tools and techniques, banks can now recognise unusual patterns and take action. Big data analytics also supports biometrics used to create unique IDs for every user. At the same time, online transaction encryption is helping the industry.
For a business with a large dynamic customer database, traditional data management systems aren’t capable to handle the multi-dimensionality of big data. The ever growing demand for speed and scalability cannot be managed on legacy platforms. By switching to data analytics platforms scalable on cloud and virtual computing, banks can handle gigantic quantities of data seamlessly.
Big data analytics tools and techniques provide the sector with dynamic and updated statistics of their most lucrative customers. It helps them chart effective business strategies and use evidenced-based data to preserve top clients and market relevant products to them.
The next wave of digital disruption will be unleashed by artificial intelligence driven by big data and scalable computing. BFSI industry will redefine services and provide customers with an enhanced customer experience which will be a competitive differentiator. In India, we are seeing the green shoots with applications being offered by fintechs. In time these will evolve into experiences for the mainstream which will be hard for larger established players to ignore. Key stakeholders — government, regulators, banks — must be prepared for robust regulatory frameworks and establish guidelines for this to flourish.
The author is Country Head, Refinitiv