Much has already been said about 21st century being the “Information Age”. We have witnessed the explosive growth in data collected by most industries, especially the financial services industry. This gave rise to Big Data.
According to McKinsey, “Big data is the data that exceeds the processing capacity of conventional database systems. The data is too big, moves too fast, or does not fit the structures of existing database architectures. To gain value from these data, there must be an alternative way to process it.”
The analyst firm IDC recently predicted that the market will grow to $16.9 billion by 2015, up from just $3.2 billion in 2010! And, the world is going cashless (not the Barter system way).
Quick facts about Big data
- US banks currently have 1 Exabyte of data.
- Credit bureaus store over 800 billion records to be analyzed for accurate credit score
The 3V’s of Big Data
Understanding the “Three Vs of Big Data” —
Volume, Variety and Velocity, is imperative in understanding the value of data being created today. This allows a bank or a financial institution to understand their businesses, customers, channels and the marketplace dynamics, including new sales and service opportunities.
Five reasons why financial institutions need Big Data
#1 Your data is growing — Is your business growing as well?
- Making the most of the information that is present in your data and converting them into business advantage holds the key in gaining the market edge.
- Big Data is put to work in Risk assessment, Fraud detection, Anti-money laundering procedures, Pattern analysis of stock trade, Customer Relationship Management, Compliance and Regulatory reporting.
#2 Blurring the barriers between the real and virtual world
- More than ever, Big Data has enabled business leaders with informed-decision making. It is important to note that the data driven decisions are any day better than mere hunches.
#3 Knowing your customers better
- Social media connectivity— “Sell better by understanding their needs better“. You are able to understand and engage with your customers better than ever before through Social media. Also, it gives you the opportunity to provide personalized content and services to the customers.
- User activity data from your systems helps to schedule maintenance and upgradations in advance.
#4 “Right offer at the Right time” .
- Capture prospective market share data. Today, there are opportunities for new players to come and perform better than the existing players, by making the most out of Big Data.
#5 Solve potential problems
- Predictive Analytics can help in understanding which of the customers are more likely to be loyal, and which ones are more likely to leave you and choose a competitor.
- Annual resource planning is made easier by staffing models based on the routine transaction time of the Account holder.
captured the market by using an augmented reality based home loan app, which could allow a customer to use their smartphone to find property values in a neighborhood and seamlessly apply for a loan. The insight captured during this shopping process combined with credit bureau information would allow a bank to better target messages around a potential pre-approved loan.
|Should you be concerned with Big Data? Certainly. Big Data offers a glimmer of hope to a global economy struggling to find a path towards rapid growth. It has the potential to completely transform your company, your customers and your community.|