TRANSFORMING FINANCIAL SERVICES THROUGH BIG DATA*1 ANALYTICS

Throughout human history, the kind of monetary exchange has universally been dependent on the
prevailing technologies of those times. Humans started with the barter system, graduated to precious
metals, paper currency, bank cheques and cards, and now the internet. In the age of internet, the concept
of Big Data is not a new one, what is new though is the prolonged absence of a successful global example
illustrating the power of Big Data Analytics in the Financial Space.
However, global trends*2 indicate that Big Data Analytics are set to change the ground rules by creating
competitive first-mover advantage. The reason for this is two-fold: Supply and Demand. On the supply
side, the increase in bulk data is pushing for technological advances like Big Data to be developed in its
entirety. On the demand side there is a never ending need among companies, fighting for their market
share, to understand the analytics behind bulk data. There are several interesting ways in which Big Data
Analytics can transform financial services:
A. Just as Netflix stormed the video rental market by using correlation techniques between customers
having similar tastes for movies, Big Data can also be exploited using statistical tools to correlate similar
profiles and make cross-suggestions for financial products. It would also help banks in coming up with
better targeted campaigns and offers for its existing and potential customer base.
B. Even the customers, investors and shareholders themselves can exploit the analytical edge of Big Data
by extracting current and historical data about their respective companies, intelligently* 3.
C. Big Data can also help organizations to directly measure and compare the financial performance of its
different subunits and accordingly take corrective measures. Data Forecasting can also prove to be
beneficial here.
D. In modern times, the increased use of mobile and online banking activities has lead to an increased risk
as well. Risk Mitigation and Fraud Detection can be done using Big Data Analytics in almost real time* 4.
This also helps in increasing customer loyalty and retention.
E. Mobile Applications of banks can use the Big Data directly collected from their users to enhance user
experience and convenience. The trend is already visible with the launch of several mobile-only* 5 banks.
F. Even non-financial firms can exploit online financial transactional data* 6 to understand consumer
behaviors and patterns.
G. Certain ancillary benefits of Big Data can be in extracting useful insights from the financial records of
people which may serve the larger goals of the society by pinpointing, say, the right medical treatment,
the right government subsidy or the right investment for old age.
However, the Achilles' Heel is also multi-fold* 7. The prime concern for customers is privacy and security.
The banks must not, in lieu of helping their customers, be intrusive. In the age of social media, it might
backfire. Financial firms also face the challenge of acquiring and maintaining (pay scale of) talented
individuals, especially those equipped with technical skills like SAS/R/SQL/Python programming
languages. Another challenge facing the firms is in relation to data quality. For example, if structured data
is created from unstructured data, it needs to pass through quality checks and controls.
Nonetheless, Big Data Analytics is bound to revolutionize the current financial environment, by its huge
number of possibilities. The need of the hour is exemplary global financial firms to emerge by setting
benchmarks for making use of data, judiciously. Thus, Big Data Analytics can easily be compared to a
new born baby which is perhaps, even yet to learn walking. Its adulthood definitely beholds a lot of
promise.

REFERENCES (SOURCES + LINKS)

*1. Gartner, Financial Times (2013) - Definition of Big Data: Big data is high-volume, high-velocity and
high-variety information assets that demand cost-effective, innovative forms of information processing
for enhanced insight and decision making.
http://im.ft-static.com/content/images/e91a32d0-2bac-11e3-bfe2-00144feab7de.pdf
*2. Forbes, Tech division (May 25, 2015) - Detailed trends in the emerging Big Data Space
http://www.forbes.com/sites/louiscolumbus/2015/05/25/roundup-of-analytics-big-data-businessintelligence-forecasts-and-market-estimates-2015/
*3. EBSCO database - Big Data and Central Banks (Page 90 Second Paragraph) - Q1, 2015 (By David
Bholat of the Bank of England's Advanced Analytics Division)
http://eds.a.ebscohost.com/eds/pdfviewer/pdfviewer?sid=d66e88f1-abb6-4b0b-a5eee56eedc4caf6%40sessionmgr4005&vid=1&hid=4103
*4.Perficient Inc. (March 2013) - Page 6, Point 1
http://www.perficient.com/~/media/Files/White-Papers/2013/Big%20Data%20Planning%20Guide%20for
%20Fin%20Serv%20-%20UPDATED.pdf
*5. Who needs branches? 10 mobile-only banks doing it all from the app (February 20, 2015)
https://www.hottopics.ht/stories/finance/needs-branches-10-mobile-banks-app/
*6. Mckinsey Global Institute (June 2011) - Page 108
http://www.mckinsey.com/~/media/mckinsey/dotcom/insights%20and%20pubs/mgi/research/technology
%20and%20innovation/big%20data/mgi_big_data_full_report.ashx
*7. EBSCO database - 5 Key Big Data Challenges in Banking Industry - Siliconindia. September 2014,
Vol. 17, Issue 9, Page 34-35
http://eds.a.ebscohost.com/eds/pdfviewer/pdfviewer?sid=642a0d6b-badd-482f-b6f3d2693857a2e6%40sessionmgr4002&vid=1&hid=4103