Big data in banking industry plays an important role from boosting cyber security to reducing customer churn, cultivating customer loyalty, and providing innovative and personalized offerings that make modern banking a highly individualized experience. Banks now can use big data to monitor their client’s transaction behaviors in real time, allowing them to provide the kind of resources that their clients need. In this blog, I will explain how does bank use by data to leverage its advantage and mention the top trends in Big Data technologies in the banking industry. Finally, I will provide some examples of how Big Data is Changing the Banking Industry.
How does banking industry use Big data?
Big Data will give banks deep insights into customer spending habits and patterns, simplifying the task of ascertaining their needs and wants. By being able to track and trace every customer transaction, banks will be able to categorize their clients based on various parameters, including commonly accessed services, preferred credit card expenditures, or even net worth. The benefit of customer segmentation is that it allows banks to better target their clients with relatable marketing campaigns that are tailored to cater to their requirements.
Customer segmentation can further be used to create and deliver new schemes and plans, aimed directly at the specific requirements of their customers. By analyzing past and present expenses and transactions, a bank can get a clear understanding of how to get the highest response rate from their clients. Creation of personalized product offerings will cater to an untapped niche of personalized services that gives banks the ability to create more meaningful client relationships.
As the title itself suggests, Big Data allows banks to ensure that no unauthorized trade or transaction is being made. This provides a protection and safety to all exchanges and makes a secure mark for the industry.
Through Big Data the information is easily located on a single large scale and it becomes easier to reduce the number of risks. Everything that is needed by the banks becomes available at a central platform. This reduces the chances of them losing any information. It also helps them avoid being ignorant towards a fraud. They can easily detect them and in turn, reduce all kinds of risks.
What are the top trends in Big Data technologies in the banking industry?
Banking analytics, combined with cognitive computing, provides you the ability to segment your customers and know each one as an individual in real time. This knowledge of each customer allows you to send personalized offers, making one to one relationships a possibility. Now you can create individualized experiences for your customers and realize tangible business benefits.
Examples of how Big Data is Changing the Banking Industry:
Sales & Marketing
- Customer retention and churn reduction
- Next best offer: Product cross-sell identification
- Predictive analysis of profitability
- Forecasting demand based on social media sentiment
Risk Management
- Credit risk stress testing
- Market risk and exposure analysis
- Aggregated risk position reporting across business units and geographies
Fraud and Security
- Early detection of credit card fraudulent activity
- Analytics based on web proxies logs, access logs, VPN logs
- Employee surveillance
Trading and Transactions
- Market risk visibility
- Same-day trade processing
- Transaction data ingestion
Compliance and Regulation
- Legal discovery
- Anti-money laundering
- Risk aggregation reporting for Basel III and Dodd-Frank
- Text analytics on all communications
Cost Reduction
- Scale-out on commodity infrastructure
- Database growth and data analysis
- Reduced database maintenance
Big Data is a huge step towards the development of banking industries because they will be able to get a better understanding of client requirements so that they can provide such services in a timely manner. The use of Big Data helps banks to function a lot smoother.
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