Big Data and FinTech: Let’s Talk Numbers
Automation is one of the long-term trends in all industries including the Financial Services industry. This might lead one to visualize a scenario where machines are whirring about and churning out accurate data that leads to smarter results. However, Big Data in the Financial Services Industry is not only about the utilisation of machine learning to fathom real-time trends and to make possible real-time recommendations to customers. It is also about service providers getting to know their customers better. A Microsoft survey showed that ‘Personalisation’ ranked on top of analytics priorities for Financial Services companies followed by Risk and Compliance issues such as identity theft and money laundering. As regulations are being constantly tightened in the industry, compliance is best-achieved by a Big Data solution that keeps companies on top of every facet of their operations. Let us take a closer look into the applications of Big Data in the Financial Services Sector.
- According to Cisco, annual global datacenter IP traffic will reach 15.3 zettabytes by the end of 2020. Cybercrime will cost $6 trillion in 2021 rising from $3 trillion in 2015.
- A global survey by Financial Services company State Street Corporation reported that 81 percent of companies operating in the Investments sector had identified the need for Digital Transformation. Among those firms that led in digital implementation, 41 percent identified investments in cloud and artificial intelligence as being critical. From the perspective of their customers, 82 percent of investors were cognizant of the importance of their firm leading in technology implementation. Chief Information Officer Antoine Shagoury stated that companies that failed to implement technologies such as Blockchain and Artificial Intelligence would not gain a foothold into the emerging new era of finance.
- According to research cited by Capgemini, Robotic Process Automation(RPA) can achieve cost savings of up to 50 percent for financial services companies. According to the company, its RPA product is equipped to manage end-to-end banking and insurance functions. The processes included data entry, validation manipulation and consolidation.
- Accenture says in a report that Financial Services firms are going to invest in data-related programs at an annual rate of 26 percent through 2019. The company projected big opportunities arising from Big Data in evidence-based analysis, discovery of new business opportunities, utilisation of unstructured data by Business Units instead of the IT Unit, and improved risk and regulatory management. Data when transferred from existing Silos to Lakes is projected as generating cost reductions and flexible analysis.
- A report in The Guardian cited research showing that eight out of the top 10 Hedge Fund Executives were those making investment decisions based on algorithms. Computer and data scientists are now helming many major Funds.
- Credit Information provider TransUnion identified cloud-based analytics services would become critical to address the issue of direct, immediate visibility of analytics for lenders, 70 percent of whom had identified the same as a prime necessity, and 92 percent of whom revealed the need for discovering new or hidden opportunities that they knew existed.
- Ponemon Institute in its Big Data Cybersecurity Analytics Report sponsored by Cloudera found that organisations were able to discover a breach within hours or minutes 2.25 times faster if they had deployed Big Data cybersecurity analysis.
- A McKinsey publication showed that CEO fraud, in which a fake email is received by an employee from a CEO requesting information or money transfer, has resulted in losses of $2.3 billion in recent years. The article revealed an example where Machine Learning was deployed to overcome the risk with the model picking out 35 high-risk transactions out of many millions in a single day. According to data cited in the article, 73 percent of finance professionals had been either attempted to or been defrauded by a payments spoof in 2015
- International Monetary Fund shows that money laundering worldwide is equivalent to between two and five percent of global gross domestic product.
The Financial Services industry is at the forefront of the advanced technological world that we are stepping into. With the availability of powerful data analytics tools and platforms, the industry can take steps forward into an era of superlative customer-friendly service and utmost compliance with government regulations. With Big Data, banks will be able to better recognize monetary issues faced by their customers and insurance companies will be able to devise better products.
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