How Big Data Changes the Banking Industry
Big Data is a very important step in developing the future of all banking industries. It is defined as a set of consolidated information based on the behavioral and other trends followed by human beings. This information is assessed through databases over a long period of time. The collection of this data helps banking industry understand the needs and expectations of people. This way they are able to keep up with trends and make changes in the industry that will improve their system and simultaneously enhance customer relations in the future. By staying aware of newer trends they are able to understand and provide their clients with what they need on time.
In this article we will look at 1) how Big Data changes the dynamics of the banking industry, 2) the dimensions in which the banking industry is affected by Big Data, 3) how Big Data has radicalized customer service in the banking industry, 4) the benefits of Big Data to the banking industry, and 5) the concerns related to Big Data in the banking industry.
HOW BIG DATA CHANGES THE DYNAMICS OF THE BANKING INDUSTRY
The use of the internet has made it a lot easier to assess and evaluate the progress of a bank beforehand. Banks are always trusted with a lot of information regarding their clients. With this information they can learn newer ways to provide better services. With the insight they have, they can make sure their customers are always provided with resources that are beneficial and not available elsewhere. The use of Big Data helps banks run more profitably.
As the number of clients increase in an industry, it becomes important for the bank to provide better services. They are entrusted with more information in their system that has to be kept safely and also be accessible quickly. Small scale databases cannot be easily trusted with such large quantities of information. If Big Data is not taken up by a bank, their databases can experience a system fail. They keep their clients waiting while they try to provide them with an answer to a simple question. Big Data helps them avoid such embarrassing situations.
Big Data may be a huge system but it simplifies everything. When a name is entered into the system it filters the required information. This way banks can save time. It helps the industries function a lot smoother and helps them identify problems being faced at both the large and small scale. This way they are able to keep their organization up to date before a problem is revealed to their clients.
Sometimes certain investors or clients make an agreement but change their mind later. Big Data helps the industry make sure that these people are not walking away from their contracts. It becomes easy for banks to keep a clear record of credit card limits assigned to each customer. With Big Data they can make sure no client is exceeding the limit unjustly. Along with keeping track of credit card limits, Big Data also helps them ensure no fraud is being committed. They can easily trace debtors through this system and block or avoid them from making unauthorized transactions that can harm their customer.
These are some of the apparent improvements that Big Data can bring about in banks. In the long run it can help banks slowly and gradually develop a better understanding of their clients. This way the industry can stay a step ahead and learn what market is valued by their clients and what strategies gain more attention.
DIMENSIONS IN WHICH BANKING INDUSTRY IS AFFECTED BY BIG DATA
It is made clear that Big Data is an extensive system that can help banking industries simplify their system and work better. Big Data helps them in developing a sincere clientele. Following is a list of ways in which the banking industry is affected by the use of Big Data:
Optimize Offers and Cross Sell
With the use of Big Data, the banking industry can improve their professional relationships with their clients and be able to understand them better. Big Data provides a more personal assistance and helps banks with detailed information on their clients. This information helps banks come up with schemes that are direct and personalized. These schemes gain maximum attention and are able to make sure they can come up with similar plans for the future. As their ability to analyze and assess the situation increases, their ability to deliver according to the expectations of their clients increases as well.
When customers begin to realize that their banks are providing them with everything they need then automatically the bank becomes a better brand. The industry gains a favorable appreciation from their old clients and gain newer ones too. They become able to attract newer clients by keeping their older ones happy with their services.
Contact Centre Efficiency and Problem Resolution
Big Data helps banks avoid all situations that can be embarrassing for them. When a client asks a question that can only be answered by assessing the database Big Data makes it easy. The clients no longer have to wait to be answered because of a system fail. Their queries are solved immediately. By entering the name of the individual, banks are provided with all the important details. This also increases the level of satisfaction received from the customers. It also develops a sincere number of clients that learn to rely on their banks more.
Payment Fraud Detection and Investigation
Though the internet has made many things easy it has also made committing fraud easy. When banks come up with newer ways to avoid fraud, people come up with newer ways to commit it. This makes it impossible for banks to be able to trace their fraudulent person. The use of Big Data rids them of this problem. It makes it easy for banks to immediately be able to trace a fraud and put an end to it. The installation and use of this system makes it easy for banks to identify where the fraud is being committed. They can stop it immediately without delaying or experiencing a loss.
Counterparty Credit Risk Management
Banks have to make many agreements to keep their business going. They have to meet with newer investors and make newer financial agreements with them. In these cases they have to evaluate the agreements and avoid risks and chances of financial damage. Initially this was considered an impossible thing to do because the information required on individuals was always limited. Big Data provides a thorough background check on these individuals and ensures that the banks make a well-informed decision keeping all things in mind. It helps them understand how things could go wrong and how things could be beneficial for them.
HOW BIG DATA HAS RADICALIZED CUSTOMER SERVICE IN THE BANKING INDUSTRY
Generally, customer data analytics is not considered very important by banks. However, Big Data has helped banks improve its customer services to a great extent. Customer analytics has enabled banks to keep their interactions with their clients at a maximum level and engage with them continually. This has helped them understand their clients better. It also helps them deliver better because they know their clients better. They are able to provide their customers with a wholesome personalized experience.
As far as acquiring new clients and then retaining them is concerned, Big Data has helped banks decipher the environmental aspects and what trends influence their clients. This way banks have been able to think of marketing strategies accordingly. This also aids them in formulating services that the potential clients might want.
Banks now make massive profits and are improving because they understand Big Data as a requirement for their development. This happens as a result of better understanding and usage of data analytics and the subsequent lead generation. Banks now make sure they know what the opinions of their clients are and then later incorporate them.
Moreover, when introducing a new scheme or system, Big Data allows banks to make decisions that have been evaluated. They know the benefits just as well as they know the risks related to the scheme. So when implementing it, banks stay aware and prepared for all the possible risks. They also ensure they come up with a plan to counter the risks on time. This way they can enhance their own position and function better.
BENEFITS OF BIG DATA TO THE BANKING INDUSTRY
There are several large scale benefits to using Big Data for the development of the banking industry. Following are few of the major and essential ones.
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.
When banks gain unlimited access to customer needs, it gives them the opportunity to help and provide for them in a better way. The business can be expanded by learning how to collect more revenue by cutting down costs. By cutting down of unnecessary costs, banks can provide the customers with what they are looking for and nothing insignificant.
When a bank is provided with the insight to track and trace the habits of their clients of where and how they spend their money, it becomes easier for them to understand the clients’ needs. Once the results are in, clients can be categorized into different segments. This will suggest their banking needs and the marketing campaigns can be drawn up accordingly. This will also promote a healthier customer relationship.
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.
Personalized Product Offerings
Customer segmentation can help deliver newer schemes that directly involve the requirements of their clients. The past and present of their clients’ expenses is traced. With the help of this information banks can understand what policies will help them get a maximum response from their clients. This increases the revenue of the bank and helps to better relationships with the clients.
Since Big Data is inclusive of many elements, it becomes easier for banks to provide increased security to their customers. They can detect and mitigate fraud whenever their systems detect its occurrence.
CONCERNS RELATED TO BIG DATA IN THE BANKING INDUSTRY
Silos of Data Block a Single Customer View
There are several barriers present in organizations that minimize Big Data’s ability to be able to help them fully see the needs of their customers. This does not allow these industries to be able to reach their full potentials. Their customer view is then reduced and their schemes never strike their clients the way they should. These barriers do not allow banks to access information. This is considered the only unsolvable problem present in industries that reduces Big Data’s ability and function.
The Skills and Development Gap Needs Closing
Big Data is unlike any other system which is why people operating it need to have some information about it. An individual uneducated in Big Data will struggle while handling it. This can make it slow down the bank and create a gap in customer bank communication. So unless the individual operating the system is educated enough, it becomes difficult to utilize the positive aspects of it.
Lack of Strategic Focus
A lot of banks intend to use and incorporate Big Data without realizing what it means. Big Data needs space to grow and be able to demonstrate the diversity of its nature. Alongside an educated individual dealing with the system, it also needs to be given space to grow. It is a complicated system and it must be met with so it can function fully. It has a great deal of potential and its approaches and concepts must be given more room to flexibly grow and expand.
Privacy Concerns Limit the Adoption of Customer Data Analytics
When Big Data provides such detailed information to a bank its responsibility increases as well. They must make sure that the information given to them is not misused in any way. The misuse of personal information makes it very difficult for the bank to keep up its progress. The banks must then take up the responsibility to protect the information. They must also keep in mind the privacy concerns of their clients and make sure that the personal information is not mistreated. It is important to ensure no personal information of any individual or details of a certain contract find its way in the wrong hands.
It can be concluded that though Big Data is made to face a lot of obstacles in the industries, it is very beneficial. If it is taken up by industries it can be utilized with the right kind of knowledge. It assists the banks in taking steps and coming up with initiatives that provide guaranteed benefit. Big Data not only helps banks attract a bigger clientele but also helps them markedly reduce all frauds and secure their system. The expected growth and ability to eventually be able to explore the full potential of Big Data is also anticipated to result in the expansion of the banking industry.