Throughout years, the banking industry has improved its service delivery thanks to technological innovation. Services are critical components in daily activities as most transactions are undertaken through the banking sector. The number of customers served in the banking sector has increased exponentially. Each transaction in the banking sector amounts to data creation and collection. The banking industry produces a large volume of data on a day to day activities. The adoption of big data analytics will revolutionise banking at present and in the future.
The banking industry is entitled to a lot of personal information from their customers. The available information has a lot of potentials when utilised by the banking sector effectively. Currently, banks can track customers' transactions in real time. Through the available information, banks can segment customers based on different parameters such as net worth or preferred credit card, among other methods used. The segmentation of customers enables banks to customise services and bundle packages that are deemed suitable for different segments with a high accuracy. Big data allow the summarization of the available information into an actionable data that banks can leverage.
The segmentation of customers has improved the marketing sector of the banking industry. Banks can now develop marketing strategies that are channelled to particular market niches. The customised marketing strategies have increased market reach in the banking sector and widened the customer base of numerous banks.
Improvement of Products and Services
Banks can follow clients' conversion rates on digital platforms. The available information collected is used to determine the different needs of customers and make them available to them in real time. Through evaluating the services offered by other banks, the company can be able to customise its services so that they are unique and gain competitive advantage. Most of the banks believe that leveraging big data creates competitive advantage in the banking sector.
The banking industry is a fast growing industry with ever increasing expectations from customers. The volume of information gathered in the sector is enormous too, and is expected to increase in the future. A significant amount of information is challenging to analyse and simplify in the absence of big data. Implementation of big data analytics ensures that the banking industry databases can store and process the information faster and safer for efficient use. Thus, big data enable to improve the efficiency of how customers' information is handled.
The aim of many businesses is to lower the cost of operation and increase profitability. The big data adoption in the banking industry ensures operational cost are reduced. This is through automation of most of the repetitive activities in the banking sector that lowers the cost of undertaking such activities. The efficiency of operation is also improved through real-time analysis of information and integration across the bank platform and access to the information from all the bank branches.
Big data in the banking sector provide the bank with real-time information on all the operational levels of the company. There are many indicators put in place to monitor the banking operation. As such, a problem can easily be identified even before it has a catastrophic effect on the bank operation. Big data analytics in banking help to reduce technical errors that could have a negative impact on their customers.
Big data have been accredited with stimulating innovation. Banking operations succeed on the basis of innovation, which not only improves the efficiency of operation, but also gives banks a competitive advantage. The banking industry has adopted big data to come up with innovative solutions to enhance services such as having a better experience while using the mobile banking app.
The banking sector is left vulnerable due to the large amount of information that it handles. Fraud is one of the major risks that banks face in its day to day operations. Big data enable the monitoring of all transactions. With increased availability of information, banks can distinguish a genuine transaction from a fraudulent one, and this has drastically reduced losses from fraudulent activities. This is though integrating all information in a central place that ensures the security of data.
Cyber security has been one of the major safety issues related to the information handled by banks. Big data provide organisations with real-time information that is able to detect any security breach in its platform. The information available also enables banks to identify any weak spots in its system, before cyber criminals exploit them.
The financial markets are more interconnected due to technological innovation and globalisation. A ripple of instability in any economy can be felt across the globe, similar to what happened in the 2008/9 financial crisis. Big data provide the banking industry with the ability to evaluate all factors in the market that may impact any operation, thus lowering risk.
Future of Banking
The adoption of big data in the banking industry has not yet been fully explored. The expenditure in big data analytics in the future is expected to increase as more and more banks will certainly fully adopt big data analytics.
Also, customer experience is expected to change in the future. The efficiency of operations, real-time sharing of information and the automation of some function will greatly improve service delivery and customer satisfaction in the banking industry. One thing is certain, big data analytics have the potential to drastically change the banking landscape.
Nikunj is the CEO of DataOne Innovation Labs. His company provides architectural solutions for big data problems faced by enterprises. His main areas of focus are real-time data processing, machine learning, NLP, cloud computing and high availability architecture design. Nikunj holds a master’s degree in Information Technology from the Dhirubhai Ambani Institute of Information and Communication Technology.