Optimizing Banking Services with Big Data: A New Frontier
As the banking landscape evolves with increased competition and digitalization of transactions, banks are navigating the complex challenge of meeting customer needs while enhancing risk management. To tackle these hurdles, banks are capitalizing on a potent resource: Big Data. This technological prowess enables them to make well-informed decisions grounded in robust and granular insights.
According to the Seagate & IDC study, the volume of data to be analyzed by 2025 amounts to 163 billion terabytes across all sectors. Furthermore, the banking sector has long been one of the largest producers of data. Let’s explore how Big Data becomes a major asset for these financial institutions.
Harnessing Big Data: Banking's Strategic Play
Banks accumulate a large reservoir of data from various sources, including financial transactions, account histories (withdrawals, deposits, etc.), customer demographic and behavioral data, online interactions, social networks, and more. This data is collected, illustrated, and analyzed to obtain valuable insights and improve decision-making.
1- PROVIDING AN “OPTIMAL” CUSTOMER EXPERIENCE:
Banks gather a multitude of financial data about their customers, ranging from transactions to purchasing habits and personal preferences. By using sophisticated data analysis algorithms (machine learning, classification and regression algorithms, etc.), banks can assimilate the specific needs of their customers and offer them tailored products and services. Financial institutions can thus recommend financial services at the right time, based on spending habits and savings goals, for example.
2- COMBATTING BANKING FRAUD:
According to a study conducted by Allianz Trade (the European leader in fraud insurance) and the DFCG (the national association of CFOs and management control), 69% of French companies claim to have been victims of at least one fraud attempt in 2022.
Fraud is a major problem for banks, and Big Data can be a valuable tool in combating this scourge. Fraud detection and prevention have been greatly enhanced through machine learning, which leverages big data. The security risks once associated with credit cards have been reduced through analytical processes that analyze purchasing habits. Nowadays, in case of stolen confidential information related to bank cards, banks can instantly block the card and the transaction, then inform the customer of the threats to their security.
Banks traditionally use data such as credit history and financial information to make credit decisions. With the advent of Big Data, financial institutions can now leverage a much wider range of data to assess the creditworthiness of potential borrowers.
Today, major financial decisions such as investments and loans are based on unbiased machine learning tools. Decisions made based on predictive analysis take into account various aspects, including economic conditions, customer segmentation, company capital, credit data, financial history, repayment behavior, and other factors. This enables the identification and anticipation of potential risks such as bad investments or defaulters, and allows for informed decisions regarding loan approvals.
• In a dynamic Banking Landscape, harnessing Big Data represents a significant competitive advantage. Banks that intelligently utilize available data will be able to optimize their services, improve claims management, and enhance customer satisfaction.
Final thoughts...
Banks are constantly seeking ways to make better decisions using data in order to offer more personalized services. As more financial sector data becomes available, banks appear to be turning to self-service technologies that have a direct impact on consumers.
Are you aiming to distinguish your bank from the competition? Do you envision a personalized banking journey for your clients? At ADDINN Group, we are dedicated to crafting an enticing banking experience through innovative and efficient IT solutions.
Embark on a transformative journey in banking digital transformation. Connect with us today!
