Banking on Big Data

Driss Temsamani is regional head of business intelligence, analytics & innovation for Latin America at Citi

The volume, speed and power of technology has transformed the Financial Services industry into one the most sophisticated data driven sectors in the global economy, allowing for the execution of complex global transactions at the push of a button. From high frequency trading to eCommerce to mobile banking, the financial sector is generating a huge amounts of data – in fact, almost too much data. Like individuals, institutions are facing an information overload that is limiting the promise and opportunity of technology, writes Driss Temsamani.

It is estimated that every day, over 2.5 quintillion bytes of data are generated globally. What’s more, 90 percent of the existing data in the world today has been created in the last two years alone. All of this data provides mountains of information from more sources than ever before–from social media to eCommerce transaction records to cellphone and GPS signals. In essence, financial firms have more information about consumers and financial trends than ever before right at their fingertips.

However, because the majority of that data is unstructured and requires unique expertise to understand, organise and analyse it, most of the information sits idly. The good news is that there is a growing Big Data industry that is poised to help financial institutions use and monetize this valuable commodity by finding important insights into their customers’ transaction flows that can help them be more efficient and effective with their service offering. Research has found that big data holds the capability to generate profits by improving the margins around transaction flows. When organised and analysed, it can highlight global payment flows and offer unique insights into trends, destinations, values, volumes and fees, which can ultimately drive cost-saving efficiencies.

Big Data is of course not an entirely new concept. Google, for example, was built on the business of helping consumers search through millions of websites and petabytes of data to provide near instantaneous results with pinpoint accuracy. This “magic” is accomplished through the use of various Big Data techniques and capabilities. In the past decade, a variety of industries in the manufacturing, retail and technology sectors have been using big data to improve their processes or to better understand and deliver services to their customers. Banks and other financial services firms however, have been somewhat slower in adopting this powerful capability to their value proposition, mostly because of a lack of internal capabilities to collect, analyse and interpret the available data.

In today’s every-changing economic environment, the financial sector is faced with re-thinking traditional value propositions and big data is emerging as a cutting-edge option. It is an innovative way to access and visualize key information for profit growth. By unlocking this untouched data, we are able to better understand missed opportunities for growth and cost savings and, therefore, will be better prepared for success on all fronts.

Big data’s superior value is two-fold in that it not only provides key information on the marketplace, but it also offers a look at the financial service industry and how it can be improved to reflect the changing economic landscape. In some way, big data acts like a GPS in that it provides clarity on what the next best step should be. This transparency will give banks the option to fill gaps, improve efficiencies and ultimately make better pricing decisions. It will also help to create customer-centric outcomes and improve the overall customer experience.

As technology continues to perpetuate a faster, more interconnected financial services industry, big data will undoubtedly become an increasingly valuable business tool. Through this untapped information, banks will soon be able to understand their businesses and customers in new and insightful ways that will allow them to develop new products and services that will effectively generate profits and additional business opportunities while enhancing their customer service and value proposition.

For many banks and businesses, using big data to identify consumer trends is still a very new approach. We have only just begun to understand what this information can offer and are continuing to gain new insights. But while diving into big data may seem like diving into unchartered waters for some, the fact remains: big data is the future of our industry and we must take advantage of it to remain relevant.