How Big Data is transforming Financial Services
It is believed, according to a report published by IBM recently, that 90 per cent of all data in the world has been created in the last two years. It is also widely believed that the current processes online mean that more data is created every single day than was overall before 2003.
This means that there has been an increase in the use of big data, particularly in the finance sector. This represents vast pools of information that companies can hold about people to help them better target and deal with their needs better.
Some of the biggest companies to tap into big data so far include the likes of PricewaterhouseCoopers and Morgan Stanley, which have looked extensively into risks and benefits of using such information.
EMC's Jason Ward described it by saying: "The world of the iPhone, Twitter, Facebook, YouTube, has created a new data type, a lot of unstructured data.
"A lot of these data types are difficult to manage, monitor, model and analyse in the way we used to analyse data. When you marry unstructured data and data of old, you get the concept of big data."
When it comes to using big data in the financial sector, there are a myriad of uses for the invaluable technological advancement. The primary ones centre around the likes of dealing with fraud and the rules around money laundering. They can also use big data, according to the Economist, to keep tabs on when customers are becoming less financially viable or credit-worthy.
This can be a priceless use for big data, as refusing to lend to those who are becoming less likely to be able to pay it back in the long term.
The legitimacy and fair practice of some companies in the monetary business has been brought into question in recent years, with the Financial Services Authority (FSA) in the UK talking of letting people borrow without looking at the risks first in the 80s and 90s, especially when it came to mortgage lending, which led to many people ending up with a shortfall on their repayments over the duration of their product.
In recent months, the FSA has produced guidelines to show just how firms should be taking less long term risks, and this could be a gap that big data steps into in the future.
It could also be the case that this kind of information could be used as a way of making sure that financial sector companies are fully compliant and working under regulations.
According to Paul Garel-Jones, financial services director at Deloitte Analytics, another major use for big data can be seen in the way that companies look toward the future. He said that in the past, much of the pre-emptive work in the financial sector was done by way of using the intuition on experts.
However, with this kind of information at their fingertips, financial institutions can base what they want to do in the future on predictions of customer behaviour using realistic figures and calculations on a massive scale, making them more reliable.
Other trends in the finance sector for making use of big data can include the likes of ensuring that cross-device integration with regards banking sectors can become much more smooth and reliable over the coming years, and better dealing with risk management.