Big Data has, in recent years, become an ever more important part of how businesses operate in a number of different industries, yet despite this, the banking and finance industry (“FI”) has been slow to fully embrace the multitude of technologies available to them.

Thankfully, there are signs that the industry is slowly starting to undergo a transformation.

It’s true that the way people bank has changed of late – mobile banking is on the rise whilst the number of high street branches dwindles every day – that’s not the only thing that’s changed. The amount of data being collected each time a transaction is processed is on the rise, and whilst banks and other financial firms have always had access to their customers’ names, addresses, credit histories, and whatnot, their ability to gain any truly valuable insights has been limited by the technologies available to analyse it.

Now, though, with the proliferation of strong and flexible data analytics solutions like IDEA Data Analysis, it has become easier for financial firms to fully leverage off their data through analysis to provide deeper insights of their target markets.

Here are a few ways in which banks and other financial firms are using data analytics to drive growth and innovation within the industry.

Enhanced customer service

Customer service has, and always will be, one of the most important parts of the business in any industry. With it being practically as easy as entering your name and address into a website to set up an account, this is no less true for the FI, who for the first time in decades are finding themselves in the position where supply outstrips demand.

Banks and other financial firms are increasingly relying on insights from big data to keep track of market and consumer trends and come up with services and solutions that have been tailor-made to meet individual needs. Combine this with a coordinated social media presence and banks can become more engaged with their customers and create value for clients, which in turn helps enhance the overall customer experience.

Staying competitive

Whilst upwards of 80% of business are already using analytics in the decision-making processes, the same cannot be said for the banking industry specifically. Although 71% of banking and financial firms globally believe that analytics creates a competitive advantage, only 41% of banks are actively using a data analysis solution for actionable insight.

Using data analytics more effectively than their competitors can provide an edge over the competition. These firms can use data analytics to uncover peculiar trends and insights within customer data, which can then be used to develop customised products and services that better meet the customers’ needs.

Risk management

With it being as easy as it is to set up a bank account nowadays, separating potentially profitable customers from everybody else can be quite the challenge. Financial firms like banks and even credit companies can use data repositories to determine a customer’s risk. Firms use subtle details like geographical information and form-filling habits to determine whether applicants will make good customers. Such analysis can even help to identify and prevent fraud.

Fraud prevention

A thorn in the side of banking for almost as long as banking has existed; fraud in its various forms costs the FI billions each year. To mitigate losses, firms are increasingly using continuous audit monitoring tools on integrated data to help prevent fraud the moment it happens, and in some cases before.

Banks are also using data analytics in an internal audit capacity. By using their data analytics solutions to identify and stifle internal fraud committed by employees – fraud that might otherwise act as a precursor to further financial crimes – banks are saving themselves from vast amounts of financial and reputational damage.