The banking sector is evolving at the same speed with which technology is evolving. Banks adapted IT in the late 1980s and became totally computerized. This was a revolutionary transformation in the banking sector. From an age where, everything was written and maintained by hand, to an age where everything is now monitored on a small screen in the palm of your hand. Banking has changed rapidly.
With the introduction of credit scores it has become very important for any bank/ financial organization to have a strong data and analytics team which can crunch the numbers and give them the exact list of people they need to approach for selling financial products.
In a World with a population of approximately 7.5 Billion, knowing who to talk to for selling your products is of utmost importance. Today every single decision to drive revenue, control costs or mitigate risks can be directly supported with Data. Data Analytics provides the biggest opportunity for the banking sector to grow and be even more profitable.
Data Analytics is transforming the banking sector in the following ways:
Restrain Fraudulent Transactions
Monitoring and studying customer behavior with the help of data is the precursor for preventing any fraudulent activity. Big data analytics offers an opportunity to tackle any fraudulent activity. Any unusual activity is highlighted and the authorities/ account owner is notified. The consumer is notified and in case the customer replies back immediately, the bank is able to stop the transaction and block the account. Thus, with an abundance of data, we can predict and prevent frauds even before they occur.
The banking sector faces different types of risks at every moment. Some of the biggest risks faced by them are non-performing assets (NPAs) and slow-moving credit growth. Data helps monitor the health of a bank. Analytics is able to chart a pattern of time and reasons why borrowers default on their payments. This is applicable for corporate as well as individual borrowers.
For example: a drop in rainfall expectancy or poor climactic conditions, increases the chances of a default by an agricultural company or by a person/ company dependent on rural markets for their business. Thus, the cost of capital/ credit for such companies/ individuals will be much higher than what it normally is for other solvent individuals/ companies. Having information about risky bets helps banks avoid them.
The days of a customer service agent calling you for marketing their products are fast fading away. Data Analytics helps banks/ financial institutions, by breaking down the vast amount of data related to a customer’s account – past history of loans sanctioned and the customer’s earning and expenses, which saves a bank employee’s time by e-mailing/ displaying ads only to the targeted customers.
Data Analysis yields the best results in this respect. A thorough analysis of all historical data gives managers and leaders a clear idea of the path that they should take in any particular market scenario. The answer for any question can be easily answered using historical data. This helps managers and managements take tough calls effortlessly – it could about a continued investment in a product/ business, laying off staff or about ramping up investments in the business.
As analytics becomes an indispensable function in banks, retail, finance and other major industries, it is imperative for all budding managers and executives to have a thorough understanding of the same. The 4 month GFMP Edge Data Scientist, Data Analyst certification program offered by BSE Institute will help young students and executives master the skills you need to establish a successful data science career. The curriculum is developed by consulting leading industry analytics leaders to ensure students master the most cutting-edge analytics skills.
Analytics combines data with every division of the company and this helps in making every process of the company to become smoother and more profitable. Today, data analytics has become a key component of the banking sector and is on track to be the most important function in global banks.