Financial analysts have been curious about how big data can improve their services. And data analytics seek to generate insights from the tsunami of data. Customers and enterprises are sharing so much information. You cannot miss out on this topic, can you? This article will show how data analytics in finance is taking over the BFSI industry.
What is Data Analytics in Finance?
You have a lot of data if you work in the BFSI industry. BFSI stands for Banking, financial services, and insurance. This industry is vital for the global supply chain and macroeconomic development. And it creates and exchanges different data types. E.g., purchase history, credit score, property valuation, etc.
Now, the data analytics consulting services use statistics, programming, and psychology to process raw data. Then, the banks and non-banking financial companies (NBFC) can leverage this technology.
Also, financial data analysts are the professionals who apply the art of data analytics to address economic challenges. In this article, we are discussing the different ways in which data analytics helps BFSI players.
1 | Data Analytics for Prevention of Financial Frauds
Nobody likes to be cheated. And banks, as well as peer-to-peer lenders, must defend themselves against the sleuth of fraudsters. One might wonder how financial data analytics can solve this problem.
If data analytics is used for the detection, prevention, and resolution of fraud, it is known as fraud analytics.
Think about the forged transactions, bounced cheques, and fake KYC (know your customer) details. If you try to investigate these financial blunders the old way, you find it inefficient. You and your team will be wasting a lot of time and resources on this activity.
Assume that the bank is using data analytics for fraud prevention. Then, you can trace such anomalies faster.
You can find the fake KYC details, low credibility borrowers, and the net impact of NPAs. NPAs or Non-performing assets are a major issue in the BFSI world. Yes, some banks lie about their NPAs. And data analytics in the BFSI industry detects fraudsters of all kinds.
2 | Increase Productivity in Finance Using Data Analytics
Data analytics helps in increasing productivity in the finance industry. It helps identify the repetitive tasks. The banks and NBFCs can automate these repetitive tasks. This is an important way in which data analytics helps the BFSI players.
One can streamline their transaction and recording processes using data analytics. Also, this approach reduces the cost of operation.
Data analytics are good at pattern recognition. And trend analysis via fintech (Financial technology) is gaining recognition. It helps the bank managers make important decisions. As such, you can attribute data analytics to faster decision-making.
3 | Data Analytics Enriches Banking Experience of BFSI Clients
A key factor in borrower retention, satisfaction, and loyalty is the overall banking experience. Also, the bank’s reputation affects the acquisition of new bank account holders and borrowers.
And data analytics services tell you which customer has a specific need.
When your bank and network of lenders satisfy one customer, the bank’s reputation increases. After all, people love spreading the word of pleasant service providers. If one customer finds your interest rates attractive, their relatives and neighbors might be your next borrowers.
Let the financial data analytics show you how you can please the account holders, borrowers, and insured clients. You can even predict when they might need a new checkbook.
4 | Financial Entities Can Use Data Analytics for Personalized Marketing
Personalized marketing is a way to create a closer relationship with the customer. In the case of banks and insurance providers, this is related to spending habits.
Data analytics helps banks understand their customers’ spending patterns, preferences, and behavior. The necessary data is available on social media platforms and discussion forums. Using it, you can learn how different account holder personas vary in their purchasing power.
Then, the bank can personalize its communication to the account holders. The insurance company can share custom greetings with its insured clients.
Personalized marketing efforts result in a better opening rate for emails. And cold leads are more likely to treat direct messages on the web positively. Long story short: the BFSI industry can treat its stakeholders as human beings through personalization.
5 | Data Analytics in Finance Facilitates Strategic Decisions
With data analytics and big data, BFSI companies can make better strategic decisions. They can understand their customers better. And their behavior patterns unlock the opportunities for more loans, saving accounts, and SIP investors.
A systematic investment plan (SIP) is an investment tool. It allows you to invest a fixed amount regularly in a mutual fund. Yet not everyone takes an interest in SIPs. But banks can improve the enrolment in SIPs. Use data analytics for finding warm leads who are interested in SIPs.
A financial institution must manage its interest rates and lending policies. This is necessary for regulatory compliance. Simultaneously, it must stay competitive to prevent others from stealing from its clients.
Data analytics can assess the performance of different financial services. So, you can identify which ones are working well. You can discontinue or revise the financial products that are underperforming.
Conclusion
The finance industry has undergone a drastic change in the last few years. And the data analytics revolution is affecting the workflows at BFSI companies. What is data analytics in finance? Here, we have answered this question. And now, you know why it matters.
Financial services across all segments have adopted analytics. It is an integral part of their business approach to generate actionable insights.
With the advent of big data and its analysis, banks and insurance companies are optimizing their operations. They also offer better customer satisfaction, increased revenue, and lower costs.
The bottom line is that financial firms can now manage finances more effectively. Contact us to learn how you can integrate data analytics in finance.
