Why Is Data Analytics in Fintech so Powerful?

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Shameer Sachdev
By Shameer Sachdev

Did you know that 90% of the world’s data was created in the last two years?

As the tiny machines in our pockets become an integral part of our everyday lives, businesses have unprecedented access to unimaginable volumes of customer data.

Whether it’s using internet cookies to create personalised online experiences or analysing financial transactions to offer budgeting tips, businesses of all shapes and sizes are discovering the power of data.

Specifically, fintechs are exploring exciting applications of big data to disrupt established financial institutions with a customer-orientated approach.

So, what are the applications of big data in fintech, and how can your business create personalised customer experiences?

Buckle up as we explore the power of big data fintech companies and offer advice to help you run customer-orientated marketing campaigns which pack a punch.

What Makes Big Data BIG?

The idea of collecting data to enhance customer experiences is nothing new. Everyone from local greengrocers to big dog bankers have always relied on snippets of information to paint a better picture of their customers.

However, the BIG in ‘big data’ presents businesses with a treasure chest of customer insights that have the power to flip the world of finance on its head.

We can define ‘big data’ with the 3 Vs:

  • Volume. The entire digital universe is expected to reach 44 zettabytes ( that’s 21 zeros) by the end of 2020. Sophisticated algorithms can process, analyse and filter enormous data sets to extract meaningful interpretations about individual customers.
  • Variety. Data is no longer limited to excel spreadsheets or photos on a hard drive. Big data collates information from a smorgasbord of video, audio, internet activity, GPS data, sensors, text messages and much more. Structured information is highly organised into a predetermined format, while unstructured information requires a degree of sorting and processing.
  • Velocity. The ‘always on’ culture and growing connectivity of digital space gives businesses access to real-time data. Instead of data sitting around and gathering dust, advanced analysis systems can collect, process and act on data in the blink of an eye.


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Why Is Big Data so Important for Fintechs?

Emerging fintechs are unlocking the power of big data to predict customer behaviour and develop sophisticated risk assessments which set them apart from large financial institutions.

The velocity of real-time data gives disruptive fintechs and challenger banks the agility to adapt to a changing marketplace. They can implement aggressive strategies at the flick of a switch and leave the big banks scrambling to keep up.

If we think of big banks as powerful diesel-powered tanks, data-driven fintechs are like electric scooters that can jump over potholes and cut corners.

The ability to process large data sets allows fintechs to make smarter decisions and create personalised customer experiences. Instead of shooting in the dark or covering their backs with conservative risk assessments, fintechs can use big data to understand their customers on a one-to-one basis.

How Can Big Data Help Fintechs?

The application of big data analysis has four core benefits for emerging fintechs:

  • Customer Orientation. Big data helps fintechs create detailed user-profiles and accurate customer segmentation strategies to tailor their services to their individual needs. Sophisticated modelling techniques can provide personalised services which consider an individual’s perception of risk, age, gender, wealth, location and even relationship status.
  • Improved Security. While fraudulent activity is a common concern among the digital banking world, big data helps fintechs develop reliable fraud detection systems by spotting any unusual transactions. Digital apps also give fintechs a seamless form of communication to alert customers of security threats and protect their cash.
  • Better Risk Assessments. Big data analytic companies in the fintech sector can combine information from multiple sources to ensure no stone is left unturned. Improved risk assessments allow fintechs to operate with more financial certainty, manage cash flow and offer customers competitive rates. Predictive analytics is changing the way banks think about risk.
  • Unbeatable Customer Service. Forget switchboards and waiting hours on end to speak to an account manager. Big data helps fintechs create a digital log of a customer’s banking activity, identify potential errors and provide seamless support. Data and forecasting can also help fintechs recommend the right services/products based on their customers’ individual spending behaviour.

How Cloud Computing Helps to Analyse Big Data

While a business’ processing capabilities was traditionally limited to the speed and capacity of physical computers, advances in cloud computing are driving the development and feasibility of big data projects.

Not only does processing data on remote servers increase the amount of information a business can handle, but it also helps to build trust with customers about the security of where their financial information is stored.

Improved encryption technologies on the cloud allow fintechs to scale and negotiate public concerns over storing their hard-earned cash with a less established financial institution.

That said, many fintechs have a long way to go when it comes to the security and integrity of their data storage systems.

In August 2019, challenger bank, Monzo hit the headlines as a potentially catastrophic internal data breach compromised the security of over 480,000 customer accounts. While the London-based fintech lives to tell the tale, fintechs must place a priority on data security to win loyalty and trust.

Run Smart Marketing Campaigns with Growth Gorilla

The application of big data in internet marketing could give your fintech the boost it needs to stand out from the pack.

Not only does big data market segmentation allow businesses to offer personalised customer experiences, but it also creates tailored marketing messages which strike a chord with the right people.

Instead of designing your marketing strategy around rough customer profiles, access to big data and real-time insights helps you hit the nail on the head every time.

READY TO GO APESH!T?

Whether it’s creating hyper-personalised social media campaigns or offering attractive cashback schemes to boost customer engagement, fintech and big data can work in harmony to create power relationships with customers.

Big data helps you do the little things well.

Discover how Growth Gorilla can help your fintech grow to new heights and shake the financial world. Contact us for a FREE consultation today.

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