How Big Data Has Revolutionized the Financial Services Sector

The exponential increase in the amount of data and the rising complexities in the technological innovation has revolutionized the day-to-day operations of a wide range of industries.

Despite being a new concept, big data is changing the landscape of many sectors over the past few years, including the financial sector. Several financial companies are using analytics to survive and succeed in the changing scenario as well as to beat competition.

About 89% of companies believe that the firms which lack analytics strategies are likely to lose competitive edge and make their mark amid the intense competition.

Big data has revolutionized the financial sector in the below mentioned ways.

1. Financial institutions have fostered the big data analytics with an aim to make profitable business and investment decisions. In addition to big data, the financial companies use past trend data to enhance their portfolio returns and their return on investment (ROI). The consistent use of big data is expected to revolutionize the financial sector. However, financial sectors also face considerable challenges with regard to make the best use of the increasing data volume with each passing day and segregating the useful data from the remaining data.

2. Big data help financial companies in achieving efficiency and gaining a competitive edge by leveraging technology. As financial institutions are facing rising customer demands, regulatory constraints, and intensifying competition, they are looking to use big data to achieve ‘the 3 Vs’ i.e. greater velocity, variety, and volume.

3. Financial institutions are not only using historical data to enhance their portfolio returns or ROI, but they are also using ticker data to make better decisions on investment, risk management, etc. Financial institutions are using automated process of big data that helps them to complete their financial deals at a greater frequency and speed. Not only have the automated process help financial institutions to improve their speed and frequency, but it also helped them to minimize errors.

4. Big data used by the financial institutions are using algorithmically generated data, both structured and unstructured. Substantial advances in the technological system has enabled financial institutions to integrate the miscellaneous data with stock data, social media, real-time news in a single algorithmic engine which can enable the companies to make superior trading decisions.

5. Virtual advisors and robots are replacing human advisors in the financial sector, where the former utilize large volume of data and investment algorithms on a digital platform. Modern Portfolio theory helps in the framing of investment that generally supports long term investments for sustaining steady returns. 

Article Published by Luke Lonergan