3 Ways Fintech Companies are Using Big Data to Beat the Banks

The financial sector has become one of the biggest consumers of big data in recent years. According to Gartner, 64% of financial service companies used big data in 2013. That figure has steadily risen over the past four years.

Big data is changing the industry in unprecedented ways.

One of the biggest implications is that it is making the once highly consolidated industry much more competitive. Fintech companies are able to take on big banks that are exponentially larger.

Prosper and other big data lending companies have become very reliant on big data technology in recent years. In fact, it is their entire competitive edge in an increasingly crowded market.

The biggest advantage big data provides to FinTech companies is predictive analytics. Saurabh Sharma of Indus Insights states that lenders can use data to make very astute actuarial decisions about a client’s risk profile.

“Without question, the emergence of Big Data has been and continues to be a key force in a market that, by some estimates, will continue to double in size in each coming year. The availability of information about prospective borrowers and the ability to aggregate it quickly and overlay algorithms to arrive at actionable results has been a boon for P2P lending growth. Big Data analytics platforms enable institutions to develop predictive models that increase the chances of getting better returns, giving them an edge against banks while allowing them to maintain a less administrative process and provide the quick decisions borrowers come to expect in the online environment.”

Using predictive analytics allows brands to set more accurate borrowing terms, which is financially beneficial to customers with low risk profiles. It also reduces the risk of taking on unnecessarily risky borrowers without setting appropriate terms.

Companies in all verticals are using big data to offer better customer service. The P2P lending industry is no exception.

Many customers expressed concern about companies having access to their data. However, these companies often use the data to better serve them.