5 Ways Big Data Is Transforming Finance

A lot of financial companies are sick about hearing of Big Data, and I frankly do not blame them. To many businesses, Big Data means hoarding reams of useless facts which are collected just because, and are just stored on some cloud server and then forgotten.

But while Big Data can be annoying to deal with, financial companies cannot ignore its transformative effects. Big Data is not just collecting data for data’s sake. Big Data is fundamentally about the analytics which come with the data as well as what banks and financial service companies are doing with them.

As more companies embrace a Big Data approach, new trends and changes are in motion at this very moment and transforming finance. Here are some of the most important trends, and what companies have to consider to get the most out of Big Data.

Many companies shy away from Big Data because they are concerned about protecting said data and the harm that can be caused by a data breach. But while it is true that companies which embrace Big Data must implement policies which protect customers’ integrity and privacy, Big Data can actually keep customers safer with improved fraud detection services which can more quickly detect malicious transactions.

With big data and predictive analytics, a bank can notice small deviations in a customer’s financial habits which could indicate credit card fraud as Dell points out or that a transaction is happening in a strange geographical location. Most importantly, Big Data can detect such deviations faster, preventing credit card fraud from becoming truly damaging.

Big Data carries unique security risks, and companies should understand how to protect said data from a breach. But it can be a security protector as well on top of its other benefits.

Big Data and cloud technology are inexorably linked, as it is the only realistic way for banks or other companies to store all of that data. But up until 2016, most banks preferred to rely on private clouds where they could keep credit scores and other data to themselves, largely due to security concerns.

That trend has begun changing, as a June 2016 report from Deutsche Bank reported that they expect 30 percent of banks to adopt a public cloud like Amazon Web Services by 2019. Private clouds are not that much safer, and they lack the flexibility needed to handle ever increasing amounts of data as well as sudden shifts in workload.