Loamics > Industries > Data analytics in financial services

Data analytics in financial services

Data analysis is a critical resource for financial services companies. In fact, financial institutions are forerunners in the use of Big Data, its methods, and its tools. The large amounts of data that banks financial institutions have to process on a daily basis are used by appropriate algorithms, increasingly based on artificial intelligence, to better satisfy their customers . They allow them to precisely define their financial persona as investors or consumers. Data analysis for financial services sector is also used to limit operational risks by detecting in advance certain operations that are too risky or too costly. Fraud detection is also made possible by data analytics. It identifies fraudulent transactions and ensures compliance with national and international regulations. LOAMICS-Suite consists of three modules dedicated to the collection, secure storage, and processing of financial services data sets.

How is data used in financial institutions?

Data is at the center of financial services. We can even say that it is the vital flow that irrigates an entire profession. Data analysis is there to ensure the smooth flow of these flows and the integrity of the information to be conveyed. The three modules of the LOAMICS suite streamline the collection, storage, and processing of this vital information.

Data management is essential for financial institutions to have a single source of truth. All teams can draw on it for valid information to create reports and dashboards that facilitate the conduct of financial operations. This is one of the benefits of LOAMICS-DataLake and its integrated validity checking procedures.

Valuable data of banking capital markets is used to help financial institutions measure day-to-day operations as well as to determine which investments will be most successful. This means that analytics data science can be used to manage the present and predict the future of financial services sector.

Big Data in finance industry is used to address 4 complex challenges in this sector:

Enforce data security and data governance to ensure safety of operations and to detect fraud

Comply with regulatory requirements like the Fundamental Review of the Trading Book

Free information from data silos with data integration tools for better decision making

Ensure data quality to rely on a unique source of truth

Sales and marketing are the first to use financial data

The financial services sales and marketing industry operates at 3 levels of the customer lifecycle. They attract prospects through mostly digital campaigns and re-engage dormant customers with new products. Finally, they must ensure that they maintain a customer relationship that builds loyalty over time. These sectors can improve their acquisition efficiency thanks to Big Data, which enables banking financial services and others to deploy marketing campaigns with a high return on investment (ROI).

These campaigns are multi-channel in nature and allow for precise segmentation of prospect profiles, a relevant choice of marketing mix to be used, and advanced personalization of marketing messages. It is a question of monitoring the reputation that one has with customers and identifying those who are the most important and who have the most influence.

LOAMICS-AlgoEngine enables big data analytics professionals to create their own sources for complex and precise insights with big data technologies.

Improved risk management

A large part of the IT activities of the largely digitalized financial institutions like banks is to detect and manage risk. These risks can have the most devastating effects on financial operations. First, positive identification of customers and their transactions must be ensured. Fraud must be prevented and detected, and mechanisms linked to Big Data finance must be put in place to control access in real time.

Risk can also come from poor liquidity management. Both incoming and outgoing cash flow must be optimized to make financial operations as smooth as possible. Financial credit is another field of application of Big Data. It allows to create models based on transaction history and other criteria to reduce the risk when granting loans to customer. The same is true for the detection of credit card and insurance fraud. Finally, Big Data analytics can be used to protect against legal action resulting from poor file preparation.

With LOAMICS-AlgoEngine it is easy to develop your own data processing pipelines to fluidify your legal and administrative processes with real time analytics.

Why is big data solutions so important for financial service companies?

The use of data analysis in a Big Data context is the only way for financial services companies to ensure their growth. Indeed, these organizations guarantee their customers increased revenues or at least maximum protection from possible financial crises.

To achieve this, it is necessary to constantly monitor market trends, whether they are real or virtual. Financial institutions are not used to sailing by sight but prefer to anticipate the decisions of their competitors and partners to be ready to adjust their financial policy as soon as it is judicious.

Big Data finance is there to give them a short-, medium- and long-term vision of the evolution of their assets. The goal of using Big Data analysis is to never let financial services industry be caught off guard by a situation they would have to face.

LOAMICS Suite lets financial sector organizations take advantage of 6 benefits specific to its activities:

Being able to consider frequent change in customer behavior and expectations

Face technological evolutions which are leading to larger amounts of collected data

Stay ranked in competition of Fintech and banking players already using Big Data

Reduce regulatory pressure to avoid fines and work more serenely

Reduce operational costs to maintain a competitive advantage and secure a good profit margin

Benefit from technological evolutions enabling the processing of vast amounts of complex real-time data

Develop more refined analyses

Thanks to the automated procedures of Big Data, especially ETL, it is possible to acquire and store large volumes of data.

In addition to the data that summarizes the transactions that are generally performed online, more and more data is acquired in an unstructured way. With the advent of NLP, it is possible to extract information from raw text to learn more about customers and partners. This wealth of information can be leveraged with machine learning algorithms to develop detailed views of certain industries.

Accurate KPIs can also be developed that provide a real-time view of the financial institution’s various activities. This can include both financial operations and those related to the operation of the organization itself.

Achieve an unparalleled level of customization

The most effective marketing recipe for creating products that build customer loyalty is to personalize the marketing offers as much as possible. It is about understanding customer expectations and meeting them in ways that may seem insignificant at first glance.

Today’s marketing models are no longer focused on matching the business plans of organizations, but rather on meeting customer needs as closely as possible by offering quality products services. Thanks to Big Data finance analysis, this new focus is easily achieved.

LOAMICS-ALgoEngine can probe LOAMICS-DataLake to extract customers personae from day-to-day transactions with data analytics financial.

Develop innovative financial data-driven models

By making the most of the large amounts of data available, financial institutions can invent innovative financial models.

There are many appropriate tools, some of which are automated, that can discern financial trends invisible to the naked eye.

Many neo-banks have grown rapidly by detecting behavioral changes in customers and incorporating them into their financial model.

Big Data can be a valuable lever for developing increasingly competitive financial models.

Create predictive and disruptive insights

With data science, we are not only able to predict future trends and anticipate them, but we also have the means to invent new measurement tools that fit with it. We need to be able to develop short-, medium- and long-term visions that are outside the box.

These disruptive tools for analytics financial services can drive the development of new products that, if you are the first to bring them to market, guarantee that you will become the leader. Data analysis through Big Data framework gives you the power of divination in the markets.

You must use it to offer products that are always more efficient and in line with current customer expectations.

Types of data analytics used in financial services industry

The financial services industry is the most extensive user of data analysis techniques and tools. These resources are used to analyze vast amounts of data on an ongoing basis, such as at pre-determined dates at the end of quarters or accounting periods. This data must be stored efficiently and be available permanently and instantaneously. To the intelligence of the storage must be added the intelligence of the communication of the data as well as that of their interpretation. It is therefore the entire pipeline of data analysis through Big Data that is used massively by financial services. With LOAMICS products, all types of analytics tasks can be performed without having to be bothered by tedious and repetitive procedures.

Study of customer behavior and expectations

Study of customer behavior and expectations

Interactions based on digital exchanges

As interactions between financial institutions and their customers are increasingly based on digital exchanges, the collection of customer data is automated when accessing online services. In this case, the decrease in interaction between customers and financial services staff does not mean a decrease in engagement.

The same is true for social media, which is becoming increasingly important between exchanges. Valuable insights can be gained from the social interactions between customers and their loved ones. The customer experience can take place on several channels at the same time, provided that relevant data analysis methods are deployed.

One method is to deploy robotic advisors who are available 24/7 to provide services that were previously operated solely by humans.

It is totally possible to link LOAMICS Suite modules to external points of access like chatbots. Customers behaviors and expectations are then naturally deduced from any bot/user dialogue.

Responding to regulation and increasing cybersecurity

Responding to regulation and increasing cybersecurity

Securities and regulatory concerns

Data analytics helps address the many securities and regulatory concerns that the industry must address. The data exchanged between regulators and financial institutions is increasingly granular, and central bank requests must be met accurately to avoid fines. The same is true for cybersecurity, which has become a major concern for financial services.

In addition to avoiding fraud at all costs, it is necessary to deploy data analysis services that calculate the risks involved in each transaction. Increasingly, this type of data analysis application is based on risk-based authentication. A risk profile can be calculated to detect user behavioral irregularities and to allow only safe accesses at all levels of the financial organization.

By using LOAMICS modules you provide transparency to your overall financial procedures by ensuring:

  • Real governance of your data
  • True sovereignty of your data
  • Total data lineage
Reduction in operational costs

Reduction in operational costs

Financial institutions

More than ever, financial institutions are under pressure from their management to reduce operational costs.

Profit margins are falling, and interest rates are getting lower.

This is due to an increase in competition, especially from neo-banks.

Competitive gains can be achieved using data analytics.

Implementing data analysis

Implementing data analysis to cope with the volumes to be processed

Solutions

Financial events are processed in real time and generate ever increasing volumes of data.

More and more documentary databases are managed electronically to facilitate access, particularly for contractual research or to establish legal responsibilities and resolve financial disputes.

Big Data is used to manage these huge volumes of data and to make them immediately available to the industry professionals who need them.

Some solutions allow you to manage the availability of this information by organizing its physical distribution to different physical and virtual storage tiers, available within the financial institution or in the cloud.

LOAMICS-DataLake is our module ensuring a unique source of truth, even with vast amounts of data whatever their format is.