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The growth and advancement in digital technologies has revolutionized the way industries carry out their business activities. Even the banking and the financial services industry has been forced to adopt technology solutions to compete with the global demand for cutting-edge services.
At the same time, the number of global mobile users has increased exponentially. To the point where they account for over half of the entire online user presence. These online users are increasingly making use of FinTech-based services to carry out billions of dollars in annual transactions across multiple industries. As a result, large amounts of data are being generated with a footprint for each digital movement and transaction.
In order to exploit this potential gold mind of user insight, traditional financial services as well as fintech companies are making use of big data analytics to drive scalable business decisions. To understand more deeply as to how big data help fintech companies and the role of big data in driving the next generation of customer experience journeys, look no further and continue reading.
What is Big Data?
Big Data refers to large volumes of data which can be both structured and unstructured. Big Data normally contains data that has been historically created from the daily operations of the business. It consists of raw unprocessed data that has been collected from various sources, which include both qualitative and quantitative inputs. In order to make use of big data, it has to be processed through specialized software before it can provide insights.
What is Financial Technology (FinTech)?
To put it simply, FinTech is described as the merger of technology and financial services. The primary aim of FinTech is to compete with the traditional methods of the financial system and use cutting edge technology to improve and automate the delivery of financial services. FinTech is used to streamline financial services for businesses, individuals and eliminate any unnecessary barriers associated with traditional financial methods.
The Link Between Big Data and Financial Technology
FinTech and Big Data both are relatively new concepts originating from the advancements in digital technology around the world. As mobile technology continued to grow, so did the number of global users around the world.
In order to tap into this previously unreachable segment of the society, traditional financial institutions had to innovate or risk losing their customers. In order to bridge the gap between the existing financial system and cutting-edge developments in digital technologies. The industry had no other option than adopting technology to automate key financial services over the internet.
When you consider financial services making use of technology, the scale at which data is being generated is unimaginable. Some of the most common sources of such data include social media platforms, business processes, machines, networks, human interactions, financial transactions, etc. In order to make use of this data, financial institutions and FinTech companies make use of data science practices and big data analytics to convert it into meaningful information. Through practices such as data mining, data storage, data analysis, data sharing, and data visualization, FinTech companies can bring meaning out of terabytes of big data sitting idly in data warehouses around the world. With a combination of big data, these companies can rely on real-time insights to drive business decisions, improve data storage and scalability.
The Strategic Triangle between Big Data, FinTech & Customer Experience
When you consider Big Data and FinTech, one of the most common elements between the two is people. Big Data holds large amounts of data regarding people, likewise FinTech deals with the automation and faster delivery of financial services to people.
Directly or indirectly, both phenomenon deal with people in one form or another, FinTech however being the primary point of contact between the organization and the customers. A consumer may interact with a financial institution in person, through one of its digital financial services/instruments or some other non formal forms of communication like social media. Each interaction represents a particular experience undergone by a consumer which may be good or bad. When this interaction is multiplied across millions and billions of users, the data collected becomes immensely valuable.
Traditional financial institutions and the modern FinTech companies are competing heavily to attract and onboard more customers on their platforms. In order to do that, gaining any form of strategic edge is considered. One of those strategies is to work on providing customer convenience and improve the overall customer experience journey. By making use of historical as well as real-time data, FinTech companies can use that processed information to provide improved and personalized services that are preferred by their customers and attractive for new users to inquire about.
How FinTech Companies Leverage Big Data to Drive Customer Experience
Historic and current data provide a vital overview regarding the changing customer preferences over a period of time. Customer expectations are different to what they were a decade ago, and they now expect companies to understand their likes and dislikes.
By using Big data technologies companies are able to know their customers more closely, especially factors that drive their purchases. With that knowledge in hand, companies are able to provide personalized offers that are more likely to appeal to customers.
Improving Customer Experience
With so many financial institutions and FinTech companies operating in the market, it’s a tough choice for customers to select one company and pursue business with. While providing value is one aspect, providing a good customer experience is the other half of the puzzle.
Most modern financial services are delivered through mobile applications, FinTech companies use data collected from users online sessions over an average period of time. By identifying key navigational bottlenecks and other performance metrics that affect customer dropouts during transactions. Companies are able to incorporate the necessary changes to improve that customer experience without incurring additional customer churn.
Marketing is an important part of business visibility, whether it’s a traditional financial institution or a modern FinTech company. Chances are marketing is being done in order to reach out to new customers and establish brand loyalty.
In order to make marketing more effective, FinTech companies are using big data practices to extract particular information regarding demographics, cultural influences and dates, sentiment analysis, and even financial spending habits. All of this information is being combined to establish a target profile, according to which marketing strategies are being pursued. FinTech companies are able to penetrate further into the society with personalized elements to capture the trust of customers and exhibit brand value.
FinTech companies are at an advantage when it comes to unstructured big data, they can structure it according to their own particular needs. When that raw data consists of customer data and other data related to their characteristics. Those datasets can be segmented based on a range of factors to improve the granularity and be of more specific use. By segmenting customers, FinTech companies can establish more accurate customer profiles and understand their wants and needs according to the characteristics of that profile.
How big data help FinTech companies is no longer a question that is left unanswered. When you consider the bigger picture, it’s safe to consider that big data is making the right contributions towards the FinTech revolution. There is no question about the growing popularity of financial technology with the ever increasing mobile user base. However, in order to address the changing and competitive business environments, traditional financial institutions and modern fintech companies have to innovate through other means to stay ahead. Big Data happens to be one way of making that happen and ensuring customer experiences can be improved for existing and new customers.