For Banks, Big Data Presents Enormous Opportunity
In an era of dramatic technology changes, the rise of big data analytics has certainly been one of the most influential. The technology has become so popular that Gartner projected worldwide IT spending on big data to reach $34 billion by the end of 2013.
“Because big data’s effects are pervasive, big data will evolve to become a standardized requirement in leading information architectural practices, forcing older practices and technology into early obsolescence,” said Mark Beyer, research vice president at Gartner. “Organizations resisting this change will suffer severe economic impacts.”
Companies are increasingly latching onto big data for its ability to identify problems and upcoming consumer trends, among many other advantages. Banks can certainly leverage these programs to achieve the same benefits, according to a recent report by The Wall Street Journal.
“Big data is really the theme for 2013,” said Guy Chiarello, CIO of JPMorgan, according to the news source, adding that big data-driven “digital marketing will become a significant thing.”
Benefits of big data analytics
Chiarello said that his bank recently integrated databases containing 1.5 billion pieces of information. Through the use of big data programs, his company can now produce real-time reports on consumer trends, which in turn are available at the request of each client.
As with many businesses, banks across the country are leveraging big data software for improved analytics and forecasting capabilities. Among the many ways financial institutions are using the technology include:
- Analyzing internal bank records to determine which customers are in danger – or will likely be at future risk – of overdraft fees. Nearly 70 percent of Americans expect better alert functions via mobile banks applications, according to a recent Varolii survey.
“We believe that most institutions are operating on second generation applications,” said David McCann, CEO of Varolii. “Today, institutions need to upgrade to the next level by embedding more proactive, rules-based outreach into their application code.”
Because of its predictive capabilities, big data analytics can certainly help mitigate this particular customer complaint. In addition, the technology can identify some of these issues quickly, before they become a source of dissatisfaction.
- With banking fraud on the rise, big data analytics represents one of the best potential security solutions. In particular, online credit card fraud remains a major issue, so big data software provides banks with a resource to stay a step ahead of cybercriminals.
- Customized marketing is arguably the top big data-related advantage. Banks, just like any other industry, can benefit from improved customer relations, and few technologies offer a better way to do so than big data.