The importance of data analytics in the finance industry is paramount, so much so you may have heard it referred to as “Big Data.” In 2015, 17 percent of enterprises reported adopting Big Data into their business models, and by 2018, it soared to 59 percent, according to a Dresner Advisory Services 2018 Big Data Analytics Market Study.
The importance of leveraging data analytics continues to grow as a tool to improve consumer satisfaction, mitigate risk, and empower businesses to make more profitable decisions based on highly accurate information. However, one of the challenges with its growing importance is that many finance professionals are still unsure how to leverage their financial data.
What Is Financial Data?
Financial data includes all of the sets of information a business has stored related to their financial health. Businesses try and use the information to analyze it for business performance, and make informed decisions on whether or not to make changes to business strategies and tactics.
Outside of the world of business, other organizations and people leverage financial information that businesses report to get a gauge on their credit worthiness, make investment decisions, or other use cases.
What Is Financial Data Used For?
There are numerous use cases for financial data analytics in banking. They can help determine a company’s financial performance, help with discovering optimal cash flows, and inform decision makers who need data analytics they can rely on. Data analytics also give businesses valuable consumer insights they can use to determine new product or service developments they should be investing in.
Business Insights
Banking analytics can help businesses uncover key business insights like revenue growth, profitability ratios, revenue growth and more. Such metrics empower businesses to see new business opportunities, and help them determine whether or not they’re ready to expand as much as they think they are.
Customer Insights
Data analytics in banking also reveal customer insights through transaction data enrichment. Banks are able to organize customer transaction data in niche categories that are presented to users in clear and understandable models that can be used to offer more personalized offers and better customer experiences.
For example, transaction data can reveal the spending and saving habits of customers, and through transaction data enrichment and segmentation, that customer can be segmented with other customers who they share similarities with in their financial data.
Banks and credit unions are able to cater to more niche customer demands and needs at greater volumes, and provide only relevant product or service offerings customers can benefit from.
Financial Wellness
Financial advisors and financial service providers (FSPs) can leverage data analytics to identify key consumer trends in niche markets, and in turn, can offer them more personalised advice. One way FSPs are doing this is through the creation of AI-powered chatbots who are capable of providing consumers top notch personal financial wellness advice based on that customer’s data, market trends, and other data sources.
Increasing Demand for Data Analytics in FinTech
Although data science has a growing role in the FinTech industry, the financial sector has an increasing need for data analysis professionals with knowledge of programming languages and deep financial analysis skills.
Financial analyst positions are in high demand as most FSPs have a high amount of data, but not enough knowledge or experience to process and interpret that data. They can turn to FinTech companies and their experienced teams of financial data analysts who have the knowledge and advanced technology to comprehend, and present complex sets of data so it can be utilized to help inform important financial decisions.
The Future of Financial Data Analytics
The ability to leverage data will continue to have a large role in and beyond the financial industry. As businesses in other industries start to adopt financial analytic solutions to gain key insights into their own financial health, their customers' financial behavior, understand market trends to reach new customers, and more, they too will see how partnering with FinTech companies is crucial for their operations.
Developers, research analysts, and financial data analysts will continue to see a strong demand creating applications that will unlock new opportunities for businesses to grow with only the most accurate data fueling their important strategic decisions.
Envestnet | Yodlee partners with organizations from all industries to provide data analytics solutions. Companies can gain key business insights and market insights using Envestnet | Yodlee’s products, and grow their business knowing they’re operations are backed by the market leader in financial data aggregation.
