Big data’s impact on finance

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Advancements in the collection and management of big data analytics have paved innovative new paths for various workplaces — especially within the finance industry. Now, many finance professionals can access an array of information on client habits, potential threats, and other relevant considerations within their field. This insight doubles as both an efficient means of planning and a strategic engagement mechanism.

Here are a few ways the finance industry is currently leveraging big data analytics.

 

Mitigating danger

Criminal activity has always been a major consideration in the finance world, but the advent of modern technology have given way to a variety of new financial crime mediums, from sophisticated terrorism financing schemes to remote cyber bank account breaches.

Conversely, however, big data analytics have presented a whole new array of methods to combat crime and mitigate danger to companies and consumers alike. Regulators and banks in Singapore, for instance, have been leveraging data to detect advanced money laundering activities, working alongside law enforcement agencies to submit and analyze key data and weed out suspicious patterns. Additionally, machine learning (ML) algorithms have been put in place for similar uses. These technologies serve as a cognitive complement to vast data analysis, learning to distinguish between anomalous behaviors and those considered normal.

 

Algorithmic Trading

Automated approaches to trading are quickly becoming a new norm in the corporate sector, and this has essentially changed the face of investing. Trade algorithms allow for transactions executed at a speed and frequency that is simply beyond the abilities of a human trader; they have been curtailed by many institutions to “incorporate mass amounts of data, leveraging large volumes of historical data to backtest strategies,” which, in turn, reduces risk and strengthens efficiency. This process continues to serve as a major discussion point within modern hedge funds, but its implementation is only growing more widespread as more companies become aware of its potential benefits.

 

Predicting client behavior

A consistent use of corporate big data is the analysis of consumer behavior, and finance is no different in this regard. This notion has not only changed the ways in which regulators interact with their clients, it has also redefined client expectations in terms of personalized service and overall supervision. Furthermore, the list of potential data sources only continues to grow (social media outlets, geo-spatial data sources, and the like). Therefore, many companies are leveraging consumer data as they revisit the structure and pricing of their products and services, taking into account both the tendencies of their own clients and the clients of competitors.