Finance Experts Share 6 Ways Big Data is Transforming the Industry - Hosted by Bitly
WE’RE CREATING A LOT OF DATA THESE DAYS.
We pay off credit card bills with a click of the mouse. We send money by bumping phones. There are apps that make it easy for the average consumer to invest in stocks, startups, and more.
All of these devices and solutions create large data sets otherwise known as big data. Each individual interaction rolls up to tell a larger story about how money is spent, lent, and invested.
Big data opens up a wealth of opportunities for the finance industry to make more informed decisions and build more efficient products. That’s probably why research forecasts that the market for big data will grow at an annual rate of 23% through 2019. Investment services and banking are two industries with the fastest growth rates for big data use.
This week, we sat down to chat with some experts in the field to learn more on how data is changing the game.
“The faster a bank can react… the greater their competitive advantage,” says Steven Schwartz, President & Founder at Global Cyber Consultants and Chief Operating Officer at Cyberfense.
Here’s what they had to say:
BIG DATA GIVES FINANCE PROFESSIONALS AN EDGE.
“Modern portfolio theory depends on the speed at which information can be disseminated among all market participants. The sooner markets can digest information, the more efficient the markets are. On the flip side, the more available data is, the less valuable it is. Thus, investment managers who understand how to process and analyze big data may now gain at least a temporary edge in some trading strategies. Of course, once the insights gained from that data cease to be exclusive, the advantage will soon disappear.”
Joshua Wilson, CMT, Partner & Chief Investment Officer at WorthPointe Wealth Management
BUT IT ALSO PUTS JOBS AT RISK OF AUTOMATION.
“Algorithmic trading is surging in popularity as financial institutions leverage big data and algorithm to automate trading and generate profits at a speed and frequency that is impossible for humans to match. The foundation of High Frequency Trading is built upon massive datasets that analyze multiple markets to execute orders based on established market conditions. Although this has created many opportunities for profit, this has unfortunately replaced the jobs of many broker dealers.”
Steven Schwartz, President & Founder at Global Cyber Consultants and Chief Operating Officer at Cyberfense
IT’S SHAKING UP THAT OLD-SCHOOL WALL STREET MENTALITY.
“[Another] often overlooked way big data is changing the financial industry… Old-school Wall Street methods have been broken down with many shifting to adopt a ‘start-up’ mindset. Firms are leveraging massive amount of data to find out the best ways to retain employees, recognize the value of an ‘open’ culture and encourage innovation through collaboration.”
Steven Schwartz, President & Founder at Global Cyber Consultants and Chief Operating Officer at Cyberfense
IT’S HELPING FINANCE INSTITUTIONS CREATE MORE CUSTOMER-FIRST EXPERIENCES.
“Big data will allow financial services to analyze the mass of personal information consumers provide to banks to create a customized consumer experience. Whether it is to create personalized financial products or to address individual consumer’s needs, financial businesses will be able to tailor their service in ways that will inspire customer loyalty.”
Michael Banks, Founder, FortunateInvestor.com
“Banks are now using big data to create integrated and complete data sets on their customers, which were previously siloed and unlinked. As a result, banks are able to derive enhanced customer insights that drive strategic decision making. [They can] maximize lead conversions through targeted marketing to attract new customers, increase current customer retention and satisfaction through a more… integrated and personalized experience.”
Steven Schwartz, President & Founder at Global Cyber Consultants and Chief Operating Officer at Cyberfense
“We are positioning a new way of banking through behavioral economics at Qapital. Monitoring consumer behavior through data insights allows us to educate, inform, and shape customers and their financial habits. For example, we might see that majority of our users save for travel or vacation, we will then leverage that information for product updates (such as customized IFTTT recipes) and strategy for marketing or PR campaigns.”
George Friedman, CEO and Founder, Qapital
IT’S EQUIPPING SERVICES AND COMPANIES WITH THE RIGHT INSIGHTS TO PROTECT CUSTOMERS.
“The rise in frequency of data breaches during recent years has rapidly evolved the identity theft and fraud profiles of consumers. Every engagement is an opportunity to protect your customers, and big data is fueling that relationship. Through integrations with application workflows, account management processes and transactional data, financial institutions are able to make increasingly better informed decisions about authentication and customer service to ensure every transaction is being completed by the rightful account owner.”
Mike Cook, Founder and CEO of XOR DataExchange
BIG DATA OPENS THE MARKET UP FOR BOTH LENDER AND LENDEE.
“Banks and the traditional lenders have always leveraged the Big 3 bureaus to make consumer lending decisions. One of the largest opportunities for FinTech companies is to leverage technology and harness additional data sources to provide a more complete and accurate profile of consumers. There are alternative credit data sources that provide information that can more accurately demonstrate the creditworthiness of a consumer. This allows FinTech lenders to extend credit and tailor financial products to those consumers who historically have lacked credit options and have been forgotten by banks and Big 3 credit bureaus.
Chip Stewart, Senior Vice President at Cookerly
ADJUSTING TO THE RAPIDLY CHANGING LANDSCAPE
Big data has helped investment managers make more informed deals. It’s helped institutions make smarter decisions about how to protect customers. It’s opening up more opportunities for banks to lend money to consumers.
We know there’s a lot of potential for big data in finance. But it’s still a challenge for many businesses to navigate and apply this data.
In a recent global survey, half of all marketers interviewed said that they were increasing their capacity to deal with big data. But only 25% of these marketers actually put big data-related insights into practice.
As the number of devices and channels continues to grow, the fragmented data will only make it more difficult to organize and analyze insights. How can financial institutions see performance across siloed platforms and teams?
It all comes back to the link. Every swipe, tap, and click is a link that tracks engagement. Using a link management platform like Bitly, you can see across all of your efforts, share click data across offices and teams, and more.
Time is money. Data can help encourage more trading, identify risks, and help the financial markets grow. The quicker financial institutions adapt to using big data, the more the industry will evolve.
“The faster a bank can react… the greater their competitive advantage,” says Steven Schwartz, President & Founder at Global Cyber Consultants and Chief Operating Officer at Cyberfense.
