The financial service industry generates and has access to huge amounts of data. Big data provides a wealth of information to banks, helping them to improve their service offerings, detect and prevent fraud, and provide customers with the right offers at the right time. Below are a few examples of utilizing big data in banking.
- Customer journey analysis — When customers do business with a company, they go on a “customer journey.” Banks use big data gleaned from transaction records, call center recordings, website clicks, and other sources to better understand how customers find them, what resonates with them, what turns them off, and why they may decide to take their business elsewhere. These big data insights can be used to improve the customer journey, improve customer satisfaction, and reduce attrition.
- Personalized service offerings — Just as Amazon recommends products based on your past purchase history, banks now take a similar approach. For example, Bank of America’s BankAmeriDeals are personalized based on the customer’s past purchase history using a Bank of America credit or debit card. For example, if you recently purchased coffee at national coffee chain, a BankAmeriDeal for that chain may pop up the next time you log into your Bank of America account.
- Proactive offers — Banks can identify customers with mortgages or credit cards that may no longer be competitive. Rather than risk its borrowers shopping elsewhere for a new loan, banks can now proactively offer a better rate or a competitive refinancing offer to these borrowers either via email or when the customer next initiates contact with the bank.
- Fraud mitigation — Have you ever had a credit or debit card transaction denied when on vacation? That’s big data at work. Banks use big data to learn your shopping patterns and geographic locations. When a transaction occurs outside the norms, it can be flagged as potential fraud. Thus, it’s smart to notify your bank in advance the next time you plan on leaving town.
The financial industry is using banking BI tools to improve service, better understand their customers, offer personalized services, prevent customers from looking to their competitors for a better deal on loans, and prevent fraud. These are but a few examples of how big data is being used in the financial services industry.
- IT News South Africa, “Is Big Data making its way to the banking sector?” – http://www.itnewsafrica.com/2014/12/is-big-data-making-its-way-to-the-banking-sector/
- Forbes, “Banks Use Big Data To Understand Customers Across Channels,” – http://www.forbes.com/sites/tomgroenfeldt/2013/06/11/banks-use-big-data-to-understand-customers-across-channels/
- Bank Info Security, “Using Big Data to Prevent Fraud,” – http://www.bankinfosecurity.com/big-datas-tie-to-fraud-prevention-a-6251/op-1