Data science, machine learning, big data, and artificial intelligence are intriguing, futuristic choices for entrepreneurs and business owners. However, organizations in the finance industry always have an aversion towards advanced technology owing to its security concerns. In reality, the finance industry is most empowered by cutting-edge advancements. While machine learning can make loan procedures accurate by decreasing fraud, AI-powered applications can offer enhanced recommendations to users.
Hence, looking at the potential of data science in finance, we have created a list of applications of data science. Dive in and explore how data science can enhance financial services.
1. Decision Making
Financial traders, managers, and investor are expected to regularly judge the market situations and make decisions based on prediction. With data science, these decisions only become smarter. Driven by data of the past and present, data science empowers financial advocators to evaluate the feasibility of trading at a particular time.
Further, these future predictions allow easy judgment of moving markets such as moving into a bear or bull market. Knowing these factors allow financial managers to develop a feasible SIP portfolio and invest at the right time.
Some analytics tool goes as far as guiding you on how and when to move to the next step, when to pull your funds back, and when to put in more money.
2. Fraud Detection
Fraud detection is one of the most valuable advantages of data science in the financial sector. Most of the financial institutions struggle to keep the data and funds of their clients secure. One loophole in the system paves way for hackers which leads fraud worth of millions, which brings unscheduled audits and reputational risks along.
Real-time tracking and fraud detection improve the cybersecurity of any organization. By constantly monitoring data entering and leaving the system along with usual activities, it is possible for data science software and platforms to consistently detect anomaly as soon as it arrives. This reduces the occurrence of fraud and also leads to damage control.
Additionally, predictive models are further made in a manner to detect alterations and manipulations in the system to stop cyberattacks.
3. Data Management
Financial institutions especially receive data from several sources. Digitizing this data or storing it in the cloud at one location do as less as only improving the search ability of this data. Companies are not able to extract the full value of this data. This also means that most of the work is still achieved by human professionals, which leads to increased chances of errors.
With data science, the system gains the ability of data mining, manipulations, and processing. This offers the ability to extract useful insights from data we talked about above. These insights go on improving the efficiency and productivity of the organization.
4. Personalization
Today, the business landscape is all about personalization. The company or institution which offers better personalization gains more customers – it is as simple as that.
In a situation like this, financial institutions are not far behind. We all would rather visit a bank that offers dedicated services and better-personalized recommendations.
Data science aids financial institutions by offering a chance to provide better personalization to customers. With a dedicated questionnaire and tracking, it is possible for the analytics application to understand user behaviour on the internet. Based on which, financial institutions can enhance customer interactions with the brand. For instance, offering advanced family insurance to a person with several liable family members.
5. Automation
Risk management has always haunted financial institutions since the starting of the time. This is because company risks arrive from all directions such as from customers, competitors, investors, etc. These risks can vary in size, type of loss, and importance. Some risks may lead to lower brand value and other risks may lead to financial loss.
Hence, based on the type of risk, data science platforms automate the detection of risk to a great level. For instance, this system can judge the creditworthiness of a customer by checking the data relevant to this user. With machines using data to analyze the creditworthiness of an individual, enhanced results are obtained. It, in fact, improves the sustainability of the organization.
6. Customer Analytics
While customer analytics is utilized in personalization, it has several other benefits. By tracking the online behavior of the customer, it is possible to understand customer sentiment around a specific product. This can enhance the launch of new products. Even before a new financial product reaches the market, the stakeholders can judge potential customer sentiment around it. This helps them tweak their marketing strategy and modify product elements to make it more acceptable in the market.
Conclusion
Every financial institution now has an opportunity to utilize the power of data science to improve and enhance its functioning. With the huge amounts of available data, it is likely for financial organizations to extract the full potential of this data in the form of analytics, personalization, and decision making. However, remember to correctly judge the requirements of your organization before implementing a dedicated data science platform.