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In basic terms, big data in finance represents large and diverse blocks of data that are generally used to offer various solutions to businesses in relation to their financial services. This notion is no longer restricted to the technological world only but is also referred to as a business imperative. It transforms business processes for the better, producing a great impact on how organizations and whole industries operate. Read on to understand what role big data plays in financial services.
What Role Does Big Data Play in Finance?
On the whole, big data produces many changes in financial services and reforms the way stock markets around the world are operating, including the way investors are making their choices. Nonetheless, the inability to connect information around the organization often makes businesses face certain challenges, which is especially true for banks where acquisitions and mergers form many expensive sets of data. As a result, big data plays a great role in the financial world revolutionizing the way it functions.
How Big Data Revolutionizes Financial Services
The rapid growth of technology and the growing generation of information fundamentally change the way industries and businesses operate. The segment of financial services is often perceived as one of the most data-intensive segments in the industry and represents a great opportunity for processing and analyzing data, which is revealed in many beneficial ways.
Initially, decisions were made based on the current tendencies and associated risks. As a result, big data offers great opportunities and has potential to turn into one of the most promising business-related technologies.
What Areas Are Influenced by Big Data?
Over the previous decade, big data and customer analytics in the financial world have changed the trends and tendencies in the market. This becomes obvious owing to the main technological innovations in the next spheres including:
- Trading and marketing;
- Risk management;
- Various prediction models as part of the market;
- Monitoring of employees.
At the same time, there are also various challenges faced by the financial and banking industry.
Challenges Faced by Big Data in Financial Industry
The main problems include the next ones:
Data Privacy
Privacy of information is the major problem connected to the introduction of cloud computing innovations. Companies are often concerned with placing proprietary data in the cloud, while private cloud projects often appear to be too expensive.
Data Silos
Yet another challenge faced by businesses is the inability to link information around the department and organizational silos. It usually results in too complicated analytics and often interferes with big data initiatives.
Fulfilling Regulatory Compliance
Various financial and business entities are to meet the Fundamental Review of the Trading Book regulatory requirements, which are often rather strict. They have been created by the Basel Committee on Banking Supervision, which controls different sets of critical information and requires quick reporting.
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Final Thoughts
In certain instances, the term “big data in the financial technology industry” is often misused and even if used appropriately, it’s often difficult to define what it is. In most cases, it stands for the high-end technologies and frameworks that are most commonly used for gathering, structuring, processing, and analyzing huge and diverse blocks of data.
Meanwhile, all the above-mentioned types of analytics refer to various specific activities like bringing some business value. Be that as it may, big data has a great practical use and it continues to show why analytics is the most widespread and valuable sphere of business.
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