As businesses in the financial sector evolve from providing generic products towards providing personalised services, a new approach to data and analytics is required in order to adapt to rising demand.
Here to detail the relationship between data analytics and fintech is Jadd Elliot Dib, the Founder and CEO of Pangaea X, a digital platform that aims to bring together the world’s best Data Analysts and Scientist freelancers from across the world onto a single platform.
The platform connects them with potential clients by providing them with a place where they can showcase their work, expertise requirements and navigate the difficulties of finding and completing jobs.
Big data and analytics are crucial aspects of the modern financial services industry and go hand in hand in the quest to improve data-crunching capabilities for financial industry players. But the big question is how do these data analytics tools and technologies add value to the financial services industry?
New data-driven services can be leveraged to increase revenues, costs can be reduced and efficiencies improved, thus increasing competitiveness, and security can be improved by providing customers with better and safer services.
Successful AI adopters target their digital services to tech-savvy millennials, who happen to be the majority of today’s world population. The MENA region is an attractive market for fintech firms and is witnessing a rise in niche fintech solutions largely pertaining to remittances, banking penetration, and security of transactions. While the United Arab Emirates (UAE) is the largest fintech hub for start-ups across the Middle East region, housing almost 50% of the region’s fintech companies.
The fintech sector is rapidly growing across the Middle East at a CAGR (compounded annual growth rate) of 30%. It is estimated that by 2022, about 465 fintech firms in the UAE will generate about $2 billion in investment capital funding. However, a majority of the funding focuses more on the payment sector with about 85% of the fintech companies in the MENA region operating in transfers, payments, and remittances.
Emerging fintechs are also unlocking the power of big data to predict customer behaviour and develop sophisticated risk assessments, which set them apart from large financial institutions. The pace of real-time data gives disruptive fintechs and challenger banks the responsiveness to adapt to a changing marketplace along with an in-depth understanding of the customers’ relationship.
Customer centred analytics is now the top priority. This is a radical shift from the past when the financial sector was mainly product centred. Data insights, systems and operations now focus mainly on the customer. Hence, it is important to learn how to anticipate changing markets and customer preferences.
Risk management has also improved. Additionally, digitisation has also paved way for automation by increasing scaled agility and innovation, as well as data monetisation. Data analytics has also made regulatory compliance easier by creating an integrated platform for the entire company and enable real-time frameworks with regulators.
However, realising the value of big data requires an analytical eye as these help in churning down data into meaningful information, thus minimising the risk decisions based on intuition.
That’s where a certified data analyst comes into the picture. A big data analyst has mastered this art as it requires them to know exactly what information to look for that will act as a booster in cross-selling and customer satisfaction. In the banking industry, a data analyst can help to develop customer profiles, predict behaviours and track trends, to name a few.
Some common examples are, banks can offer credit cards with customised incentives based on a consumer’s spending patterns. Additionally, they can also detect levels of customer engagement based on a customer’s ATM usage and call centre interactions.
Secondly, the application of big data in internet marketing could give a fintech company the boost it needs to stand out from the competition. Not only does it allow businesses to offer personalised customer experiences, but it also creates tailored marketing messages which strike a chord with the right people.
The adoption rate for business intelligence platforms is on the rise, as companies begin to interact with big data, seeking to operationalise findings from enormous data sets.
Digitisation in the finance industry has enabled disruptive technologies such as advanced data analytics, machine learning, AI, big data and the cloud to penetrate and transform how fintechs are competing in the market. Data analytics tools have become more and more advanced and, therefore, became important to enterprises over the last few years.
As the financial industry rapidly moves toward data-driven optimisation, companies must respond to these changes in a deliberate and comprehensive manner. Those wishing to stay ahead of the game, or arguably in it at all, must be willing to adapt and learn how to use data skills on the job.