Banking / Finance

Positive effects of big data in financial sector

29th Feb `16, 05:52 PM in Banking / Finance

The past number of decades have seen more and more of our world move into computers. Rare is…

Joseph
Joseph Contributor
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The past number of decades have seen more and more of our world move into computers. Rare is the doctor’s office with file cabinets full of alphabetized patient folders or a company researcher hanging out at the library to get data for a client report. Today, our worlds are online, in computers, on smart phones – and often, they are being turned into numbers.

We often hear people today complain that they feel like more of a number than a person when they deal with companies. While this is an unfortunate side effect of our modern world, the truth is that today data is king. Stakeholders expect organizational decisions to be evidence based – based on numbers and facts. They expect marketing decisions to reflect sales numbers, competitive reports and other data. They expect training to show quantitative results. As big data becomes a more important part of financial organizations it is important to be aware of the following:

  1. You must protect data and maintain control over fraud issues 

During the holiday season of 2014 Target hit the news big and in a bad way when their Red Card files were compromised. It cost the company a fortune not only in mitigating the damage to their clients and issuing new cards but in the loss of customer confidence at the height of the holiday shopping season. No company can afford to have this. Whatever your industry it is imperative that you be aware of the following:

  1. What information you collect about clients.
  2. That you are transparent with your privacy policy so that customers know what will be shared.
  3. That you protect customer data.
  4. That if a breech does occur you own up to it quickly and work to minimize the risk to your clients. This is imperative if you are to preserve your reputation.
  1. You must have the ability to identify and analyze high risks.

You, and your entire staff, must be highly trained and professionally competent. This may seem like an obvious point, but the fact is that people from different backgrounds can find themselves working in the financial sector. If you run a company ensure that you, personally, have confidence in each one of your advisors and employees, that you are confident that they know what they are doing, that they understand the products they sell and the risks inherent to them, and that they know how to properly communicate these things to clients.

In addition, it is imperative that you know who to contact if a data breach occurs. You must have an action plan that includes a media communications plan and a plan for how to communicate the problem to clients and mitigate the situation.

  1. You need to promote improved client intelligence.

If you are in the business of advising clients on how to invest their money you need to have the skills to analyze risk. But you must also have the soft skills – the communications ability – to ensure that your customers understand the risk and go into their investments with their eyes wide open. This means that you need to understand your customers – as a whole and as individuals – so that you can better reach them and better advise them.

An intelligent client makes better choices, is more likely to listen to your good advice, and is better satisfied in the end. In addition, a wiser client – one that you have properly informed – is more likely to give you a positive review, boost your reputation, and bring in more word-of-mouth clients.

  1. You must be transparent and informative, making new financial trends and schemes known to customers.

Many customers who go to financial advisors do so because they don’t understand investing. It is important that you advise them about a variety of options, at different buy-ins, different fees, different returns on investment, and different risk levels. For example, every customer you see should understand basic investments such as CDs, bonds and stocks. But you might also ensure they understand low risk, high return investments such as buying structured settlements, lottery winnings, or annuities.

Many customers understand at least the basics of investing, but some may not understand which are more risky and which are more secure, or when it is best for them to choose risk over security and vice versa. In addition, many clients will be knowledgeable only about very basic investment and may not even know that there are options such as purchasing precious metals, buying or selling structured settlements, and so forth unless you take the time to explain it to them.

  1. You must stay up to date on the development and growth of e-commerce businesses.

Today, no business can survive without the leaders having a firm understanding of e-commerce. While you may hire a marketing company to do your work for you, you still need to have your finger on the pulse of the situation, understanding terms such as SEO, social media, and more. Ensuring that you, your leadership, and even your staff understand how modern business and e-commerce work is important. Consider having an on-site training if you feel that your staff is a bit behind the times.

References:
How to write a website privacy policy”.
How a company should respond to a security breach.
Target says 40 million credit, debit cards may have been compromised in security breach.

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