Banking / Finance

The role of big data personalization in the banking industry

08th Nov `16, 05:57 PM in Banking / Finance

According to a popular belief, banks and big banking corporations rule the world – they deliver all the…

Marcus Jensen
Marcus Jensen Contributor
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According to a popular belief, banks and big banking corporations rule the world – they deliver all the funds where they are needed, handle large transactions, choose who to support, and, ultimately, decide what the world is going to look like in the future. However, what about some of the other characteristics of the banking industry? What about the big data they collect, the security risks involved, the personalization and the individual approach towards every single client, big and small? When it comes to the involvement of big data research in the process of personalization, things do not have to be as simple as they may at first seem.

Why do banks need big data?

How do banks protect their data

We all know banks to be huge corporations hidden behind closed doors, inaccessible to regular people, unless it is a matter of the utmost importance. What we do, on the other hand, know, is the money transaction process limited to our personal use – and quite well, in fact, since it is our dollar on the line. However, while we know literally nothing about banks, they seem to know quite a lot about us, and they are not afraid to use it.

Based on your social security number and your bank account, the banks can find out every small detail about you – from the basics, like your age, address and phone number, to more complex data, such as your habits or shopping preferences. They usually use these pieces of information to get closer to you, offer you something you desperately need and give you the opportunities you are looking for. That way, your relationship with your bank gets more and more personal, but at what cost?

How do banks protect big data?

The real question here is not whether banks collect big data – because they obviously do – but what they do with it later. Keep it to themselves? Sell it to interested companies? Or share it with other banks? It is impossible to keep track of these things unless you are an experienced hacker, and what happens with your personal information is basically out of your control.

Why do banks protect their data

That is why banks have complex protection systems – or we all hope they do. Having your entire life stored in just a few bytes somewhere makes you feel vulnerable and at risk, and it should. Although you may think that your data is unimportant to professional hackers and they can’t profit from it, you can be wrong. Once they get hold of your info, everyone is at risk and the security breaches can take the entire system down.

This is the reason why banks need to invest more in their security systems and, while most of them take these threats seriously, there are still some thinking nothing can go wrong. Nonetheless, keep in mind that the speed of technological change is more rapid than we can comprehend and that threats are becoming more and more serious. Due to that, cybersecurity programs, according to the experts from Securelink, simply must become “dynamic to keep pace with the fast-changing technological landscape.” In other words, banks have to take things to the new level.

What is the future of big data? 

With all this information in mind, what can banks do with big data in the future? Are there any other ways of obtaining vital personal information about their clients? Is there a new method of distribution? Are they really in the business of spying you and sharing details of your personal income, for example? Or, are they, on the other hand, interested in building a long-lasting relationship with you and strengthening the trust?

An increasing number of banks have been getting interested in new technologies for some time now, and are currently in a position to predict your spending preferences and map out your decision making patterns based on your social media presence. This kind of analysis allows them to forecast more and more things you may have wanted to keep to yourself, from your geospatial data to your spouse’s birthday, for example. Moreover, they encourage you to use their mobile apps and connect to your banking account directly from your smartphone. That way, they are more able to collect valuable data easier, use it to anticipate your next move – even before you make it, or even think about it – and offer you something they know you are going to need.

When things get personal

All of these things sound a bit scary at first, but once you realize that all of them are already everywhere around us, you will understand that there is no use in fighting back. Big data is a way for banks to get to know their clients a little bit better, and if that means they will offer you a bigger loan or a better credit card payment plan, so be it.

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