The current technological advances in machine learning (ML), big data, and artificial intelligence (AI) have created more scope and opportunities for the fintech industry. The fintech teams can increase their focus to improve customer experience and speed up innovation with the new capabilities.
It has been identified that integrating big data in fintech has more advantages for financial institutions and fintech companies. Research shows that nearly 71% of financial and banking markets firms have admitted that using analytics and information has a competitive advantage.
This post will throw light on how the fintech industry is changing with big data and open banking to enhance their growth and speed innovations through self-service analytics. It will also focus on the evolution of open banking in the fintech industry and how it impacts the business.
What Is Big Data In The Financial Or Fintech Industry?
Big data refers to the diverse and extensive set of information with ever-growing rates. The demand for big data is growing across almost all segments of the business field with the support of mathematical and advanced statistical models. Technically, big data involves data mining, artificial intelligence (AI), deep learning, machine learning (ML), and predictive analysis to enhance business performance.
Integrating fintech data analytics aims to get a better insight to make quicker and wiser business decisions. Here, big data uses artificial intelligence to accomplish fintech industry tasks with its computer-controlled robot ability. Machine learning is integrated to analyze the available databases by studying computer algorithms. Further, integrating deep knowledge in the fintech industry can help analyze human neural systems using neural networks.
Research shows that global IoT connections have already created 13.6 zettabytes of significant data volume in 2019 and are predicted to grow to over 79 zettabytes by the end of 2025. The IoTs are digital and mechanical machines, interrelated computing devices, and other objects with identification forms or UIDs. It helps to transfer data over a network without human-to-computer or human-to-human interaction.
It shows that new tech can automate and improves the use of financial services and delivery. Research shows that the global fintech market is anticipated to generate approximately $190 billion by the end of 2026. After understanding the importance of big data in the fintech industry and its market growth in upcoming years, it is crucial to focus on applying it in the respective industry.
Fintech Industry And The Application Of Big Data
Research shows that the global financial technology market is predicted to generate a 26.87% CAGR from 2020 to 2026. The main reason behind the financial technology market growth is big data that guarantees the followings;
1. Give A Personalized Experience To Customers
The fintech data integration allows firms to handle each customer case with a personalized approach. Financial or banking apps use big data analytics to provide improved and customized notifications to their users, as it is helpful to collect relevant information about customers. Usually, financial firms collect customer information from different channels like social media, mobile apps, smart devices, and wearables.
2. Fintech Data Analytics
Fintech data analytics helps to identify inaccuracies within the system and analyze the incoming raw data or information. Moreover, it helps to make better strategic business decisions, provides sophisticated risk assessments, and estimates customer behaviour. There is no doubt that predictive analytics software has additional traction. This software allows you to input your existing data and give risk assessment models or scorecards, which helps with targeted advertising, risk and fraud detection, and product recommendations.
3. Quick And Fast Data Processing
Integrating big data in fintech is beneficial for many fintech firms as it can process vast amounts of data or information in real-time quickly and quickly.
4. New Authentication Methods
It has been identified that the new authentication methods in the fintech industry, like behavioristic and biometric methods, are also accessible with such vast amounts of data. Therefore, you must hire fintech data integration services to learn more about the new authentication methods and implement it property within your fintech business.
5. Improved Risk Management
Another significant benefit of fintech data integration is improved risk assessment. Big data analytics integrates data from different sources to provide a guarantee over risk management. Usually, it helps to predict and determine risks that can negatively impact your fintech business.
6. Better Fraud Detection
Fintech data analytics helps create a better fraud detection system that can easily let you know about the odd transactions within your business. Big data use cutting-edge methods in the fintech industry to prevent and detect suspicious activity.
What Is Open Banking In The Financial Or Fintech Industry?
The fintech industry is going through many evolutions because of big data analytics, resulting in the emergence of open bank data or open banking. The open banking system allows all third-party financial services to openly access financial data, consumer banking, and transaction from financial institutions and banks.
The whole process of an open banking system grants access by using APIs or application programming interfaces. Here, APIs act as the interface among applications or as an intermediary between the software. Application programming interfaces play a significant role in BaaS, SaaS, or BaaP industry.
Moreover, it enables banks to involve comprehensive programs to integrate with different digital software or offer digital services to existing and potential customers. For instance, financial institutions can provide debit and credit cards to their customers so that they can use the app to get information about their transactions in real time.
Fintech Industry And The Application Of Open Banking
Research shows that global open banking payments are predicted to generate a market value of $116 billion by the end of 2026. It has been identified that global open banking users are expected to grow at 50% of an average annual rate between the forecast period of 2020 to 2024. Overall, it has been observed that the application of open banking has many benefits for the fintech industry, which include the following.
1. Control Over Customer Data
One of the significant benefits of fintech data integration with open banking is that it offers control over customers’ data. Usually, customers are concerned about how the companies handle their private data, which the open banking system addresses. This system limits access to customers’ data and maintains their privacy.
2. Improved Customer Service
Open banking focuses on the data derived from various sources and data analysis. This data analysis helps to improve financial institutions’ customer services, which allows the firms to retain customers and attract more clients. You can hire fintech data integration services to learn more about how open banking can improve customer services effectively.
3. New Payment Options
The development of CBDC or central bank digital currencies has been observed with the growth of open banking in the fintech industry. It has been identified that central banks are focusing on developing a digital version of cash, i.e., Cash 2.0, that can bring more significant control over the finances. Cash 2.0 can be used for additional paying for services and goods.
Here, the central bank could take initiatives to limit the usage of each CBDC and make CBDCs programmable. The limitations could depend on the types of services and goods, specific situations, international or domestic purchases, physical or online stores, and purchase size. Research shows that nearly 85% of central banks worldwide are piloting or studying CBDCs.
4. Customized Services
It has been identified that customized services are preferred among consumers. With an open banking system, financial institutions allow authorized third-party service providers to access customer data and understand their buying habits in a better way. Therefore, the service providers provide highly customized and integrated payment experiences, credits, micro-loans, insurance, and investment options based on the specific needs of consumers.
Overall, the fintech data integration with open banking has a bright future in the financial industry. It has been identified that the combination of open banking and big data has become more efficient in the fintech sector. The fintech industry needs to stay relevant and competitive with these new technologies.
The fintech industry is enormous, with billions of dollars playing. If you are running your business in the fintech domain, it is crucial to focus on innovation to make a difference in the vast competition. Adopting the right self-service platform and data strategy allows you to stand your fintech business in the vast global market. The fintech data integration with open banking can be the right business strategy to improve your fintech business.
The demand for big data analytics and open banking is growing daily because it reshapes the fintech industry with open APIs and helps secure data exchange. Hire professional fintech data integration services to open the door to upcoming innovations and new payment options and provide them with a better customer experience and personalized services.
GetOnData’s fintech data integration services are crucial in bridging the gap between big data and the fintech industry by providing a secure and efficient way to integrate data from multiple sources, allowing businesses to make the most of the opportunities offered by big data and open banking. With GetOnData’s services, fintech companies can harness the power of big data to drive innovation, increase efficiency, and stay ahead of the curve in an ever-evolving industry.