Big data and what it means for the future of banking

Banking is changing. Formerly faceless institutions are developing online personalities through social media engagement, and experimenting with new ways of creating and maintaining customer relationships. But away from the customer service revolution, other seismic shifts are occurring. Financial institutions process millions of transactions each day, every one its own set of data points, the whole forming a vast trove of potentially valuable information known as Big Data.

Just think: every transaction tells a story, and every story has a lesson, but how can we extract the stories from the numbers? All four of the major banks in Australia (NAB, CBA, Westpac, and ANZ) are competing to unlock the valuable insights hidden in the Big Data mountain, with CBA taking an early lead thanks to a recent modernization of its IT systems, followed by strategic investments in social media, mobility and analytics.

The results of CBA’s focus on Big Data analysis has led to some startling bottom-line consequences: check fraud is down 50% and internet fraud by a staggering 80%. By reading patterns in the data and creating systems which recognise suspicious transaction patterns, every aspect of the business benefits: customers gain confidence, which is reflected in a healthy brand identity, and less revenue is lost to fraudsters.

With the other three big players forced to play catch-up, the big question is whether CBA can hold on to the top spot. As you can imagine, NBA, Westpac and ANZ are making their own strategic investments, and the next few years look set to be a period of unprecedented competition, and as everyone knows, competition means better products, better service and better business.

Kristoff Doneit

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