Use data to disrupt Fintech Industry

Data can be used to disrupt the fintech industry in a number of ways, including:

• Personalizing financial products and services. Data can be used to develop personalized financial products and services that meet the individual needs of customers. This can lead to improved customer satisfaction and increased loyalty. Leverage customer data to provide hyper-personalized financial recommendations and automated advisory services. Analyze consumer spending habits and cash flow to provide targeted guidance on saving, budgeting, and financial health.

• Improving fraud detection and prevention. Data can be used to identify and prevent fraudulent transactions. This can protect customers and financial institutions from financial losses. Apply machine learning techniques to combat fraud and enhance security based on patterns in customer behavior and transactions.

• Making financial services more accessible and affordable. Data can be used to develop new financial products and services that are more accessible and affordable for customers. This can help to reduce financial inequality and promote financial inclusion.

• Streamlining financial processes and operations. Data can be used to streamline financial processes and operations. This can make financial services more efficient and cost-effective.

• Use transactional data, social media data, and other alternative data to assess creditworthiness and provide expanded access to lending, especially for underserved populations.

• Use data-driven algorithms for automated, efficient trading and investment versus traditional manual methods.

• Develop chatbots and voice assistants powered by natural language processing and customer data to deliver customized banking experiences.

• Analyze supply chain, inventory, sales and other operational data to optimize dynamic discounting, pricing and other working capital decisions.

• Parse legislation, regulations, news to build data models that enhance compliance efforts.

• Apply blockchain and distributed ledger technology to use data to automate and streamline trade finance as well as settlements.

• Leverage geospatial, foot traffic and other data for location planning and customer acquisition for branches, ATMs and marketing campaigns.

• Use data from apps and internet-connected devices for superior identity verification and cybersecurity.

• Mine data to understand customer journeys and optimize UX/UI design for digital banking platforms.

Here are some specific examples of how data is being used to disrupt the fintech industry:

• Personalized financial advice. Robo-advisors are using data to provide personalized financial advice to customers. This is making financial advice more affordable and accessible to a wider range of people.

• Online lending. Online lenders are using data to assess the creditworthiness of borrowers and to make loans more quickly and efficiently than traditional banks. This is making it easier for people to access credit, especially those who may have been underserved by traditional banks.

• Payment apps. Payment apps such as Venmo and Cash App are using data to make it easier and more convenient for people to send and receive money. This is disrupting the traditional credit card industry.

• Blockchain technology. Blockchain technology is being used to develop new financial products and services, such as decentralized finance (DeFi) and cryptocurrencies. These products and services are disrupting the traditional financial system.

• Credit scoring. Traditional credit scoring models rely on factors such as credit history, income, and employment. However, these models can exclude people with limited credit history or those who are self-employed. Data-driven credit scoring models use a wider range of data, such as bank statements, utility bills, and social media data, to assess the creditworthiness of borrowers. This is making credit more accessible to a wider range of people.

• Insurance. Data is being used to develop personalized insurance products and services. For example, insurers are using data from wearable devices to track customers' activity levels and offer them discounts on their health insurance premiums. Insurers are also using data to develop new insurance products, such as parametric insurance, which pays out based on the occurrence of a specific event, such as a natural disaster.

• Investing. Robo-advisors are using data to automate the investment process and make investing more accessible and affordable for everyone. Data is also being used to develop new investment products, such as fractional shares, which allow investors to buy small pieces of expensive stocks.

• Payments. Data is being used to develop new payment methods, such as mobile wallets and QR code payments. These payment methods are making it easier and more convenient for people to send and receive money.

• RegTech. RegTech is a rapidly growing sector that is using data to help financial institutions comply with regulations. For example, RegTech companies are using data to develop anti-money laundering (AML) and know your customer (KYC) solutions.

As data becomes more and more abundant and accessible, we can expect to see even more innovative ways to use data to improve financial services and make them more accessible and affordable for everyone.

Sash Barige

Sep/15/2020

Photo Credit: Unsplash.com