BDAA GROUP ASSIGNMENT

The challenges

It’s a no brainer that the amount of data we generate or acquire every day is enormous. Every
message shared access to web page and even every credit card transaction creates nearly 2.5
quintillion bytes of data. That is the amount of data produced by the global population on a
daily basis.

As a result, new doors of endless opportunities open up across various domains to utilize that
data and banking industry has also taken its advantage.

Half of the world’s adult population uses digital banking which provides the institutions with
enough data to introspect on the way they operate. One, this helps them to improve their
efficiency. Also, they tend to become more consumer centric and as a result, more profitable.
The question of how to make the most of the available data still remains.

Importance of Big data in Banking Industry

It wouldn’t be a surprise that banking falls under the list of business domains that makes huge
investments in big data and business analytics.

Here is a list of few benefits of big data in banking:

1. Big data acts as a catalyst and allows optimization of processes along with
streamlining the internal processes.
- With the help of AI and Machine learning
- This results into a significant increase in performance level and reduction in
operating costs.
2. Big data provides a bigger picture of our business.
- Be it market trends, internal process efficiency or consumer behavior patterns
- This drives informed data driven decision making and of course, business results.
3. Big data analytics can be exploited to enhance cyber security and reduce risks to a
great level.
- Detection of fraud and prevention of malicious actions
- Intelligent algorithms can be designed to serve the purpose

Major roadblocks for implementation of Big Data

1. It’s a struggle for the legacy systems to keep up.

- Banking industry has always been slow in adopting change. Most of the top banks
are still relying on the IBM mainframes for their operations. Fin-tech adoption is
definitely on the high. In comparison to agile and customer-centric startups,
traditional institutions are definitely lagging behind.
 - Legacy systems cannot cope with the ever growing workload. The stability of
entire system is shaken and put at risk when the outdated infrastructure is used to
collect, store and analyze essential data in their required amounts.
- As a result of this, it’s a task to constantly update their processing capacities or re-
building the systems to stay ahead among competitors.

2. The bigger the data, higher is the risk.

- There’s always a huge risk when it comes to acquiring and processing of user
data. The service providers should make sure that the user data should remain safe
at all levels of processing.
- According to ISACA International, only 38% of institutions are equipped with
systems to handle this threat.
- In addition to this, data security rules and regulations are becoming stringent.
GDPR has posed various restrictions worldwide on businesses in relation to
collection and application of user data.

3. The total volume of data is getting too big.

- The increasing kinds and volume of data is a serious concern for businesses. They
are struggling to cope with it and hence, it’s becoming increasingly important to
separate valuable data from the raw data.
- The sorting out of irrelevant data is hindering the processing of potentially useful
data. This means that the businesses now need to prepare themselves and
contemplate on the methods for analysing more data.

Despite all challenges, the upsides are on a stronger side. The insights and the
resources it frees up, the money that is saved- data is a fuel that can give a kick for
businesses to reach the top.

Final Thoughts on the topic- Big Data in the Banking Sector

Operating with the help of old ways is risky to stay competitive in this era. There is a
need to constantly update and evolve. Grasping of new technologies is the way to go.
Big data analytics can be of help and prove to be one of the key elements to survive
and prevail in the rapidly evolving environment of this digital millennium.

We have always seen the brick model of banks where there are huge buildings with
clerks working with customers. Last 10 years, the banks have highly invested in the
modernization and provided digital services. Next 5 years, they will have to get hands
on learning on Big Data analytics, AI/ML algorithms and high tech tools to empower
their operations.