Trade Finance Forum › Forums › Trade Finance › Basics › I’m curious to learn about the benefits of integrating big data and data analytics in the finance sector. Does anyone have insights on how these technologies are contributing to positive developments?
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March 18, 2024 at 12:44 pm #2506Joel RichardParticipant
I’m curious to learn about the benefits of integrating big data and data analytics in the finance sector. Does anyone have insights on how these technologies are contributing to positive developments?
March 18, 2024 at 12:46 pm #2507Rahul JaiParticipantHere are the benefits highlighted:
Boosting Forecast Precision with Big Data: Big Data’s role in financial planning and analysis (FP&A) enhances the accuracy of forecasts by validating the underlying assumptions of business forecasts. This leads to a more accurate prediction of how market and internal factors affect company performance and competitiveness. A data-driven approach enables finance departments to anticipate trends and make well-informed decisions.
Refining KPIs through Big Data: Big Data supports FP&A in pinpointing and comprehending value drivers, allowing for effective management and monitoring of both financial and non-financial KPIs relative to these drivers. Given its essential function, FP&A is uniquely positioned to determine if the fundamental planning and reporting models accurately represent the appropriate drivers and KPIs.
Predicting Working Capital More Accurately: The application of Big Data in analyzing and forecasting working capital marks a significant advancement. Where finance departments traditionally tracked 15 key factors to forecast working capital, analysts can now identify statistical correlations among a broader array of data points for a more precise forecast.
Identifying Opportunities for Growth: CEOs recognize the critical role CFOs play in using financial data and analytics to uncover growth opportunities, as noted in KPMG’s The View from the Top 2015 survey. Although marketing is important, the finance sector, with its superior data access, is better positioned to examine the cost across various dimensions (products, customers, services, channels) and to devise pricing strategies that maximize profitability and growth.
Elevating FP&A’s Strategic Influence: FP&A professionals already possess the analytical approach and multidisciplinary thinking required. By leveraging Big Data and adapting to its intricacies, they can swiftly alter their strategic insights and recommendations in light of business environment changes. Shifting focus from historical analysis to future projections and their implications, FP&A departments are transitioning into strategic advisors to the business and its senior leadership.
March 18, 2024 at 12:47 pm #2508Jessica PeterParticipantThe finance sector is witnessing a technological revolution, with big data, advanced analytics, machine learning, AI, and cloud computing reshaping competition. Major companies are adopting these technologies to undergo digital transformation, cater to consumer expectations, and enhance their financial outcomes. Yet, despite accumulating vast and valuable datasets, many struggle to fully exploit this potential due to the unstructured nature of the data.
Prior to the COVID-19 pandemic, there was already a growing push for enhanced digital capabilities. The pandemic has further underscored the need for digitalization, exposing service and automation gaps in real time.
Financial entities that were quick to integrate big data, analytics, and AI for operational automation are now seeing significant benefits. Banks that are proactively investing in data-driven strategies are positioning themselves to better identify:
New offerings and solution
Customer-preferred channels
Optimal pricing strategies
Effective marketing approaches
Insights into customer loyalty and provider preferences
Currently, businesses are gathering vast amounts of data daily, but only a select few are channeling investments into data-driven strategies to harness customer insights. This is particularly evident in the banking industry, which often trails behind in adopting data-driven transformations.The Role of Data-driven Analytics in Finance:
-Enhances revenue and customer satisfaction
-Accelerates traditionally manual operations
-Streamlines the purchasing journey
-Optimizes workflow and ensures dependable system operations
-Provides insights into financial performance and guides sustainable growthMarch 18, 2024 at 12:48 pm #2509Joseph Klaus PeterParticipantOptimizing operational efficiency: Financial institutions continually strive to enhance the performance and expand the range of their services. Utilizing big data allows banks to analyze customer footfall and transaction volumes, thereby optimizing branch and ATM locations and numbers based on customer behavior and peak times. This data-driven approach aids in decision-making regarding the establishment of new branches and ATM placements, enhancing customer experience and service accessibility.
Strengthening fraud prevention measures: The integration of the Internet of Things (IoT) and Artificial Intelligence (AI) enables more interactive customer engagements, elevating operational efficiency and fortifying cybersecurity strategies. These technologies produce vast amounts of big data daily, aiding in the identification of fraudulent activities and anomalous transactions. This accumulation of transactional data enhances security protocols, fostering safer and more streamlined financial processes.
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