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HOW ADVANCED DATA ANALYTICS IS PIONEERING A REVOLUTION IN FINANCIAL SERVICES

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By James Blake, founder and CEO of big data firm Hello Soda

James Blake

James Blake

One out of every six waking minutes is spent on social media. Consumers post, comment, tweet, and like multiple times a day, creating more and more online data exponentially. Social media is a huge contributor to the vast mine of big data which is growing daily; but only 0.5% of big data is actually being tapped for the meaningful insights it can reveal.

Not utilising this data not only means businesses are missing out, it might even be costing them valuable business. Social media analytics can help businesses truly understand consumers on a more personal level. Knowing what consumers desire in a product, what they want in a brand, what services are relevant to them and even what puts them off, can completely revolutionise a company’s strategy.

Hello Soda has proven expertise in the sector and work with 50 clients all over the world as far afield as Asia in sectors including financial services, recruitment, tenant vetting and marketing.  We’ve just published a new study in partnership with Visa Europe Collab which explores the power of social media profiling and its potential to financial services.

The research reveals how online social footprints can be used to boost financial inclusion, detect fraud, enhance contactless and e-commerce and enable more targeted marketing – all on a consent-only basis. The results demonstrated that utilizing social media data can benefit both consumers and businesses.

LaptopBy applying advanced data analytics, natural language processing, the big five personality traits and other psycholinguistic profiling techniques to people’s social media interactions, the study identified that these methods could create a new, effective way to verify consumer identity and widen access to financial products. ID verification through pioneering social data analytics is particularly revolutionary for some developing countries where large portions of the population have been excluded from traditional financial services or may not have official identity documents.

According to our study and the results we see each day through our business, social data driven services could also increase addressable markets for lenders through the introduction of alternative methods of risk assessment for individual borrowers. Implementation of this type of analysis could enable individuals who are not able to provide adequate assurance to lenders through traditional data sources such as credit checks. Individuals who could benefit include young people without a long-standing credit history who are struggling to buy their first home and foreign immigrants unable to transfer credit history between countries. These customers could now be able to access credit – potentially for the first time.

And when it comes to debt, the study found that by combining social data and financial history, consumers could actually be protected from over-spending. Information around planned expenditure, trends in financial consumption and upcoming expensive events such as birthdays or weddings are all available through the convergence of social and financial data and by integrating analysis of this information into banking and payment applications, real time preventative measures which protect consumer credit ratings and lower lending risks for banks could become a reality.

For a student with a loan that is due to last an academic term, social and financial data could combine to provide individuals with accurate real time monthly expenditure projections intervening with warning messages when spending behaviour is likely to be unsustainable.

The research also highlighted the possibility of preventing fraudulent financial transactions before they take place. For banks and e-commerce merchants the challenge is to accept as many good payments while avoiding fraudulent ones and with the use of social identity verification it’s possible they can authenticate transactions more accurately and enhance their existing fraud detection capabilities by tapping into social data.

In addition, the possibilities for greater and more accurate personalisation and targeted marketing campaigns were also identified in the research paper and, with the intelligent application of big data analytics, this could potentially increase engagement and up-take in financial services products and services. Currently, due to the vast amount of unwanted and irrelevant offers, the average click-through rate in the industry globally is just 3% but personalised and relevant targeting could see this significantly rise.

The FinTech revolution is creating opportunities for the industry to innovate and take major steps forward when it comes to financial inclusion, ID verification, tackling fraud, debt management and more accurately targeting consumers with personalised offers instead of bombarding them with irrelevant ones. We are making ground-breaking discoveries each and every day through big data analytics and what’s exciting is that as an industry, we’re only just scratching the surface. Big data has far-reaching possibilities in it’s ability to positively impact both the consumer and businesses.

For more information on big data analytics and Hello Soda’s capabilities, visit www.hellosoda.com. You can also follow @Hello_Soda on Twitter

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