Data analytics technology has led to a number of impressive changes in the financial industry. A growing number of financial professionals are investing in data analytics technology to provide better service to their customers.
The market for financial data in the United States alone is projected to be worth over $20.8 billion by the end of this year. Both small financial institutions and large conglomerates are leveraging data analytics to improve efficiency, mitigate fraud and deal with an increasingly complex regulatory environment.
Naren Vijay of India Times has discussed some of the ways that data analytics is changing the financial industry. She pointed out that big data can increase revenue by up to $300 billion a year.
Individual financial professionals can utilize big data in various ways. Keep reading to learn more.
What Are Some of the Ways that Financial Professionals Can Utilize Big Data?
Here are some of the various ways that different types of financial professionals can use big data to serve their customers.
Financial Planner and Financial Advisor
Financial planners are one of the many different types of financial advisors. In the same way that all orthopedic surgeons are doctors, but not all doctors are not orthopedic surgeons, not all financial advisors are planners. In fact, there are over one hundred different types of certifications that a financial advisor can get. Specialties that businesses and individuals can take advantage of to meet their goals.
Financial planners are valuable for businesses and individuals that would like help meeting their long-term goals. A financial planner might help your business set a budget, or simply better understand what resources you have available to you.
Other forms of financial advisement could involve insurance, money management, or banking. Think about what your goals are, and then look for financial professionals with the right accreditations to help you reach them.
There are a number of reasons that data analytics technology can be useful for companies and individuals trying to help their clients. One of the biggest benefits is that data analytics tools can minimize the need to do certain tasks manually, which lowers the fees that they have to charge to their clients.
Financial analytics also helps financial planners better anticipate the needs of their clients. They can use predictive analytics tools to project future inflation levels and changes to major financial markets, which enables them to provide more nuanced and useful advice.
Data plays a key role in how high financial professionals advise businesses. Data, of course, is just information.
But what does this mean in the context of business?
Data processing is all about recognizing patterns and anticipating how they will repeat, or change in the future. Due to the quantity of information out there — the human race now produces more storable information than even existed for the majority of human history — technology is required to store, sort, and make sense of it.
Business analysts use data to examine the financial health of a business. They usually don’t work full-time for any single organization, but are called in during particularly fraught periods. For example, if a company is considering opening a new branch, it might consider the services of an analyst.
Business analysts use sophisticated data mining tools to evaluate company financial reports, which helps them make more informed decisions. Data analytics tools can identify discrepancies and make financial health evaluations that human financial professionals might not be able to do manually.
Can financial analytics tools help professionals that are anticipating a recession?
Since you asked, yes. Your goal might be to retain your growth rate even during the recession and financial professionals can use sophisticated data analytics tools to help you prepare. Advanced data analytics tools can look at economic indicators to estimate the probability of a recession, so they can help customers choose investing and financial management strategies that will perform best during turbulent financial times.
It might simply be to survive. The business analyst will come in, look at what aspects of your company aren’t serving your goal, and then make recommendations for how you can cut the fat.
Accountants often get lumped into the same camp as financial advisors. They rely on data analytics more than anyone. They have to use data analytics tools to make sure financial forms are completed carefully and to mine data from banking records and other databases to ensure all expenses and debits are properly accounted for.
Financial Analytics is Changing the Future of the Financial Industry
You don’t need to get a degree in finance to become competent at it. There are smaller online programs that can equip you with the basic skills in a relatively short time frame. These certifications aren’t necessarily going to help you get a job (although some of them actually do look good on a resume) but you’re not exactly on the market anyway, are you?
The good news is that you can be proficient at financial management easier than ever, as data analytics makes the job easier to learn. You will spend less time learning mundane financial skills, which helps you focus on mastering more important tasks.
There is never going to be a time when financial skills aren’t valuable to your business. By regularly brushing up, you empower yourself, help your business, and accumulate a suite of skills that will be useful for the rest of your working life.