Modern digital infrastructure proved its worth during the last couple of years, as it ensured that businesses and our digital lives did not come to a halt despite the crisis. It enabled the government and businesses to rollout various programs, helping people and enabling them to continue working remotely. Digital transformation continues to evolve and drive innovation across industries, and it is no different in the financial sector. Regardless of an organisation’s size, digitisation enables the financial sector to offer more integrated and hyper-personalised customer experiences.
Due to digitisation, large volumes of data are generated and shared. This is not only financial data, but other very valuable data that can be used to gain insight into consumer behavior and market trends to understand their needs better. The data analysis can also help improve fraud detection and perform timely underwriting.
The digital ecosystem in banking underwent another transformation in the last couple of years – a shift that is reflected in the growth of non-physical modes of transactions. A total of 7,422 crore digital payment transactions were recorded in the fiscal year 2022 at a 33 per cent growth as per MeitY.
As a result, much like every industry in the information era, the financial sector is capturing and using data at a staggering rate. Interestingly, it is not just the large institutions, but fintech organisations of all sizes are also collecting, aggregating, and leveraging a massive amount of data in a bid to revolutionise the future of banking.
Purchasing records are the most obvious source of data in the financial sector. While legacy establishments, such as banks and credit card companies have decades of purchase records and customer behavior models to tap into, the amount of new electronic records is also surging. Market estimates predict that the value of digital payments in India could jump threefold to reach US$1 trillion by FY 2026. Online payment systems, digital wallets, and installment plan financing are generating valuable data about customer purchases and behaviors.
The customer data, if leveraged appropriately, can potentially help plan new financial products and services and offer these to the right customers. In fact, the sector has undergone a massive disruption, thanks to the insight from consumer behavior and preferences. Today, many new branches have emerged in the financial sector, such as peer-to-peer lending, peer-to-peer payment, and many new investing methodologies, such as robo advisors. The global robo advisory market size was valued at $4.51 billion in 2019, and is projected to reach $41.07 billion by 2027, growing at a CAGR of 31.8 per cent. Robo advisor is a software that helps investors manage their funds, portfolios, and investments online with less human intervention.
The sanctity of financial data
Today, almost every business in the world is turning into a “data company”. This brings the importance and the vulnerable criticality of data to the center of focus. Because data is an invaluable asset for growth, but at the same time, it is also a vulnerable resource that must be stored, protected and analysed. It can improve our lives drastically or do just the opposite, depending on how it is used.
This possibility of data is fueled by a strong technology platform that the world’s innovators are building on and enabling the best new experiences — intelligent devices powered by the cloud and connected by high-performance networks. Today, we have only scratched the surface on the value of data and the technologies that unlock it.
Views expressed by Khalid Wani, Senior Director – Sales, India, Western Digital