Data science plays a significant role in financial industry

Data science with artificial intelligence (AI) as its backbone, which was just an option, has turned out to be a crucial support system for financial services industry. Be it decision making for granting loans or issuing credit cards to a prospective customer, ensuring cyber security, making recommendations or offering advice on where to invest, predicting market, or understanding the sentiments of customers, data science is everywhere.

Data science is an integral part of almost every department in financial industry. The organizations, if there are any, that choose not to invest in AI are left far behind in the competition with the likelihood of going under. Well, this may sound overstatement or a bit of exaggeration, nonetheless, it does make a point that how important it is for a financial organization to consider data science as its significant ally.

When it comes to granting loans or issuing credit cards to prospective customers, banks usually, in traditional approach, follow rules-based process before making the final decision. However, due to the cut-throat competition in this industry, these businesses cannot afford to lose a potential customer. Although, some of the rules may suggest to decline a customer’s request, but data science models built on historical data may suggest otherwise. A smart banker may reconsider the decision based on these classification models, whether a customer will default or not. After all, the real story lies hidden in the depths of these data. The data never lies!

What about cyber security in banking sector? There is no doubt, it is an undisputed fact that cyber or data security is of utmost importance in financial industry. Who will trust a bank that cannot even protect its customers financial data! Advancing technologies have definitely added more layers of security, but have also given rise to the number of hackers with greater abilities to hack into a system, no matter how robust.  It is getting more difficult for companies to just rely on traditional security measures. Anomaly detection with the help of data science has a long way to go and its role in cyber or data security will become more reliable with time.

Customer is everything in business! Therefore, keeping track of customers’ sentiment is a matter of paramount importance. Human interaction backed by AI-enabled technology can be a game changer. If the customer service department can hit the right chord in identifying the actual sentiment of a customer, it can make all the difference. Retaining existing customers, cross-selling, up-selling, right kind of engagement with prospective customers can all be handled with more intelligent judgment using sentiment analysis or facial expression analysis with the help of deep learning used in data science.  

Lastly, along with sentiment analysis while taking into account the available information of an existing or prospective customer, data science can also assist in recommending investments in  appropriate financial instruments.  

Although there are many other areas in financial domain where data science can be applied successfully, covering all those will make this post long and boring. Maybe, we will talk about them later.

So, the data science says, “With me the sky’s the limit, Baby!”

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