5 Incredible Ways In Which Data Science Has Transformed Industries
From coins and notes to bitcoin and net-banking, finance has transformed from an entirely tangible to an increasingly digital sector. Today, we are reaping the benefits of an efficient and convenient transaction at our fingertips through cutting-edge finance portals and apps. Technology has seeped into the finance sector and changed its face, redefining the idea of monetary exchange. And data science is one of the most significant disruptive technologies around us today.
What is Data Science?
- Data science is a broad interdisciplinary field that uses intricate algorithms and systems to acquire, capture, process, maintain, analyze, and retrieve structured and unstructured data.
- Today, data science is implemented in almost every aspect of decision-making and organization of data, from predicting consumer behaviour to providing those movie recommendations on online streaming platforms.
- Data scientists are trained to use these complex algorithms to study patterns, collect, interpret, organize data, and prepare models to address business challenges.
- Data science involves the extensive application of statistical formulae and principles to formulate algorithms and study patterns. In addition to this quantification of data, data science also consists of collecting, analyzing, and interpreting qualitative data such as images.
Finance and Data Science: What’s the Deal?
Finance is another crucial domain in which data science plays an integral role in consolidating and classification information. Here are five ways in which data science has significantly contributed to the finance sector:
Fraud Prevention
The online world can be just as treacherous as offline, and treading safely is a prerequisite in both these zones. Financial data science algorithms are designed to alert banks in unusual transactions or behaviours, such as a too high purchase by usually cautious spenders. Tracking such suspicious activities facilitates much more secure and transparent financial undertakings.
Consumer Behaviour and Analytics
Data science algorithms are also used to predict consumer behaviour based on their previous purchase patterns and preferences. Using this technique, insurance companies can classify their clients into distinct groups and come up with round figures of the profits they would make from each. This estimate further helps them understand what prospect consumers should be targeted and the specific plans they would benefit from.
Risk Control
Many individuals are often sceptical about entering into investment and financial planning due to imminent risks like Predicting the possible risks involved in a financial venture can help investors and banks alleviate these risks effectively. Data science studies existing scenarios and past occurrences to predict likely outcomes. Such analyses help individuals make wise financial decisions and ensure efficient risk management throughout their journeys.
Algorithmic Trading
Algorithmic trading occurs when a machine undertakes a trade based on specific pre-specified algorithms. Typically, the algorithm consists of certain pre-defined conditions that must be met to carry out a business. When these conditions are fulfilled, the algorithm receives a signal, post which it makes the trade within seconds. Such algorithms in financial data science make it a breeze for investors, traders and bank authorities to trade efficiently and securely.
Managing Customer Information
Like in most other sectors, finance also generates a massive chunk of unstructured customer data. It often becomes exceptionally cumbersome for banks and financial institutions to segregate this data alongside the structured one. Data science algorithms help streamline this information and provide detailed insights based on the same. Such insights can facilitate a more holistic and careful understanding of customer behaviour and patterns.
Conclusion
If finance and investment have become organized and efficient to another level today, data science has a significant role to play in the same. The key to the successful implementation of data science in finance is a sound understanding of financial requirements and the possible ways in which data science can contribute to resolving your current challenges.
Pranab Bhandari is an Editor of the Financial Blog “Financebuzz”. Apart from writing informative financial articles for his blog, he is a regular contributor to many national and international publications namely Tweak Your Biz, Growth Rocks ETC.
