Home » Business Topics » Business Analytics

How Data Visualization is Essential for the Banking and Finance Sector

Businessman works with financial data
Businessman works with financial data. Futuristic 3d interface above laptop computer. Interactive financial diagrams and digital data visualization concepts. Global e-business network communication

Representation of data using graphics such as charts, plots, infographics, heat maps, bubble clouds, scatter plots, mekko charts, animation, etc., is termed data visualization. Such visual displays and representation of information help communicate complex data relationships and data-driven insights in a way that makes it easy to understand and base decisions on. The primary objective of data visualization is to assist in identifying patterns and trends from large data sets.

The data is processed, and Immersive, interactive visualizations display this data as it streams in. There is a huge volume of data available today, and to derive any benefit from such abundant data, real-time analytics has become extremely necessary for all industries, including the banking and finance sector, to gain an edge over its competition.

A massive digital transformation is happening in the financial sector, including the banking sector, and immense pressure exists to innovate. To do this, digital transformation is being taken up in new ways, and by leveraging data visualization, banking institutions can gain benefits like –

  • Detailed 360-degree view into customers changing behavior and needs.
  • Timely financial intelligence to make informed decisions.
  • Improved client reports.
  • Effective fraud detection.
  • Unified view of risk across the organization.

Some data visualization applications in the banking and finance sector:

  • Risk reporting & analytics – Integrating various data sources to offer a single window view is often challenging. This is more relevant in areas of regulatory reporting for banks, including reporting risks and performance numbers. The main challenge is to create reports that combine the risk areas applicable to the banking sector, like market credit, operational risks, etc. Data visualization is the perfect choice in such cases since data can be consolidated in real-time from various sources to generate reports that can provide visual analysis. Data analytics can also perform quality data checks across all sources to ensure error-free reports.
  • Client reporting and CRM – Client relationship management systems and client reports go hand in hand for the banking sector. CRMs provide and help improve relationships with customers. At the same time, client reports are generated to give banks and finance companies a holistic view of the customers, their risk analysis, and more. By integrating big data and data analytics in real-time, visual reports provide succinct information needed to make informed decisions and assist in analyzing client spending patterns, etc.
  • Managing liquidity – Banks and financial institutions must manage liquidity effectively and have real-time access to all aggregated liquidity positions like currency, geographies, and applicable products. It is also important to compare financial figures against standard ratios like the net stable funding ratio (NSFR) and liquidity coverage ratio (LCR) on a real-time basis. Data visualizations make such comparisons easy by providing aggregated visual reports and risk analysis. Data receipts from other external sources like ERP systems can also be integrated to provide further in-depth reports to predict and analyze liquidity.
  • Customer analysis – Identifying customer needs and behavior is an important part of banks and the financial sector and helps these institutions to offer new products and services to meet customer requirements. By involving and empowering bank representatives to interact with customers, data visualization tech can provide them with relevant and up-to-date information to view and offer financial products that can be tailored to the customer’s needs.
  • Social media integration – Social media is an innovative way for financial institutions to market their products and enhance customer relationships. This generates big data and can be integrated into CRM applications. Data visualization can easily connect all these data sources and generate data analytics which is very useful for these institutions.
  • Fast identification – Using data visualization, the graphical representation can be generated for any dataset without setting filters and sorting through rows and columns of data. Different graphs, like bar charts, line charts, heat maps, etc., can be generated instantly to identify the macro and micro details.
  • Data sharing and collaboration – The reports generated can be shared across departments, teams, and branches. This helps simplify data sharing and collaboration within the bank. Teams can collaborate and work together irrespective of their location. Microsoft Power BI is a commonly used tool for data visualization. It offers a complete suite of applications that allows banks and financial institutions to collect, process, analyze and generate reports in real-time.
  • Detection of anomalies and patterns – One of the biggest concerns for a bank or a financial institution is fraud. Reports generated using data visualization can help detect patterns that may be missed because of volumes of data. Such reports can help minimize or even eliminate the risk of financial fraud. Most financial institutions now have separate dashboards for fraud detection and risk management.

To conclude, data visualization is a powerful tool and can immensely help the banking and financial sector. Using data visualization consulting services, consultants with a background of working with the financial sector and banks can help give a unique and competitive edge to their customers.