Data science is revolutionizing fintech. By leveraging statistics, machine learning, and advanced analytics, fintech companies are drawing deep insights from the vast data they accumulate, informing product enhancements and process optimizations.
The journey of data science, which began with John Tukey’s 1962 publication, “The Future of Data Analysis,” has led to diverse roles such as Data Scientist, Data Engineer, and Business Intelligence Manager emerging in the modern market. And now, data science for fintech has become more critical than ever.
Data Science Integration in Fintech
Integrating data science with fintech products starts by understanding the goals and sourcing data. Typically, fintech gathers data from:
- User Verification Services: These ensure only verified users have accounts, with checks ranging from document verification to self-identification.
- Card Management Services: This includes data about card statuses like activations, blocks, and transaction locations.
- Payment Services: Offering insights into financial behavior, which becomes pivotal for modeling.
- Mobile & Web App Analytics: Monitoring in-app feature utilization.
- Customer Support Tools: Offering data about user queries and resolutions.
- Open Data Sources: This can include government statistics which provides broader context.
Upon collection, data is stored in data warehouses. It’s crucial to differentiate between data lakes (unstructured raw data), data warehouses (processed, structured data), and data swamps (unorganized data lakes). The key is maintaining a structured data lake to avoid turning it into a swamp, emphasizing the importance of robust data governance in fintech’s data science journey.
Next steps involve business intelligence, machine learning, and other processing models. Gaining insights from the data is then paramount.
Modern Data Warehousing in Fintech
The data structuring tool plays a pivotal role. Companies like Dashdevs utilize Snowflake, a cloud-based data warehousing solution. Choosing the right tool should consider factors like cloud scalability, varied data source integration, consistent data ingestion, scalability, compatibility with tools like Spark or Python, database management ease, access level customization, and cost-effectiveness.
Unraveling Insights with BI Tools
With data stored, extracting insights requires effective Business Intelligence (BI) tools. Key features to consider in a BI tool include seamless data warehouse integration, a user-friendly interface, data management capabilities, robust security, and high-speed data processing. Leading BI tools are Microsoft Power BI, Looker, and Tableau, each with unique strengths.
Key Data Science Applications in Fintech
Here’s how fintech leverages data science:
- Fraud Detection: Real-time analysis helps identify fraud patterns and raise timely alerts.
- Customer Behavior Analysis: Using deep learning, fintech companies understand user behavior, segment users, and visualize financial activities.
- Risk Modeling: By evaluating product usage and external data, risk profiles can be created to customize service offerings.
- Product and Process Improvement: Based on product usage and market data, refinements can be modeled and predicted.
- Personalized Marketing: Analyzing user behavior helps recommend tailored financial products.