The financial rebellion is in full swing, banks are on the run and the small lender’s chunk of the finance pie is getting larger and larger and it’s all down to one thing.
The emergence of big data is unprecedented, its importance cannot be underestimated. To frame that in some sort of context, data is now the single most valuable resource on the planet. Not oil, not gold but data.
The reason it’s so valuable is that it’s the most effective weapon in combatting the monopoly that the banks hold on the financial industry.
There are lots of ways fintech companies use data, we whittled them down to these 4.
Data doesn’t give you the edge, it is the edge
Knowledge is everything and for small lenders, data can ensure they are savvier than the big banks. Let's be real, they are never going to beat a bank in terms of size, profit or workforce (yet) but attaining data is the leveller that ensures they can compete. Once a small lenders foot is in the door, thanks to data, it allows their other qualities to come through such as offering a friendlier service.
Data allows lenders to do what’s called predictive analytics (it’s a little dry, granted but hang in there) where they are able to work out more realistic accurate borrowing terms which benefit customers with low-risk profiles.
Better value for the customers
Customer service and customer interaction are made better by data, verticals across the country are using data to ensure they know more about their customers in order to offer them a bespoke experience - which is kind of cool when you think about it.
You’d probably think that customer wouldn’t be a huge fan of business having your details on file but a report by Accenture found that customers would be willing to give their deets away if it meant they’d have a nicer experience especially if they’re looking to apply for loans.
Business plans get a boost
Like we said earlier, data is a good leveller, an abundance of data can ensure that a small lender is showing itself in its best light in its business plan, plainly because it has the best data. They are better able to show their edge.
Since the entire global financial order went to pot around 9 years ago, traditional finance firms have been more than reluctant to lend a hand to startups, in the shape of capital, money, readies, wonga! But with a solid, data-led business plan backing up a businesses wishes, the chances of investment are far, far greater.
Cleaner, more efficient business
More data out there means there are fewer places for errant business to hide. Tougher compliance standards that have been implemented since the banks went bust, which means internal audits and reports by businesses need to be thorough. Big data allows businesses to do that, which reduces the risk that they’ll be penalised.
Conclusion: Prepared to kneel at data's feet for a long, long time
In a world increasingly run by computers, the cloud and other technologies it's virtually impossible to see data not being the number one resource for the next few decades. This is the start of a new ‘age’, as it were, data is going to shake everything up, especially in the world of alternative lending. Are there other ways that big data helps business disrupt? If there are, let us know, get in touch on the socials!