Big Data and the Financial Industry

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Big Data is not exactly a financial terminology but it’s importance in financial industries is growing day by day. According to Wikipedia, Big Data is the term for a collection of data sets that is so large and complex that it becomes difficult to process using on-hand database management tools or traditional data processing applications. The data being described here includes every single thing existing in this world, whether it is personal information of a customer, number and type of automobiles being sold around the world, every Facebook postings and Twits people create every second, and even the data collected from every single CCTVs and black boxes around the world.

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According to KB Financial Group Research Institute, this kind of digital data seem to be growing in a rapid speed of 40% annually. The thing is such data includes not only the data people produce intentionally but also the information created automatically when you use e-mail accounts, mobile phones, and GPS services.

Now, I bet all of you have a brief understanding of “Big Data”. From now on, let us find out how financial industries make use of huge volume of data being stacked every second. Did you know that financial businesses including commercial banks, insurance companies and even investment banks invest millions of dollars in data processors and recruiting IT experts to analyze the big data? As data processing technology has developed in a rapid speed, computers can process and search almost 1 million data and images per second. Imagine why these financial institutions are investing millions in this big data!

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Financial institutions are devoting all their energy in big data because of the following reasons.

1. Finance requires accuracy and considers all kinds of external variables existing. Before data processing technologies were developed, these financial institutions always had to consider unexpected situations and couldn’t be sure of their data. But they do not have to worry about this anymore with the introduction of bid data processing system. They can now design financial instruments more accurately.

2. Financial institutions can now receive real-time information. This means that they can respond to diverse unexpected variable factors. In 2010, almost 50,000 people withdrew their balance after plotting to do so collectively in SNS in France.

3. Financial institutions can now process semi-structures data which they had hard time to do so in the past. This has brought financial institutions with fresh insight to find out new client attitudes with market tendencies. Following these kind of trends, a lot of IT companies are providing services such as “Google Trends“ and “Facebook activity statistics“. With this information, they can rate their credibility and use it in their marketing strategies.

You have seen how financial institutions make a use of big data. But on the flip side, reverse effects have been witnessed as well such as pharming, voice phishing, imprudent telemarketing and etc. The Financial Services Commission is trying it’s best to solve the side effects that can arise from the flood of information increasing every second and prevent misuse of the data. So always be aware of the FSC’s financial policies to safeguard your individual information.

Hyokhee Kwon “Tony” (kwonhyokhee@naver.com)

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