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7 Big Data Use Cases in Financial Services and Benefits of Data Science

November 4, 2021
by
Kate Blumberg

Data science has improved financial services by speeding up processes that would have usually taken a long time. For example, SafeGraph helped one of their financial services clients by providing them with data to assess whether or not customers would walk into a bank during the COVID-19 pandemic. This helped the client make an accurate assessment of how the pandemic would affect that particular bank, and aided the bank in making the right business decisions moving forward.

In this article, we’ll explore other ways big data can be used in financial services. We’ll also suggest some ways you might be able to make use of it, depending on your niche or your needs. We’ll cover:

  • 4 benefits of using data science in the financial industry
  • 7 top big data use cases in financial services

It’s important to look at the 7 top big data use cases in financial services to understand the specific impacts of these technological changes on the banking world. And aside from these big data use cases, the financial sector has reaped other rewards from advancements in data science that may not be immediately obvious.

4 benefits of using data science in the financial industry

It’s important to note the most significant benefits that data science has brought to the financial industry as a whole. These small changes have made huge differences to people’s livelihoods, including the ways they conduct work.

While we’ve listed 4 huge benefits in this section, you can check out SafeGraph’s Financial Industry page to find out more.

  1. Forecasting financial trends: Predicting financial trends before they occur can have a massive impact on how management handles future actions. Being proactive can curb the damage that a negative financial trend can do, as opposed to being caught off guard and simply reacting to it. This can also give you a leg up on the competition.

    Forecasting supply, demand, and other key financial indicators equips firms with the necessary information to make decisions about their products, services, and investments. It also helps them advise their clients on how to make smart financial decisions based on predictive models.

  2. Analyzing risk: Machine learning algorithms can very accurately predict whether or not a person or company will be a risky investment (using their credit score and financial transactions). This will dictate whether or not this person or company can be trusted with a loan, or if they should be denied because of their bad credit history. 
  1. Automating tasks: Automating tasks increases productivity and makes the work of financial services analysts, managers, and associates easier. For example, online applications and algorithms make it a lot faster to determine whether or not a particular customer is a financial liability. This makes it easier for bank workers to figure out whether or not to provide a service to that particular customer.

    Additionally, customers have benefited because they do not physically need to walk into a bank to apply for products and services. They can also autofill most of their applications online at home if they have their browser set up to save commonly-entered information like address, cell phone number, name, etc. Automation increases customer satisfaction by making it easier for consumers to engage with brands, while also increasing productivity of financial services workers themselves.
  1. Fostering inclusivity: When algorithms are used, financial institutions are guaranteed to treat each individual equally regardless of race, sexual orientation, or gender. This is because the decision process is completely based on the financial activity of the customer. This creates more transparency for customers in terms of their ability to qualify for products. It also removes the risk of discrimination, which can unfortunately happen with more subjective application processes.

7 top big data use cases in financial services

The financial services industry is constantly evolving, so data science use cases for financial firms are, too. For example, risk assessment and management is something that is incredibly important in the financial industry. Banks must be very careful about whom they lend to or invest in. As such, the ability to assess and manage risk faster and more efficiently with data makes the lives of bankers much easier.

1. Consumer analytics and insights for insurance companies

Insurance risk, whether related to a property or a person, is largely dependent on how people interact with a particular space. Data science models can shed light on how consumers move throughout a community, including which businesses they go to and when they go. This can inform general liability risk, as a location that gets more visitors has a higher risk of someone getting hurt there. SafeGraph explains general liability using geospatial data, exhibiting that insurance risk can be more accurately calculated using alternative data.

Insurance risk is vital information for insurance companies to be able to determine whom they will and will not accept as clients.  

2. Real-time analytics and marketing

Data science has made it possible to analyze data in real time, as opposed to waiting for data to be processed and made available. This means financial services firms can respond to trends quickly and make decisions that push them ahead of the competition. Geofencing, geotargeting, and beaconing are all examples of real-time analytics.

Real-time analytics are especially useful for understanding and responding to consumer behavior. In an ultra-competitive market, financial firms and banks need to know what their consumers want and need, and when they want and need it. Real-time analytics makes it possible to uncover this crucial information. This lets businesses develop targeted marketing campaigns to meet consumer demand and win market share.  

3. Risk assessment and management

A graph showing risk as declining on a graph with bigger bars on the left going downwards towards the right

Businesses are beginning to move their decision-making processes away from individuals and towards machine learning algorithms. These reduce human error while also increasing efficiency. Leveraging models that predict risk associated with particular investments or ventures enables financial services firms to make decisions quickly. At the same time, they don’t need to sacrifice the quality of their due diligence and investment research.

At a more consumer-facing level, financial planners assess whether or not a person is in a position to buy a mortgage based on their lending and credit history. Before machine learning, this was a very manual and individual research process. With sophisticated pre-built data models, approvals are much quicker and more reliable.

4. Fraud detection and prevention

Financial institutions are using machine learning tools to identify unusual consumer spending patterns or behaviors in real-time. This helps banks act quickly and effectively to reduce losses for both businesses and consumers. For instance, in response to the rise of cybercrime, many banks have algorithms in place to prevent further spending if they detect a credit card displaying unusual activity.

5. Customer segmentation and targeted marketing

In order to effectively understand and reach customers, it is important to segment them into categories based on their likes, dislikes, needs, socio-economic status, etc. Financial services firms can then develop products and services designed especially for each segment. For a parallel in a retail environment, a business might split their clientele into higher and lower gross income segments. These would depend on the customers’ demographics and how much disposable income they are expected to have. The more disposable income they have, the more they are expected to spend in the store. 

6. Predictive analytics and future planning

Data science allows for the instant analysis of many different data sets from the past and present. This makes it easier to predict the direction(s) in which the market will go, and which investments will be more or less feasible based on those trends. This simplifies decision-making for financial institutions.

For example, an investment company is likely to use statistics to decide which stocks to invest in over a long period of time. They can then use their expected investment profit to offer products to their clients and set their rates.

7. Financial market and investment analysis

Financial market analysis results are used by financial firms to choose whether or not to invest in a stock, company, or commodity. Data science can automate and expedite this process, while also producing more reliable scientific results. For example, algorithmic trading can be used to choose which stocks to invest in. This is where advanced mathematical formulas guide bankers in choosing the best stocks to invest in, as well as the best long-term strategy for managing these investments. The use of alternative data for more objective investment analysis is just one example of big data use cases in the financial services industry. 


The financial services industry has made significant strides in providing innovative solutions for predictive analytics, risk modeling, and customer engagement – all thanks to data science. Learn more about how alternative data, like the POI and foot traffic data curated by SafeGraph, powers financial models and increases efficiency in analytics.

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