How is data science used in the finance domain?

Posted by Nithya on July 14th, 2019

The usage of Data Science has been spreading in a vast array of industries.It has evolved briskly in past few years and it has proven to be of pivotal importance in various industries like marketing, manufacturing and finance.

The aim of this article is to cover the question of how data science can be used in the financial domain. Before jumping directly on where data science is used in the finance domain and what exactly is its application, let's first discuss in brief what data science is all about.

What is Data Science?

Data science is basically the computation of data from sources that can be structured or unstructured to get useful insights from such data. The sources discussed here include a survey done online or in person to get the information for clients such as customer behavior, preferences, likes, and dislikes. This data is combined together to understand future trends and patterns. The field of data science can be incorporated into a study group of humans, such as those associated with social media, forecasting weather, machine learning, artificial intelligence, statistics, analytics, and so on. The data science, if applied correctly, will help the organization reach new heights, taking into consideration the proper implications of insights of data.

Applications of data science in Finance

The use of data science is not only restricted to getting insights from data but also using those insights in decision making.  With the financial field, we all know how important it is to make smart decisions and in a very short period. This is only possible if we have the relevant information in hand. Something that is clear is that there is a huge risk involved in any decision whether it is a short or long term. But if the decision is backed by sound data and insights then it surely gives a peace of mind to all role players and also lessens some risks that may be involved.

Listed below are a few of the examples where the data science is applied in the financial domain:

Customer and Risk Management

An increase in customer management, keeping intact profits through risk management and continuing to be ahead in such a fast-evolving world of finance is all possible on a correct and wide implication of data science. The companies would be able to effectively carry off the customer data to the best of their advantage and also foretell the future trends in particular sectors. This, in turn, would make them be prepared for any contingency in the near future.

Diagnose Frauds

For any financial institution, security is one of the biggest concerns because the fraudsters are continuously in search of the ways to shoplift monies and other products. Take an example of the stock market, wherein odd trading trends are detected by machine learning algorithms. In such a case, this would be investigated and the staff would be alerted.

Real-time Analytics

Earlier the processing of data was historical in nature. This created a problem for various financial industries that needed real-time data to get insights into the present circumstances. With the application of data science, it is now possible to record a transaction, credit scores and many other financial aspects without any further delay.

Empowering Personalized Services

Financial institutions implement a wide variety of techniques to get useful information about customer interactions from insights of data. This would ultimately lead to an increase in profit as the companies would be producing and supplying in the exact way that the end customer needs.

Algorithmic Trading

Algorithm trading was impacted when there was big data coming into the picture. Thus, it has given rise to the most important feature that is data science. The data analytical engine is aimed at making predictions for future markets by getting a proper understanding of devastating data sets.

Conclusion

Thus, we conclude that data science in the finance sector is not limited to only one but many roles as mentioned above. It is an important thing to note that the use of data science is widely used in risk management and analysis. It is also used for detecting fraud to find abnormal transactions. Attend a good training to master these data science skills.


Nithya

About the Author

Nithya
Joined: July 14th, 2019
Articles Posted: 1

Claim 1 FREE Stock! No Purchase Necessary!
You have a 100% chance of receiving one free stock! Click to claim and have a chance to get one share of Facebook, Visa, Microsoft and others for free!
FREE App - Earn up to 25/gal cash back on gas!
Download this FREE app and earn cash-back when you buy gas, groceries and food! 100% FREE to join and FREE to earn cash back on your everyday purchases!
Quality Office Furniture USA Shipped Direct - Madison Liquidators
Nationwide vendor of quality office furnishings including Desks, Office Chairs, Conference Tables, Cubicles and more!
Earn HNT Tokens with a Helium Hotspot!
Pre-Order a Helium hotspot and earn HNT tokens that are redeemable for USD. Set it and forget it!
Lolli: Earn Free Bitcoin When You Shop Online!
Lolli is a rewards application that gives you bitcoin for shopping at your favorite online stores.
Fold - Earn free bitcoin when you shop
Earn bitcoin cashback rewards when you shop at top retailers, including Amazon, Uber, Starbucks, Chipotle, and more. Download the app, sync your payment method and start earning bitcoin today!