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Like all other businesses, financial industries are always looking for new and innovative ways to amplify their business. And this quest can become easy with the help of data science services. 

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Data science services are a godsend solution that has helped the financial industry to improve its services, understand clients, boost customer acquisitions and retention, and improve its overall performance and efficiency.

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Want to know how? 

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Then keep on reading because this article covers everything about how data science services and solutions have revolutionized the financial industry. 

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To begin with, let’s discuss what are data science solutions for the financial industry. 

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What Is a Data Science Solution for a Financial Industry?

Data science services for the financial industry or fintech (financial technology) are services that help companies to gather insights and improve businesses with the help of machine learning, deep learning capabilities, and artificial intelligence. 

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Many businesses, like Empower, Wealthfront, etc., leverage data science solutions to improve their business. 

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10 Ways to Use Data Science Services and Solutions in the Financial Industry

Research conducted by Statista reveals that investment into fintech start-ups has increased exponentially over the past decade, with global investments reaching their all-time high in 2021. 

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And since data science is a major part of the fintech industry, its demand is increasing every day. 

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Now that we’ve established that the popularity and usability of data science services and solutions are reaching new horizons, let's talk about some actionable ways to use data science in the finance industry.

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Below are the ten most common ways to use data science services in the financial industry: 

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1. Analysis of customer behavior 

Helps you to identify and analyze customer’s behavior, patterns, and preferences. 

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2. Evaluate and manage risks

Evaluate financial risks and predict project earnings by analyzing customers’ past activity in each campaign. 

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3. Run efficient workflow processes

Real-time customer segmentations and automation of workflow processes accordingly. 

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4. Optimize sales processes 

Enables businesses in the financial industry to optimize the sales process by identifying negative (or positive) customer sentiments.

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5. Reduces customer churn rate

Helps businesses to identify a potential customer churn and predict a customer’s lifetime value (CLV).

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6. Personalize customer experience

Offering a personalized customer experience with the help of data collected.

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7. Offer new or improved products or services

Encourages the introduction of new processes like the buy now and pay later method or offering no fees on trade like Robinhood by understanding customers’ demands or new trends. 

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8. Fraud detection

Helps in fraud detection by leveraging information about the history of payment methods and tracing any attempt to imitate a transaction or steal money. 

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9. Master data management 

Provide unified and consistent data across all businesses, just like Data Pilot enabled National Commerce Bank (NCB) to improve data uniformity, accuracy, and coherence across all platforms by building master data. 

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10. Personalized marketing

Show your customers what they like to see with personalized marketing. This form of marketing runs based on data collected and interpreted through data science services. 

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Data science consulting in finance is a total game changer. If you are still skeptical about leveraging these services, then continue to read how the finance industry has benefitted from data science services. Your answer will turn into a definitive yes. 

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How Do Data Science Services Benefit the Financial Industry?

Wondering whether or not data science consulting for finance is beneficial enough to be opted for? Then let us tell you loud and clear that it is undoubtedly very advantageous. 

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Data science services offer remarkable benefits to businesses belonging to the finance industry: 

1. Better customer relationships. 

The best way to nurture relationships is understanding and data science solutions enable businesses to understand their customers better. 

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2.  A competitive advantage

Even though many businesses have adopted data science services in the finance industry, there are still some who haven’t completely taken a grasp of it. So, there’s a clear chance that using data science services can give you a competitive advantage. 

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3. Reduced churn rate 

As mentioned in the section above, data science services can help you predict a tentative customer churn. Businesses can use this information to their advantage and run re-engagement campaigns to retain customers. 

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4. Improved customer experience

The goal of every business is to provide a smooth and enjoyable customer experience. And data science solutions and services help companies to offer better and more personalized customer experiences with all the information they have collected through customer data. 

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5. Optimized investment strategies

Businesses can use data science services to understand market trends and customers’ preferences and interests. 

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6. Operational efficiency

Data science can help you automate mundane and repetitive tasks and streamline workflow processes; as a result, businesses can increase operational efficiency 2x times. 

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7. Increased ROI

All the improved customer experiences, customer segmentation, and streamlined workflow will result in an increased return on investment. This is the advantage that businesses look forward to the most. 

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It’s insane how leveraging a single solution like data science services can transform the finance industry. 

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Challenges That Come With Using Data Science Services for Financial Industry

We say this with a heavy heart, but even the best things in the world come with a challenge, and so does the use of data science services for the finance industry. 

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Even though data science services have become increasingly important in improving operations, there are still some problems with leveraging this service. 

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So, let’s discuss some of the limitations of using data science consultation for the finance industry: 

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• All the data collected and tracked down results in an increased breach of privacy and security of each customer. 
• Since financial data is quite complex and heterogeneous, poor data quality can result in inaccurate insights and analysis. 
• As the field of data science is still evolving, there’s an abundant skills and knowledge gap. This means hiring a trained data scientist or engineer is a real challenge. 
• Implementing data science solutions into financial systems is costly. And a business can only bag good ROI if they have invested enough. 

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These are some of the challenges faced by the finance industry when leveraging data science services and solutions. However, it’s safe to say that the advantages outweigh the limitations. Moreover, these challenges will be catered to shortly as technology is improving with every passing day. 

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Financial institutions can benefit a great deal by leveraging data science services. It’ll be naive (read wrong decision) of a business not to consider it an option. 

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Even the future outlook of data science services is quite positive, and many businesses will adopt this trend in the financial industry. So the quicker one opts for the rising technology or data science service, the more chances a company has to flourish compared to its competitors. 

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Written by: Rida Ali Khan

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