The Top Five Use Cases for Event Streaming in Financial Services
The banking sector accumulates petabytes of data. Event streaming is the paradigm-shifting strategic data platform. It can forever change the way banks and financial institutions work with data. Today’s banking customers are tech-savvy. They know what personalized service is and expect instant insights into their accounts.
However, many businesses in the banking sector are reluctant to try a solution as disruptive as event streaming. Is it worth the effort? What does it have to offer?
Before you even consider shifting to data in motion, you need more information. Learn how event streaming can help you overcome the batch processing barrier and the top five use cases for it in financial services.
Event Streaming in a Nutshell
Event Streaming refers to a strategic data platform able to capture data in real-time from multiple event sources. Event sources can range from databases and sensors to software apps and mobile devices. The data is captured in the form of streams of events. It enables businesses to process, manipulate, or react to the event streams in real-time as well.
Simply put, the event stream enables ongoing flow and interpretation of data. It empowers organizations to react to events at the moment and get a competitive advantage over those that get insights from batch processing. In the banking sector, every financial transaction creates data which is an event. Here is how fintech startups and the banking sector in general use event streaming.
Increasing Customer Engagement
Both businesses and individuals are considerably more tech-aware today than they were just a decade ago. They want instant feedback no matter how complex the demand is or whether it is made through a direct channel or an app. People want to have more control over their finances, get instantly notified when a credit card purchase is made, or have a dividend payment reinvested.
On top of that, modern customers use multiple devices and expect financial services to be available through each one of them. Financial services organizations are having a hard time keeping up with customers’ activity, requests, and expectations. How do you answer this demand and push personalized notifications across platforms without degrading performance?
The answer is event streaming. It enables financial services businesses to stream data from all customer touchpoints and uses this data to generate personalized messages. This new way of connecting with customers is only available through data in motion.
Improve Workflow and Efficiency
When you take a look from the outside, the financial services appear simple. You press this button or send a message through this channel, and you get the results. Under the hood, the situation is far from being simple. Financial services encompass countless processes. Don’t forget that the industry itself used to operate exclusively on a paper-based paradigm.
Yes, the banking sector is currently under digital transformation, but many things are still handled manually. Meanwhile, data fragmentation remains the main obstacle towards achieving improved workflow and efficiency. Many organizations try to resolve it by implementing AI-powered automation solutions. However, since they are not architected for complex data efforts, their efforts are limited.
Event streaming is now used to resolve these challenges and move from data at rest to data in motion. Thanks to event streaming architecture, financial institutions are able to use cutting-edge technologies with greater efficiency and leverage data to create better digital experiences for their customers.
Fraud-detection and Risk Assessment
Unfortunately, fraud goes hand-in-hand with the banking sector. FTC reported that there are more than 3 million instances of fraud in the US only. Meanwhile, the cost of fraud keeps on increasing year over year. In 2019, financial services companies had to pay over $3.25 for every dollar lost to fraud in liability. The main risks include:
- Fraudulent account creation;
- Money laundering;
- Unauthorized access to digital accounts;
- Stolen credit cards;
- Chargeback and ATM fraud.
Even though the data is there, batch processing made it really hard for financial services organizations to analyze changes in real-time and red-flag fraudulent actions before it was too late.
Today, organizations use event streaming as a central platform for all transactions. Thanks to real-time streaming and processing, it became easier to build Machine Learning models with capabilities to identify risks and prevent fraud, thus saving millions of dollars in liability payments. Not to mention the impact the increased security has on customer trust and repeat business.
Streamlined Core Technology Updates
Financial services organizations use advanced and custom-tailored tech stacks to streamline internal processes and enable customers to get instant access to their accounts. However, using the legacy system hand in hand with solutions that enable microservices is challenging. It’s particularly challenging to integrate data from all systems and use it to drive operational excellence.
This is exactly why banks decided to switch to event streaming platforms. With event streaming, organizations can integrate data from various sources, including legacy systems, as long as they are digital. The practice resulted in several benefits, including reduced load on costly legacy systems, lower operational costs, and the start of the transition from batch to real-time processing.
The best thing about event streaming platforms is that they enable financial services organizations to connect all their core data systems and route the data to preferred applications and channels for further analytics. In case of a core technology update, all they have to do is connect the new source to the platform and take advantage of minimal to no downtime and unparalleled performance.
Single View of Business
When you look at the average tech stack of a financial services company, the chances are that you are going to find a dozen apps, data platforms, and cloud services. While all of these solutions resolve specific challenges they do create a major one – an organization is left with several data silos. Instead of having the data work for you, you end up with disparate datasets you can’t use to inform your decisions.
It brings us to our 5th use case for Event streaming in financial services – a single view of the business. You see, event streaming enables you to integrate all solutions in your techstack, even if you have several unique event types. With a platform that connects all your real-time data streams, you will be able to do wonders:
- Develop custom-tailored analytic apps, train ML models, and leverage AI for automation;
- Aggregate and process user, apps, server, and firewall logs and event data;
- Reuse data to enable all your core teams to get accurate and relevant business insights;
- Identify and solve problems at scale.
“Event stream” is a paradigm-shifting approach to how financial services companies use data. Instead of dealing with disparate data sets and having to process data in batches, it enables companies to integrate all their data under one platform.
More importantly, it enables them to stream that data in real-time and use it despite the type of event that created it. Pandio is a managed Pulsar service provider able to help you leverage all the benefits event streaming has to offer to the banking sector. If you are ready to bring your digital transformation to a new level, you should definitely check how Pandio can help you do it.