Intuition or experience, or both combined, are usually in many cases the main sources to which one appeals when considering whether to give a new direction to the business or change the way one has been working.
However, it is possible that this scenario will soon end up changing and that Big data will become increasingly important in making financial decisions. Next, we will learn a little more about how this technology is revolutionizing the business world.
What does Big data mean?
The concept of Big data is related to various kinds of actions or deeds, which are:
– Generation: There is a large volume of very complex data, due not only to the fact that it is not structured, but comes from different sources: signals sent by devices, search results, social media behavior and other records.
– Compilation: To move from this data to information, it is first necessary to collect it, so that it is not scattered, but can be organized for analysis.
– Analysis: The data alone says nothing. Without an analysis process, extracting information that can be considered valuable is impossible. Of course, since this is a large volume, advanced tools are required; in this case, we are talking about AI systems.
– Interpretation: With analysis, data can be organized, looking for patterns; but interpretation is about understanding the implications of the data, particularly for an organization.
How does big data influence financial decisions?
Once the information has been understood, it is possible to apply it later in decision-making, which is also another challenging task. Therefore, the organizations also, in addition to the computer tools, must have a team of professionals trained.
Of course, of this whole process, the most important thing is what organizations do about financial decisions. Let’s see below how Big data can influence to improve business efficiency and increase profitability.
Precision and speed
By applying artificial intelligence tools in finance, decisions are based on solid and reliable data, and not only on the subjective perception of people. In addition, with this type of resource, detailed and complete reports are obtained more quickly, which saves time when discussing the future of the organization.
Business and marketing opportunities
By analyzing data related to customer purchasing decisions, and identifying patterns, companies can anticipate trends and then guide the production of goods and services, including helping to develop marketing campaigns and promotions.
Market analysis
Also, the analysis of Big data can provide information about the market, in relation to what the competition does, identifying their strengths or weaknesses, as well as niches and segments, and even threats in the market. With all this, strategies can be outlined for pricing, and expansion, among other important financial decisions.
Improving efficiency
An interesting aspect of Big data analysis, referring not to the market but focused on the company itself, is that it provides information about internal processes, helping to improve them, optimizing performance and reducing costs, even in terms of personnel.
Logistics and supplies
Other data to be analyzed, which has an impact on production processes, as well as on financial decision-making, has to do with logistics, transportation, and distribution. In this sense, the information that is obtained would allow to identify problems in the supply chain, for greater operational efficiency.
Finance: risks and portfolios
A very significant issue to consider, and for which Big data analysis can be used, is the company’s exposure to financial risk, which would help to identify investment opportunities; and also optimize portfolio management, analyzing the behavior of markets and assets.
The relationship with the client
Possibly, the most decisive aspect that Big data can influence is the relationship with the customer, since a good part of the information generated has to do with the way it interacts with the brand, which can improve, ostensibly, if the appropriate tools are applied.
Big data and the future
According to some sources, currently, 65% of managers consider that data analysis is vital for the survival of the company. In fact, there has already been an increase in profitability, as well as a reduction in losses, in those who implement it, obtaining advantages in the market, by improving their overall performance.
And big data is expected to play an increasingly important role in financial decision-making by 2023. Therefore, many companies are investing in state-of-the-art technological tools to improve analytics.
In the outlook that is looming for this year, it is even more necessary to have this type of resource. And it is that the prospects point out that the world economy will remain with slow growth, with inflation and interest rates remaining at record highs.Thus, financial decisions must be well thought out, backed up and based on solid data, since any wrong move can be expensive if the year is to end with a positive balance.