Historian Arthur Schlesinger once said, “Science and technology revolutionize our lives, but memory, tradition and myth frame our response.”
While science and tech have certainly revolutionized our life and times, I’d venture that big data (in addition to memory, tradition and myth) is close to being able both to frame and predict our responses.
It sounds scary, but big data is helping businesses and consumers alike. Its benefits for businesses — including financial institutions — include greater insight into consumer behaviors, fraud detection and prevention, and enhanced operations. It also helps consumers keep informed of the things they want and need to be informed about (e.g., their health via wearable tech like Nike+ and FitBit).
But achieving these benefits is difficult because of five big challenges. Known as the five “V’s” of big data, these challenges are, ironically, the very things that make it so valuable on the one hand and so difficult to harness and use on the other: volume, variety, velocity, veracity and value.
During the next few weeks, I’ll be covering each of these challenges in a new blog post. First, let’s discuss the challenges associated with the first of the five V’s: volume, or the sheer size of big data.
How big is your data?
Having large samplings of data is a good thing. After all, the more you have to work with, the more you can do with it. More data leads to more sound analysis and better decisions. This is especially true when you’re predicting future outcomes. Marketers, for example, have increased clarity into the future to gauge the likely effectiveness of a particular strategy or campaign — versus relying entirely on past performance. (A good analogy is deciding whether to cross the street at a busy intersection. Do you make the decision based on what happened yesterday, or even five minutes ago? Or do you make the decision based on what’s happening right now?)
Having a wealth of data is important. It’s just difficult to corral.
We’ve seen the mind-numbing statistics around big data, especially social media:
• Facebook has an average of 8 billion daily video views, totaling 100 million hours per day of video watch time
• Facebook accounts for 1 in every 6 minutes spent online (1 in every 5 minutes spent on mobile)
• 6,000 Tweets are sent every second
• Instagram users share more than 80 million photos per day
• Instagram users like 3.5 billion photos per day
• 1 in every 3 professionals in the world is on LinkedIn
• LinkedIn users conduct 1 billion searches per day
• YouTube has 4 billion views each day
• The average YouTube viewing session via mobile is 40 minutes
Combined with GPS tracking, Bluetooth and Near Field Communications, data is also available through our mobile devices and everyday objects such as our refrigerators, television sets and automobiles.
It’s literally everywhere. And it’s growing. Each day, more than 25 billion gigabytes are added to the big data ecosystem. And by 2020, it’s predicted that 40 zettabytes (43 trillion gigabytes) of data will have been created. In fact, if we took all the data generated in the world between the beginning of time and 2008, the same amount of data will soon be generated every minute.
Volume is a particular challenge for financial institutions because not only do banks and credit unions need a way to store the data, but they also need qualified personnel to mine it for appropriate conclusions and (most importantly) a way to secure it for compliance, regulatory and customer peace-of-mind reasons. Existing legacy platforms can’t keep up with the volume of data coming in, so most financial institutions must seek new solutions that can reach into their legacy data stores to complete the picture for regulatory compliance.
These challenges are not insurmountable. But the complexities of addressing them — primarily by creating processes for data acquisition and management — prevent many financial institutions from getting started at all. Keeping an eye on the prize helps to overcome the initial hurdles. Remember: by leveraging big data, financial institutions are reaping unlimited insight into their customer’s way of thinking and priorities.
To learn more about big data and its challenges and benefits for financial institutions, visit the Analytics section of our website.