“Digital Transformation” and “Big Data” are parroted so often that, when heard, many file them away in the ignorable corner of their minds reserved for buzzwords. But when it comes to the accounting and finance sectors, serious risk comes with dismissing the latest developments and applications in these areas. Big Data is evolving rapidly, and so are its implications.
Simply put, industry professionals must keep up with cutting-edge technologies to stay ahead of their competitors in the financial sector.
This blog will cover the basic tenets of Big Data and explore how they’re being leveraged across the accounting and finance industries.
Big Data refers to large data sets that need to be analyzed and processed for the actionable use of organizations.
Complexity and speed are key characteristics of Big Data and the “Four V’s” are a helpful shortcut to understand the basics:
- Variety – the different types and different sources of data.
- Velocity – the speed at which data is created.
- Volume – the data generated daily.
- Veracity – the trustworthiness of the generated data.
There’s a reason “big” is the operative word: data today is high volume, high variety, high velocity, and high variety. Fortunately, tools have caught up to the sheer amount of data available, allowing access to broader and more useful data sets. We’ll explore some of those uses below.
Effect of Big Data on Accounting
Accounting firms used to rely on analysis based on their expertise instead of user experience. With the evolution of big data, now these firms use statistical expertise to make more informed and accurate decisions. If you have real-time access to accounting data, it will keep you in sync with business calendars, make informed reports, and enhance efficiency.
- Data Analytics: Applying data analytics to big data helps gain significant insights, make future predictions possible and accurate, and automate non-routine financial tasks.
- Risk Identification: Big data allows accountants to identify risks in real-time and enables them to ground their decision-making on evidence and facts rather than guesswork and assumptions.
- Audit Analytics: Audit analytics are applied to larger data sets to visualize the financial and non-financial data sets in a broader range and improve forecasting accuracy.
- Data Visualization: Data visualization software grants the ability to see large volumes of data to help identify patterns and irregularities with greater clarity.
The Impact of Big Data on Finance
Even in a data-heavy world, the finance sector is considered to be one of the most data-intensive. In banking and finance, there is an incredible amount of data at the disposal of each organization. Competitive organizations are now using a more data-centric approach to manage their businesses and realize advantages.
Big Data in finance refers to leveraging data that anticipates the behavior of customers and helps to make more informed strategies, and improves decision-making. Based on analyzing diverse data sets, financial companies improve customer satisfaction by providing better services, preventing fraud, targeting appropriate customers, and assessing risk exposure.
- Real-Time Insights: Big data can take the latest trends into account with unprecedented precision. It helps to monitor trends in real-time and enables analysts to make smarter decisions.
- Detects and Prevents Fraud: Fraud detection and prevention are among the biggest beneficiaries of the data movement in finance. For example, the security risk once posed by credit card theft has been drastically reduced through data analytics that interprets buying patterns.
- Precise Risk Analysis: Contrary to before, investments and loans now rely on unbiased machine learning applications fueled by Big Data. Predictive analytics can now be leveraged to identify potential risks like bad investments or payers with an accuracy that simply wasn’t possible before.
As more and more data becomes available and the tools that make it actionable multiply, it’s imperative that companies ensure they are properly implemented and used. The sooner and more aggressively that firms embrace the latest shifts and applications in Big Data, the better situated they will be to compete in an increasingly data-centric landscape.
Sanford Rose Associates – JFS Partners
At Sanford Rose Associates – JFSPartners, we’ve specialized in helping great organizations find the exceptional data-driven accounting and finance candidates they need to thrive. Contact us today to learn how we can do it for you.