What is Financial Analytics and Why is it Important?

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The topic of fintech analytics is hyping on the 2023 agenda. If you’ve got puzzled and think, "What could this be?" - don't worry! Let’s make it simple!

Fintech's ultimate wonder goes beyond its sophisticated technology and better transactions.

It deals with complex information every second. On a fintech platform, each transaction, click, and swipe weaves a new thread in the tapestry of data.

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What is Financial Analytics?

Fundamentally, financial analytics is the use of computational analysis to analyze a variety of data or stats in a methodological manner. The question may arise: "Why would we engage in that?" The answer is to stay updated on financial trends and try to forecast their future course.

That's not all, though! Analyzing market data also requires the use of financial analytics.

Market helps us gain a better knowledge of the market's functioning and potential. It's kind of like having a business crystal ball, albeit a mathematical one.

Also, assessing a company's performance is a vital function of financial analytics. Think of it as a corporate scorecard, revealing the current status of a company and highlighting potential improvement areas.

One of the best features? It supports decision-making based on data. That entails substituting precise numbers for intuition. It's the capacity to make data-driven decisions that reduce risk and might even improve performance.

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What Happens Behind The Scenes?

Let's now explore fintech data analytics. It is a specialist area of financial analytics that concentrates on data analysis relevant to fintech products and services. You have contributed to this data if you have ever used a fintech app.

The regular operations of fintech platforms produce enormous volumes of data, including user transactions, interactions, demographic information, and behavioral trends. What happens to all of this info then?

Fintech data analytics enters the scene at this point, evaluating and drawing conclusions from the vast sea of data. For fintech businesses, the information gathered can be important in helping them better understand their clients and make tactical choices. It is comparable to diving deeply and analytically into the digital ocean and emerging with a treasure trove of information.

How can a fintech company use the gathered data?

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Segmentation. To provide more personalized services, businesses can use the gathered data to sort the customers according to demographics (age, gender, location, education, preferences, employment), family status(married, with children, home-owners etc), financial (income, assets, net worth);
Understanding customer needs. This is crucial when it comes to personalisation and customer care. Learn more about why you need to get to know your customers in our recent article.
Preventing Fraud. By analyzing the financial habits of the costumers, data such as location and purchases can help prevent or deal with fraudulent activities.
Automation. By gathering big data and identifying the recurring trends, fintech companies can introduce automation to improve operation, i.e. by introducing chat-bots.

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Enhancing Analytics Usage: Paving the Path for the Future of FinTech

The sophisticated use of analytics in fintech is vital to the industry's future. Analytics allow businesses to decode the massive amount of market data at their disposal, turning it into a powerful asset.

The use of fintech Google Analytics is among fascinating breakthroughs. Google Analytics is now utilized in the fintech industry to:

track and analyze consumer behavior
evaluate the success of marketing campaigns
analyze mobile app performance.

It has historically been used for website traffic tracking. Businesses can better serve their consumers and run more effectively thanks to the wider adoption of Google Analytics in fintech.

Discover how Google Analytics 4 outperforms its predecessor in business analytics with our in-depth overview.

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Why Analytics is the Future of Fintech

The interplay between fintech and data analytics will shape the industry's horizon. Analytics can:

offer insightful information about customer behavior
assist in spotting fraud
support regulatory compliance
forecast future trends.

Therefore, data analytics in fintech becomes an integral part of every business blueprint. In addition, the combination of financial technology and data analytics is creating a financial system that is both effective and inclusive.

For instance, predictive analytics in fintech is changing the game. Businesses may assess credit risk, forecast client behavior, and predict market trends using machine learning algorithms. This talent can offer a sizable competitive edge in a field that is developing quickly.

We asked our analytics expert, Pavel Fortelniy about the specifics of web and mobile analytics for fintech enterprises.

Fintech analytics focuses on product analytics, while marketing efforts are often directed towards landing pages. This means that the analysis revolves around understanding the performance and user behavior within the fintech product, while marketing activities are concentrated on driving traffic and conversions through the landing page.
Fintech analytics differs from other types of analytics by tracking both landing page and mobile app traffic. It also involves configuring app and web analytics to address potential data overlap and ensure accurate attribution of traffic sources. Without proper setup, the traffic may be misattributed or direct, leading to incomplete insights.
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‍Pavel Fortelnyi
Team Lead Web Analytics at Promodo

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Choosing the Ideal Analytical Tools for Fintech Companies

The techniques employed are crucial given how much the sector relies on data analytics for fintech. A corporation has access to a vast array of financial analytics tools.

Each tool possesses a certain power, such as the ability to simplify complex calculations or to provide visually engaging data interpretations. The choice ultimately comes down to the unique requirements of an organization.

Think about the businesses that specialize in finance analytics. Tools like Oracle Financials Analytics or SAS for Financial Services will come in handy. These are specialized means that offer financial solutions answers. The scope of these tools includes risk management, customer intelligence, and regulatory compliance.

These are but a few illustrations. Similar to a Swiss Army knife, each feature of these gadgets serves a certain purpose.

Tools for risk management help to identify potential risks and reduce financial concerns.
Customer intelligence technologies help businesses better understand their customers, which improves customer happiness and loyalty.
Tools designed for regulatory compliance ease the path for firms to stay compliant while traversing the complex landscape of financial regulations and laws.

The final tool selection should be driven by the company's requirements, the nature of tasks, and the volume of data. All that will play well depending on your budget! There is no one-size-fits-all tool.

According to Pavel Fortelnyi, here are the main tools Promodo analysts use in their work to achieve the best results: powerful web and mobile analytics tools (GA4/Matomo, Firebase/AppsFlyer/Adjust, SimilarWeb) combined with custom-built dashboards using data insights (PBI, Tableau, Looker Studio).

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The Benefits of Financial Analytics

The advantages of financial analytics are numerous, as is the list. Businesses can:

improve their operations
make better strategic decisions
cut expenses
boost revenue by using analytics for finance.

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More precisely, analytics for financial services can offer in-depth perceptions into consumer behavior, assisting businesses in better meeting client wants and enhancing client satisfaction. Additionally, it can help businesses detect and reduce possible hazards before they become an issue.

Improved decision-making: Data-driven insights help make judgments that are more accurate and well-informed, which improves business performance.
Better customer experience: Analyzing client behavior enables to personalize services and improve the user experience.
Risk Management: Analytics aid in risk assessment and management are the two key components of any financial business.
Innovation: Analytics insights frequently pave the way for cutting-edge financial services and products.
Competitive edge: Businesses that efficiently employ analytics are frequently one step ahead of their rivals.

Businesses may now get an even more complete picture of their business operations owing to the development of finance business analytics, which enables them to increase efficiency and streamline procedures. The application of data analytics in finance spans a broad spectrum and will soon redefine the fintech industry.

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Surfing the Data Wave

In 2023, fintech analytics will be exciting. 90% of the world's data was generated in the last two years alone. The fintech industry is using advanced analytics technologies and making use of the insights they offer to harness the power of data like never before. Consequently, those who fail to maximize analytics will fall behind in this increasingly competitive industry.

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