The quantity of data growing daily is mind-boggling. There are 2.5 quintillion bytes of data produced every day and over 90 per cent of the world’s data has been created in the last two years alone.
Today, data is considered as a reservoir of information that can help businesses skyrocket their profits by identifying customer requirements and ensuring security and compliance. Analytics is important to sort, organise and analyse this data to make businesses stand firmly and compete in today’s modern data-driven world.
What is Data Analytics?
In simple words, it is the process of analysing raw data to figure out meaningful insights which allow organisations to become more innovative, and forward-thinking, and transform their business and culture.
However, it holds a special value when it comes to the finance sector. Being a data-intensive sector, the finance industry benefitted the most from data analytics. Financial firms like banks, trading firms, etc. generate a massive amount of data regularly. To obtain meaningful and useful insights out of this data, it is important to utilise data handling techniques that can control and analyse it effectively. This is when data analytics takes an entry. These financial firms invest a ton of money on analytics to improve business analysis processes.
Also Read: Importance of Financial Analytics
What role does data analytics play in the finance industry?
- Keeping Customers in touch
- Risk Predictions
- Better decision-making
- Personalised customer service
Keeping Customers in Touch
Banks and other financial firms use data analytics to analyse the data of their customers to understand their behaviour. On the basis of that analysis, such firms will decide what can be done further to keep their customers in touch. Let’s take the example of banks. Banks have an enormous amount of customer data such as online transactions, deposits/withdrawals at ATMs, customer profile data collected for KYC, etc. Analysing these data banks can offer better deals to their customers such as low-interest rates if they observe any reduction in the transaction volume.
Risk Prediction
Financial frauds and crimes are increasing every day. With this, financial firms such as banks need to protect their most valuable asset i.e. customer’s trust. Analysis of data helps banks become more aware of fraudulent cases much earlier. With the help of various machine learning and data analytical tools, unusual patterns and activities in trading data can be identified in advance. This is how analysis of data alerts organisations and prevents frauds.
Also Read: Online Data Science Course in India
For a better understanding of how frauds can be detected and prevented using financial analytics, check out XLRI’s financial analytics course online. The course’s extensive curriculum provides a practical understanding of various data analytics tools and techniques that can be implemented in the real finance world.
For Better Decision-Making
Customers expect high-quality and timely services around the clock. In order to deliver such exceptional services, in-depth knowledge about the customer is required. For example, it would have been a really difficult activity for banks to decide where to set up an ATM (the place where there is a huge requirement of it), and which ATM required what amount of cash. But, with the help of data analytical tools, it is possible for banks to make accurate decisions accordingly.
Personalised Customer Service
Let’s take an example of the retail industry that always works towards better customer experience and customer personalization. The retail sector utilises customer data such as purchasing history, geographical data, and search queries to create deals, offers and provide them personalised services. Banks and other financial institutions are also taking notes from the retail industry to provide similar services to their customers. In order to do that, they apply techniques to analyse customer data and generate insights about their interactions.
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Data Analytics has the power to benefit almost every business today. It helps organizations address critical business questions with remarkable ease, speed, and accuracy. It has a forward-looking approach that tells businesses what’s going to be the next.
A Career in Financial Analytics
Finance is a hub of data and acts as a pillar for every business which helps them compete and grow in the market. In today’s highly competitive business environment, organizations need to utilize their financial data to get forward-looking, predictive information that can help make the strategy for tomorrow with more accuracy and improve day-to-day decision-making in real-time. Financial Analytics plays a crucial role in measuring the profitability of the business as well as addressing all business-related challenges. Therefore, organizations need analytically minded people who can gather, crunch, and analyse all sorts of financial data to prepare them in advance for future turbulences.
Also Read: Essential Items for a Financial Analysts
What do Financial Analysts do?
A Financial Analyst is a highly responsible role that includes dealing with crucial financial data, gathering information about the industry, unleashing actual insights about the company’s financial performance and overall outlook, and creating strategies to grow the business. It is the most prestigious career path in the finance industry. He or she explores the financial data and uses financial ratios to generate meaningful reports for the company and the competitors. The role requires professionals with high analytical skills as well as good quantitative acumen.
Financial analytics certifications offered by Talentedge are quite affordable. Furthermore, Talentedge also provides the learners with an option to pay the course fee in the form of monthly instalments to make their way to success extremely convenient.
Top Roles and Responsibilities of Financial Analysts:
Gathering and Organise Data
A financial analyst has a long to-do list, but the main job of a financial analyst is to gather and organise the data in Excel or other types of database to make it meaningful. These data can be in the form of historical financial reports, accounting data from the general ledger, stock price information, statistics and macroeconomic data, industry research, and just about any other type of quantitative data.
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Analyse the data
Once the data is gathered and organised, it’s time for the financial analysts to analyse this data to figure out future trends. This includes looking at ratios and metrics which involve- gross margin, net margin, variable costs, return on equity, debt or equity ratio, and additional measurements.
Make forecasts and projections
As stated above, a financial analyst requires to figure out how a company will perform in the future. XLRI’s financial analytics course syllabus will give you a robust introduction to various prediction techniques such as Time series forecasting to make future predictions by analysing the past data.
Develop Recommendations
A financial analyst is also responsible for making recommendations and generating insights to improve business operations. Such recommendations and insights include ways to cut costs, opportunities to grow revenue, ways to increase market share, operational efficiencies, customer satisfaction, and much more.
Also Read: How to start a career in Financial Analytics?
7 most in-demand skills that are required to succeed in financial analytics career:
Analytical Skills– Every financial analyst must possess analytical skills. These skills help an analyst to collect data and thoroughly analyse it to get meaningful insights.
Decision-making skills- It sounds very easy to gain skills, but it is the toughest skill to master. The decision a financial analyst takes can impact the business in a positive or a negative way. He or she should perform proper research before making any decision and ensure that it will affect the firm or the client in a positive way.
Quantitative skills– Working as a financial analyst requires working with numbers. They should be able to understand statistical methods to check and investigate numerical data for practical insights.
Problem-solving– When talking about problem-solving skills, it means the ability to handle complex and difficult business challenges. Financial analysts encounter complex challenges on a daily basis during their work. Their success at the job depends on how effectively they deal with the problem that affects the business growth.
Accounting skills– If a person possesses accounting skills that means he or she has the capability to manage financial transactions ethically and accurately. They are competent enough in calculating budgets, cost analysis and reduction, managing cash flow and a general ledger, reconciling bank statements.
Critical thinking skills– A financial analyst should be able to think through financial questions before making big decisions in order to ensure success in a job. With the help of critical thinking skills, a financial analyst can analyse and organise the data, identify a problem, and create strategies for the future.
Financial literacy– A person who plans to embark on a career in financial analytics must have knowledge of the current investment market, interest rates among lenders, and other financial current events.
Also Read: How is Big Data Analytics Different from Data Science?
We at Talentedge offer a pathway to those who are looking forward to creating a satisfying career in the field of financial analytics. Talentedge has partnered with top universities such as XLRI which follow modern world pedagogy and provide meaningful insights into finance that help young financiers become industry-ready financial analysts.
Financial Analyst Salaries
With the increase in financial globalisation, the demand for financial analysts has also increased. Every organisation needs a professional who has up-to-date knowledge and relevant expertise.
According to Forbes, financial analyst became the most promising job in the finance sector in 2017. The Bureau of Labour Statistics has projected that the median annual wage of typical financial analysts was $83,660 in May 2020. The agency also stated that the employment of financial analysts is expected to grow 6 percent from 2020 to 2030, about as fast as the average for all occupations.
In India, they are the most top paid finance professionals with an average annual salary of INR 4 lakh per annum according to payscale. The pay in this field ranges from INR 2.19 lakh to INR 9.93 lakh per annum and depends on various factors, including your experience, location, skills, and employer.
Also Read: Kickstart your Career in Analytics with Data Science Program
The Way Forward
Finance has always been about data and it is one of the most critical sectors in the world. Earlier, finance management required a lot of human effort and time, but with the introduction of data analytics, one can quickly analyse financial data and make better decisions. The main aim of data analytics is to help financial institutions understand the massive data in a better way, keep track of financial scams and frauds, and make better predictions for the future market. If you are curious about learning data analytics and its role in finance, check out our financial analytics online courses and upskill yourself for the future.
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