Big banks are 'just cracking the surface' of an exponentially powerful industry

The numbers game is on. Picture: Warner Bros

Capital One is looking for a data scientist — the kind of person who might get excited by reading this in a job ad: NOAA Weather Data + Credit Card Transactions = Fascinating!”

The lender isn’t alone, and recruitment efforts by companies from American Express to Geico highlight the way big financial services companies are making use of their troves of user data to re-engineer their business.

Big data is an industry that’s barely in its infancy, but growing thanks to the pickup in the speed at which data can be processed, and the realisation that companies can use information to predict consumer behaviour (like how weather affects spending patterns.)

“We’re evaluating how we can improve each and every process in the company,” says Manish Gupta, executive vice president of Global Information Management and Data at American Express. “We are just cracking the surface.”

The job ads say a lot about how it will work. Capital One’s posting, for example, is looking for someone to apply technology to “billions and billions of customer transactions to unlock the big opportunities that help everyday people save money, time and agony in their financial lives.”

Goldman Sachs, on the other hand, is looking inwards. It’s a surveillance team that watches for bad behaviour like market manipulation and insider trading is looking for a data scientist to “identify potential risk behaviours that may not be accounted for within our current surveillance framework.”

While the use of data in this way is legal, as long as consumers don’t opt out and banks have outlined what’s being gathered, Wall Street’s growing ambition in the big data space may spur new restrictive regulations on how consumer data is used, said Cynthia Larose, a privacy expert at law firm Mintz Levin.

Ultimately, it could mean banks and other companies that track consumers could see calls from more lobbying groups to enhance data protection policies and procedures.

That could push banks to change the way they extract information from their clients. A bank that is already crunching big data to tailor rewards for consumers could also throw someone a bone in the form of a gift card or other enticements for participating in their great big data experiment. Older customers may also need to be better educated about their data collection processes.

“With Gen-Xers, and with Baby Boomers, we might have to put incentives into the mix,” said Wells Fargo chief data officer A. Charles Thomas. “The question is: is the organisation ready for a fundamental change for how it talks to its customers?”

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