Fintech means using technology to provide financial services. There are a lot of Fintech companies we take any finance service from daily. Some worldwide known examples of Fintech companies are Mastercard, Visa, Stripe, and Paypal. Data is considered the ABCD of the Fintech companies. So, if you want to know how Fintech companies use data science, this article is for you. In this article, I will take you through the use cases of Data Science in the Fintech industry.
Use Cases of Data Science in Fintech
Below are some of the best use cases of Data Science in the fintech industry.
Fraud Detection
Data Science helps in the prevention of fraudulent transactions. It is done by monitoring the historical transaction of the customer and identifying unusual transactions. These companies train machine learning models using the data about the previous transactions of their customers.
Their systems predict fraud transactions if the transactions are unusual according to the past transaction behaviour of the customers.
Credit Allocation
Whenever you apply for a loan, you only get a loan if your credit history is good. Banks study your credit history to calculate your credit score. If your credit score is good enough according to the market, you will get a loan from the bank.
To process the task of credit allocation instantly, banks classify all the customers based on their credit history. It enables banks to predict whether the customer is a good candidate for a loan or not and also helps in the fast approval of loans.
Predicting Transaction Volume
A client’s transaction volume is the total number of transactions processed in a time period. Fintech companies keep a record of all the transactions to predict the volume of transactions on their payment platforms.
It helps in recommending services according to the historical transactions of the customers and notifying them about their recurring bills and payments.
Summary
So these were some of the use cases of Data Science in financial technology. There are many more active use cases of data science in the fintech industry. If you want to know more, I suggest you look at how a specific fintech company uses data science. I hope you liked this article on the use cases of Data Science in the fintech industry. Feel free to ask valuable questions in the comments section below.
Well said. Thanks fo sharing. At Paylend, we have applied most of the things that you have mentioned.
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