Applications of big data in identifying market trends, managing risks, and detecting financial fraud

Big Data is emerging as a transformational tool in finance. Throughout the world, the financial sector has turned to Big Data as a source of new revenue generation, operational cost saving, and risk management for existing products. In this chapter, we present advances in the use of Big Data across different subsectors in finance, namely, asset management, banking, and insurance. Big Data is typically defined by the so-called three Vs – vast amount of data, ranging from terabytes to zettabytes; diverse data sources, including structured transactional data and unstructured data generated from sensors and web activities; and velocity of data flow, which makes real-time processing of the data more desirable yet extremely challenging. Coupled with cheap data storage and processing tools enabled by cloud computing, organizations are increasingly leveraging Big Data to gain valuable business insights and further their objectives. Examples include online e-commerce companies recommending products based on users’ activities; hospitals improving healthcare quality by analyzing drug prescription data; and manufacturers forecasting product demand, based on supply chain and sales data.