What is the role of a data scientist in finance? The finance industry is positioned well to collect, interpret and make use of what’s known as “big data.” Big data is a term resulting from the dramatic increase in availability and quality of data that organizations are able to create and collect, according to the Bureau of Labor Statistics. In the finance industry, financial institutions are generating a wide variety of data relating to every facet of their business operations including mortgages, loans, securities, credit card debt and derivatives. Talented data scientists can use this data to predict and solve looming problems on behalf of their hiring organizations. Let’s take a look at some of the problems that data scientists are working to solve in the finance industry.
What Data Scientists Do
Analysts at the US Department of Labor track information about every major industry and job description in the USA. According to the Bureau of Labor Statistics, the job title of “data scientist” is a recently trendy designation, and they are not yet tracking this role separately. As of the year 2013, staff at the BLS were classifying many data scientists as statisticians, computer programmers, software developers, managers or postsecondary teachers. They were able to determine how a broad variety of industries were using data scientists, and their findings regarding data scientists in finance are as follows:
Fraud Prevention and Detection
Data scientists have the ability to greatly enhance financial institutions’ abilities to prevent and detect fraud. A skilled data scientist can analyze patterns in account-related datasets to determine patterns indicative of normal transactional activity. When deviations from the norm occur, the financial institution is able to recognize them, take action and investigate, thanks to the work performed by data scientists. In many cases, data scientists have helped financial institutions to automate their processes for fraud detection and prevention.
Cybersecurity and Prevention of Security Breaches
According to the FBI, cybercrime is a growing threat to banks and other organizations. FBI experts expect opportunities for cyber crime to increase as financial institutions in America adopt Internet-based technologies and commerce systems. Some of the problems include:
- Fraudulent wire transfers
- Account takeovers, which can exploit credit and debit card payments, Automated Clearing House (ACH) systems and market trades
- Card counterfeiting
- Security breaches in the computer systems of third-party payment processors
- Exploitation of securities trading via schemes for market manipulation
- ATM skimming schemes in which criminals steal debit card numbers to use for making fraudulent purchases
Data scientists can play a role in helping to prevent and detect all of these types of cybercrimes on behalf of financial institutions.
Related Resource: What is a Business Analytics Analyst?
These are some of the most prominent problems that data scientists are able to work at solving for financial institutions and other types of organizations in the finance industry. These are not the only important issues that data scientists tackle. They can also solve a variety of problems for financial institutions’ marketing, customer service and other departments. As you can see, data scientists in finance play an increasingly important role in contemporary society; if the idea of working to solve finance industry problems appeals to you, this is an excellent career to consider pursuing.
