Aspects of Big-data in finance: Transformations, digital solutions and new risks in the financial system

Abstract

The digitalization of the financial sector allows big data technologies such as advanced analytics, machine learning, artificial intelligence, and the cloud to penetrate and revolutionize the competitive landscape for financial market players. Major companies are adopting these new technologies to successfully carry out their digital transformation, meet customer demands, and enhance their profitability. As the financial sector increasingly evolves and reorganizes around a data-driven approach, organizations must respond to these changes proactively and comprehensively. With effective technological solutions capable of meeting the advanced analytical demands of digital transformation, financial organizations can fully leverage vast amounts of unstructured data, uncover new competitive advantages, and seize market opportunities. However, since financial institutions were not originally established in a digital environment, they must undergo a lengthy conversion process that necessitates both behavioral and technological changes. This adaptation is crucial to adjust their conventional approaches and toolkits to these transformations and to avoid potential risks arising from this revolution. The present research is based on an exploratory methodology, primarily involving theoretical and technical investigation. It aims to identify the aspects of big data in the finance sector and the new risks associated with a digital financial system, while highlighting the digital solutions implemented in this context. The theoretical analysis suggests, on one hand, that the financial world is undergoing continuous evolution characterized by a data explosion, the rise of AI and financial technology tools. On the other hand, new challenges are being added to the traditional risk portfolio, increasingly jeopardizing the financial system.

Keywords: Big Data; financial system; digital transformation; AI; financial risk; digital solution.

Classification JEL: G17

Paper type: Theoretical Research