It’s relatively apparent these days how the sheer amount of information has changed the way both big and small companies do business and make their money. Indeed, big data has so altered the modern business model that new regulations in the U.S. (various legislation at the federal and state levels) and abroad (GDPR), are increasingly being introduced to effectuate tighter and better control of the massive amount of personal data now available via the Internet, the World Wide Web and beyond. What might not be so apparent, however, is how big data has also changed the way we, as individuals, manage our private lives, especially our private finances. Like big business decisions, our personal ones are being impacted by the massive loads of data we can now all access. Take a look at just a few of the ways big data is influencing our personal finances:
Whether we enlist the help of a professional or attempt to make our own trades, big data often influences our options, as well as our ultimate choices. Algorithmic trading is an automated process whereby a computer program applies a mathematical algorithm to big data in order to generate the best price and time for a trade. It removes human influences from the trading process (and the unintentional biases that come with them) in the hopes that the resulting trades will be the most profitable for the people investing in them. Indeed, the large variety and amount of real-time information that is used in algorithmic trading makes it possible for traders of all kinds to forgo the constant manual monitoring of daily stock fluctuations. The result: near instantaneous retrieval and application of information that can produce monetary benefit for individual investors.
Big data also informs our own research findings. Exposure to more information means we can conceive better solutions. Whereas we might once have been stymied by too little data or data that was too vague, we now have easy access to massive quantities of facts and figures on which we can base our decisions. No longer do we have to go to a library and scroll through rolls of microfiche or wait for books to be delivered and studied. We have all kinds of personal and consumer insights at our fingertips. We can seek advice on how to reduce our debt or manage our portfolios by researching how others like us do it. We can also use our own data to facilitate better decision-making, as most banks now provide personalized banking metrics that enable us to see how we send our money each month. Automatically tracking how and when and where we spend our money can help us pinpoint and address any alarming trends.
Our Own Financial Marketability
We know big data directly affects business decisions, but many business decisions also indirectly affect us. With access to more information, financial institutions have more opportunity to deny us a product or service. We need to remain vigilant as we share personal details, recognizing that every data point we release into the world could be used in many different, and not always advantageous, ways, affecting our credit and our access to financial services.