Geospatial Data to Revolutionize Banking

The use of geospatial data and geographic information systems (GIS) is facilitating financial decision-making and opening new business horizons for financial institutions, according to a recent report from fintech publisher Financial IT.

Geospatial data – which means any information indicating geographical positioning via satellite-driven technologies – provides a lot of useful information about specific areas via visualized maps. GIS software provides users with additional demographic insights on population density in specific areas, peoples’ income, or the financial services they use.

Geospatial data derived from GIS software could help banking institutions analyze current patterns and understand how trends change over time. Specifically, the use of GIS has provided banks with better information to help them study market demand, track competitors, and manage agricultural credit risks.

For example, banks have utilized satellite-based crop monitoring analytics and custom solutions to help mitigate risks associated with agribusiness, the report says. Yield forecasting with satellite technologies allows for analyzing credit default probability so banks can understand if farmers are likely to repay loans by predicting their future profits.

Prior to the use of GIS, banks would have to conduct physical field inspections and dig through piles of paper documents. Banks faced numerous challenges in determining financial decisions in agriculture – such as a lack of required data, credit default risks and payout failures, and time management issues during physical inspections.

In addition, banks had to struggle with possible misinformation regarding a farm’s productivity, which complicates data processing and increases the credit default risks.

Crop yield prediction helps lenders understand if prospective borrowers can meet the credit requirements and return the loan, but the traditional methods for risk assessment were often slower and less effective than modern ones.

With new satellite-driven technologies, crop yield estimations can be done using remote sensing capabilities, the report says.

Therefore, with the use of geospatial data and by leveraging satellite-based farming software, banking and financial institutions will be able to improve their workflow; including shortening the application processing time, accessing reliable data for yield prediction, reducing repay failure risks, and saving costs for field scouting.