With the recent spate of data-related stories in the news, consumers are growing increasingly concerned about what companies are actually doing with their personal information. From backlash regarding Facebook Messenger's terms to Verizon's recent consumer privacy investigation, it seems like consumers have reason to be apprehensive about how their personal information is being used.

And in today's big-data-driven world, banks and financial institutions have access to some of their customers' most sensitive personal information, including their credit card data, real-time transactions, location, account information, and personal information. Armed with customer information, financial institutions are becoming data-driven companies that have the capability to capture, crunch and analyze billions of customer data points. But how are banks actually using all of this data? Banks are making use of their customer data in 5 major ways:

1. Personalized Offers and Targeted Marketing

Smart banks are using customer data to act differently, creating a 360-degree view of each customer based on how each and every individual uses mobile or online banking, ATMs, or branch banking. Big data helps banks zero in on trends in consumer behavior, then use this demographic information to design more targeted sales efforts and boost success rates.

2. Fraud Detection, Investigation, and Prevention

Smartphone users spent a combined total of over $20 billion dollars through mobile browsers and apps. Customer data helps spot the small number of fraudulent transactions in a sea of legitimate payments, despite the massive shift towards electronic and mobile payments. Analyzing this data radically improves banks' abilities to detect fraud while also decreasing false positives--an infuriating event for any customer who has ever had their account frozen.

3. Improving Banking Efficiency

Banks analyze customer data to discover the reasons behind customer attrition, so managers can focus improvements on where it will have the biggest impact on customers. For example, in 2010, Bank of America used big data analysis to understand why many of its commercial customers were defecting to smaller banks, and released a more flexible mobile banking tool that met their customer's needs better. For other banks, data analysis could mean compiling and analyzing information on account activity, transactions and portfolios over a period of time to look for patterns or trends that can improve product development, communications, and even risk management.

4. Becoming Customer-Centric with Automated Data Analysis

Banks have unique insight into how, where, and when customers are spending money--and by analyzing this data, banks can build better insight into account and relationship management. For example, banks can analyze how credit lines are being used against their limits; or identify interesting payment patterns. In addition, banks can test new products, manage business relationships and build customer loyalty in new and more powerful ways.

5. Risk Management Based on Unique Risk Profiles

Customer data helps banks reinforce risk management through better monitoring and more effective early warning systems. For example, banks can build better credit risk models, do more predictive modeling, and have the ability to make customer and event predictions at the individual level, which helps them make responsible lending decisions.

Thanks to cutting-edge data analytics, banks are using customers' personal information to modernize and enhance their services, making their services faster, easier-to-use, more reliable, and more secure. Although consumer privacy is a legitimate concern for consumers, for banks, customer information enables greater insight into their business, better understanding of their customers, and the ability to establish a more personal connection with them. Analyzing customer data allows banks to provide better services to customers and merchants- all while building a more effective business.