Pedestrians walk past the People's Bank of China headquarters in Beijing, China, on January 7. Photo: VCG

Large-scale application of big data and advanced analytics can improve bank business performance, reduce operating costs, and optimize risk control and decision-making, said a report released by consulting firm McKinsey & Company on Wednesday.

Application of big data and advanced analytics in China's banking sector has entered a golden era, due to the inherent demand based on the sector's high-quality development, government support and optimized technologies in China, read the report.

John Qu, senior partner at McKinsey & Company, said in the report that over 90 percent of the top 50 banks in the world are actively promoting the application of advanced analytics technologies, with about 17 percent of their personnel working in this sector. China's banking sector, by contrast, has less than 5 percent of staff in related positions.

Financial institutions that can transform into "tech banks" or "data banks," will lead the industry in the next decade, Qu said.

Although there is already a consensus that big data and advanced analytics can bring new profit growth momentum, the final implementation of related tech is facing a challenge, which is also the critical part for large-scale application.

A lot of banks have realized small-scale or individual success in the application of big data and advanced analytics, but many senior executives at these banks have noted that an underwhelming amount of value is being created despite huge investments in these areas, the report said.

The underlying reason is that the application is not extensive, so it cannot boost other areas of banks' business, even though these cases can generate small amounts of benefit themselves, according to the report.

The application of big data in the banking sector should start from "small data" and internal data to realize small wins, Qu said, adding that talent cultivation will also be vital.

Advanced analytics has a value creation momentum of $9.5 trillion to $15.4 trillion in various industries globally, and it could boost profits by 10 to 15 percent in the banking sector, according to data from McKinsey & Company Global Institute.