Banks and credit unions are starting to use the data they have on their customers’ spending to send them offers and coupons on their mobile phones, Bloomberg Technology reports.
Banks have a big advantage in this era of hyper-personalized marketing: They know every spending habit of every customer. For example, a fast-food chain can send a coupon to someone who actually bought a fast-food meal using his debit card in the past month, rather than one who dines once a week at an upscale restaurant.
Some banks and credit unions see this as a way to increase adoption of their mobile wallets. They are drawing lessons from companies like Starbucks, that have had great success in getting customers to adopt closed-loop mobile wallets. Some even see it as a revenue opportunity, which may make up for lost interchange revenue and lost revenue from fees.
Of course, financial institutions face risks pursuing this strategy. First of all, customers may feel like the bank is spying on them if their mobile apps are suddenly filled with offers every time they check their balance. Second, customers may worry that the app is less secured if third parties seem to be watching them. Finally, customers may end up feeling so overwhelmed by all the offers that they just start tuning them out, leaving the offers to be just so much more clutter on the app. Personalization is not just matching offers to history, but making sure that the matching is done with the right timing and frequency.
Overview by Ben Jackson, Director, Prepaid Advisory Service at Mercator Advisory Group
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