by Kevin Coupe
The Financial Times has a story about how some banks are using Netflix-style algorithms and artificial intelligence "to target individuals with products and third-party rewards based on their specific needs and tastes, as part of a broader effort to strengthen customer relationships by homing in on the 'segment of one'."
As the story notes, "Analysing customer data to set basic loan sizes and terms has become standard practice at most retail banks: they can dissect a user’s profile and recurring transactions to predict when they might want to take out an overdraft or insurance policy, for example. But some banks are starting to analyse customers’ ad hoc spending to offer discounts with retailers, restaurants and other partners that are tailored specifically to them."
It is yet another example of how important data is to businesses when trying to evolve more nuanced consumer relationships. Sure, banks want to be in the financial services business … but at a time when there is plenty of competition in the space, it simply makes sense to analyze transactional information that allows for behavioral interpretation, and then the extension of promotions that cater to what people want and/or need.
That's how enduring relationships are created.
Now, it isn't always easy, and such strategies can create the opportunity for abuse. FT notes that especially in the US these days, there are privacy concerns that are important for banks to take into consideration.
But, what the banks are doing, modeled on what Netflix and other companies have done, also makes a lot of sense - especially if it creates real value for their customers.
It can be, for both sides, an Eye-Opener.
The Financial Times has a story about how some banks are using Netflix-style algorithms and artificial intelligence "to target individuals with products and third-party rewards based on their specific needs and tastes, as part of a broader effort to strengthen customer relationships by homing in on the 'segment of one'."
As the story notes, "Analysing customer data to set basic loan sizes and terms has become standard practice at most retail banks: they can dissect a user’s profile and recurring transactions to predict when they might want to take out an overdraft or insurance policy, for example. But some banks are starting to analyse customers’ ad hoc spending to offer discounts with retailers, restaurants and other partners that are tailored specifically to them."
It is yet another example of how important data is to businesses when trying to evolve more nuanced consumer relationships. Sure, banks want to be in the financial services business … but at a time when there is plenty of competition in the space, it simply makes sense to analyze transactional information that allows for behavioral interpretation, and then the extension of promotions that cater to what people want and/or need.
That's how enduring relationships are created.
Now, it isn't always easy, and such strategies can create the opportunity for abuse. FT notes that especially in the US these days, there are privacy concerns that are important for banks to take into consideration.
But, what the banks are doing, modeled on what Netflix and other companies have done, also makes a lot of sense - especially if it creates real value for their customers.
It can be, for both sides, an Eye-Opener.
- KC's View:
