Bancography | Branch Planning, Marketing Research, Brand Strategy, Products & Profitabilty

Banks’ Power to Mine Data Frightens, Intrigues Consumers

Consumers fear financial marketers’ enthusiasm for data mining in the digital age crosses the line. Invasion of privacy? Or a harmless way to harness the vast sea of intel available today?

Consumers worldwide say they are willing to share personal information with banks, but they expect the service they get in return to be measurably better. Even with conditions and caveats, they hold deep reservations about where, how — and what — they share with financial institutions.

Today’s digital consumers are indeed a complicated bunch, and often skeptical about how financial institutions use their data. A study from Infosys shows consumers may understand the benefits of sharing their info, but remain very apprehensive about what kind of revelations financial marketers can extract through data mining. 45% of U.S. consumers feel that data mining can be “helpful,” yet at the same time 30% decry it as “invasive.”

For the global research project, Infosys surveyed 5,000 digitally savvy consumers in five countries, including the United States, UK, Australia, France and Germany. Their report examines how consumers trade private data in the banking, retail and healthcare sectors. For comparison, U.S. consumers feel most comfortable sharing data with doctors (95%), banks (89%) and retailers (82%).

( Read More: Is Banking Really Ready For Big Data? )

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What Data Consumers Want Banks to Have… And When

74% of consumers want banks to communicate with them about their account or transaction information via alerts to mobiles or smart phones; however only 39% frequently share information on these devices. 85% say they share at least some personal information when banking online, but only seven out of ten (71%) are comfortable with doing so. Nearly nine out of every ten consumers say they are more comfortable sharing personal details with a bank in person vs. online.

Almost half of bank customers (49%) do not want their purchase history and transaction data used to offer new services.

That doesn’t mean consumers aren’t interested in personalized offers. Nine out of ten (91%) would be willing to share at least one piece of information if it meant they received more customizable deals and/or user experiences, with email address (73%), ZIP code (60%) and postal address (49%) being the most likely bits of info they would share.

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“Research shows that people will certainly share though they’re very savvy about how they give up their personal information,” notes Stephen Pratt, Managing Partner at Infosys. “Companies need to crack the code in mining data effectively to gain consumer trust and clearly articulate the benefit to their customers.”

( Read More: Big Data: Big Opportunity In Banking… Or Big B.S.? )

Kiosk & Display | Digital Merchandising for Financial Institutions

Security = Loyalty

87% of respondents expect their bank to mine personal data to protect against fraud. But are banks reassuring customers enough? More than a third (35%) feel that their current bank or financial institution does not have a clear process for addressing fraudulent issues. A whopping 83% said they would even consider changing banks if a competitor offered assurances that their data and money would be safer.

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Download the Complete Report

You can read the entire 11-page study, “Engaging With Digital Consumers: They’re Ready, Are You?” after completing a standard registration from on the Infosys website.

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Comments

  1. It is amazing that 73% consumers are willing to share email addresses (much more than phone numbers, postal addresses or even birth dates), yet banks continue to be challenged in collecting this important insight that can save hundreds of thousands of dollars in marketing costs annually. Email also is one of the channels most preferred by banking customers for communication with their bank. Stop the excuses branch bankers and gather insights that will improve results and decrease costs.

  2. There are plenty of financial institutions collecting email addresses who just don’t use them. I’ve run across many who have email addresses for at least 50% of their customer base, but refuse to use it as a marketing channel because of “phishing reasons” (e.g., they protect their customers from phishing by not sending out ANY emails).

  3. Good points Jim and Jeffry about the emails. In my recent webinars, Credit Unions in a Digital World Part I and Part II (links below), I shared insight on how credit unions and banks can use a simple email to engage members on a 1:1 basis.

    Once again, we find details in the data including emails and birthdays. An example I continue to share, knowing that credit unions and banks have birth dates of customers and members, is to present them with a birthday offer twice during their birthday month.

    Let’s assume that today, 7/1, an email is sent to members and customers whose birthdays fall in the month of July. Some kind of birthday offer is included with the birthday wishes. Celebrate your birthday with us and save .25% of an auto loan as our gift to you. This is something that can be easily tracked and measured.

    Like Jeffry, I have heard the same arguments about not using email as a marketing channel due to concerns of “phishing”. That’s absolute bull shit and the same reasoning of I will not fly because the airplane “might” crash. Or I will not drive because I “might” get in an accident. If we operate in a state of fear, we are letting a select few with mal intent control the way we engage with our members and customers.

    At the end of the day however, and when talking about data, I go back to the fact that the majority of credit unions we have surveyed do not have a CRM or do not use it to its full potential.

    Related Resources

    Webinar: Credit Unions in a Digital World – I (http://blog.ptpnewmedia.com/2013/06/webinar-recording-credit-unions-in-a-digital-world.html)

    Webinar: Credit Unions in a Digital World – II (http://blog.ptpnewmedia.com/2013/06/webinar-recording-credit-unions-in-a-digital-world-part-2.html)

    Article: Digital Lead Generation For Your Business Development Initiatives (http://www.ptpnewmedia.com/resources-articles-path-to-digital.php)

  4. Beating a dead horse here, but consumers are willing to provide their email and prefer email more than any other channel for communication (http://bit.ly/17VxYeS), yet banks are worried about phishing their customers. This concern only should arise if the subject line is weak, the offer is non-existent or the targeting is poor (all can be avoided).

    With budgets strained and organic growth considered to be one of a bank’s or credit union’s primary objectives, this is the type of ‘small data’ strategy that can yield immediate results.

    Again, avoid boiling an ocean, but do the basics exceedingly well. If the corner dry cleaner or local retailer can do it, a small bank and credit union can do it.

  5. Don’t be so quick to hate on email Ben. The problem for many banks or credit unions is the fact they send generic, non-personalized offers as noted from Jim. I discuss this exact issue in this webinar.

    Maybe this is why a recent Gallup poll found 66% of ‘fully engaged’ customers felt the offers they receive from their bank are ‘general’ in nature, 41% found the offer annoying, and stunningly, 53% of customers already had the product being promoted.

    Furthermore, email continues to be the go to communication source for even social channels. For example, when you get a direct message on Twitter, you get an email. Or when someone tags you on FB, you get an email. This of course depends on ones social settings.

    You are correct, and I agree, that when you are ready to buy a car, an email may not trigger it at that exact moment. This is why a credit union can analyze your digital behavior and when you are ready, based upon your digital buying signals, offer you a car loan.

    As I said in this webinar, people wake up and say I need a car, not I need a car loan. When done properly, email can be a great way to establish a 1:1 relationship.

  6. Eric Lindeen says:

    What surprises me is the reluctance to share information with banks, yet many consumers are comfortable sharing almost anything via social media channels. There exists a gap in understanding between what consumers don’t want their bank to know and what they have unknowingly shared with the rest of the online community. Thanks to things like online purchases, file sharing, and Facebook statuses, consumer data is much more available than one might think. It’s scary that the person standing behind you in line could know more about you than your bank does.

  7. Ben Rush says:

    Email!? Come on, that seems so dated. Consumers put email as their preferred method of contact because they don’t want you to call. Email or text alert notifications for statements are a good feature and tells me something I want to know once each month. Having my FI send me “sales” stuff is no different than stuffing my statement with stuff I likely won’t read. Email is not something to establish ANY type of relationship on. If I want to buy a car, an email won’t trigger it. I will have made the decision after researching car models, etc. and seeing what car loan rates are out there. But, if I have a solid relationship with my credit union, I will look there first via website or branch office.

  8. In my view the article is interesting point showing the type of mining the customer perceive as relevant and important for them. It is not a simple question about sharing data but creating value for the customer. Campaign management process needs to be adjusted to real time predictive analytic or recommendation value for example. So my question is about, are we in the right move to consider what is expected in people’s mind? Thanks

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