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Finformation warfare

Just had a great discussion about segmentation today, building on yesterday’s blog entry.

The old homogenisation of customers into apples and pears, oranges and lemons, goes back to a simplistic time of the 1980s, where the analytics tools could not mine customer data to a segment of one.

Today, these tools can do this and far more, but banks are loathe to deploy such tools or are handcuffed from doing so due to their legacy systems.

That is changing, as banks rethink processes for mobile channels and personal financial management, but the challenge is how to mine that data and deliver actionable insights on such data.

One really interesting idea is to offer actionable data based upon coupons and offers from retail partners.   

This is something I’ve seen a few times before, particularly from solutions providers who make clear they can mine customer data and make proactive offers based upon transaction habits at point of sale.

In the UK, this is where banks have been worried that Tesco has their major opportunity

The idea that Tesco could not only make proactive offers – “buy this beer at Tesco next time and it’s 10% cheaper” – but also mine the data for financial cross-sell – “as you don’t drink beer, we give you 15% reduction on your car insurance” – has been a concern for a long time.

That Tesco concept is already here, so the banks now need to get with the segment-of-one or potentially get rail-roaded by those who do.

But, more interesting, is an idea bounced off met today that I really like.

Not only could a bank start to intelligently cross-sell and co-promote offers proactively based upon segment-of-one analysis, but they could also turn this around and offer the bank data analysis to corporates as a service.

Therefore, the bank could offer Tesco’s competitors analysis of their transaction volumes compared with Tesco, and look for co-promotional offers for the competing retail partners to compete more effectively.

In this context, you could be shopping at Tesco and the bank sends you a text that says “buy that beer at Sainsbury next time and save 10%”.

Hmmm … banks becoming instrumental in information warfare between retailers … this could get really interesting.

In fact, as information about money is more important than money itself, finformation warfare could be the real battleground of the future.

Does this mean that a bank be a disruptor in the Amazon, Apple, Google game?


Are banks ready for this?

Absolutely not.



About Chris M Skinner

Chris M Skinner

Chris Skinner is best known as an independent commentator on the financial markets through his blog, the Finanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here…

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  • Ron

    If my bank started selling my transaction history, I’d see that as an immediate breech of trust and find a bank that promised not to.
    That said, in today’s world I’m protected by the fact that the banks actually only capture and process limited data – so they’ve got almost no information to sell, i.e. they may know I bought something from Tesco for £162.50 but they don’t know what.
    If we finally get to a position where the banks capture the data from the POS terminal to ‘give us’ the full details of what, where and when we’ve bought stuff or spent our money on then perhaps that’s the time to worry. i.e. as soon as we get meaningful information on our statements, we’ll need to start worrying that the bank will be selling it!

  • Isn’t this what Cardlytics and other U.S. merchant funded rewards programs are doing? Instead of selling the data, however, banks are keeping their data and applying the merchant offers on their online statements based on transactional behavior.

  • Lee

    If this were to ever happen, and I don’t think it ever would, my guesstimation is that the data and/or information probably wouldn’t move the needle in the retailer warefare. Similar concept applies now within the retailers, e.g. Kroger. I buy Purina dog food and the checkout counter prints out an Alpo coupon. Brand managers will tell you that the coupon redemption stinks and has little to no impact. However, what BM’s do like is the information for this scenario “consumers who bought Diet Coke also buy Lean Cuisine”; therefore a future cross promotional partnership is in play. To Jim’s point the bank’s are doing this but as a cross promotion between bank and retailer, giving rewards back to their existing customers. That’s the battle ground Tesco has won on, and that’s where banks/retailers need to focus on first.