The secret to success with customer data

It shows the nature of money and finance in our lives, in the way that the media reports about it. Quite often you get a scary headline like the big banks are watching you or banks will sell your data and it makes us mad. Replace bank with internet giants, and it’s not so annoying … or is it? Sure, we all got hyped up about Cambridge Analytica and Facebook but, to me, it’s a bit of a storm in a teacup considering Facebook has been doing this from almost day one. This being the abuse of our data.

Coming back to banks though, it is my firm belief that they handle themselves badly in communicating with customers. A great example of this was ING Bank in the Netherlands, who started discussions to sell customer data to provide more personalised offers to customers in the spring of 2014. The media backlash was so great that it meant that, a week later, the Chairman of the bank wrote a letter announcing that they wouldn’t do it:

The use of Big Data provides many opportunities, but also calls for caution. We fully recognise that privacy is a very sensitive issue, and ING’s number one priority is the protection of our customers’ personal information. ING will therefore never give personal information to third parties that is traceable to the individual. Customers can rest assured that ING will only use their personal information if it is permitted to do so. We will always act in accordance with rules and regulations, as well as our own business principles.

And yet, four years later, the bank has been forced to share customer data with third parties if the customer gives permission, thanks to regulations (PSD2).

In fact, I’ve seen many discussions of using customer data for leverage within the banks, particularly since we moved into the age of Big Data, machine learning and artificial intelligence; and yet the media and the customer resists this. For example, a recent YouGov poll found that three-quarters of UK consumers haven’t heard of Open Banking and 77% would be worried about the bank sharing their data with third parties. This is because of the risk, and consumers generally feel it’s risky sharing their data.

Maybe this is why Open Banking is failing or maybe it is because it’s all about money, which is more important data than any other. The most secretive thing for most people is how much they earn. Go on a date and ask your prospective mate how much they earn, and you’ll probably get stony silence. Ask a colleague what their earning, and they’ll most likely ignore the question. It’s taboo. You just don’t go there.

This is why psychologically we want our data about our money locked in a vault. We don’t want it shared, tracked, leveraged or sold.

This creates a dilemma for banks, as they know that there’s gold in that data … but how to mine it? This is where better communication skills are needed. If I knew that the bank would share my data, but it would be safe and secure and result in getting great deals and offers … well, maybe I’d consider it. So, I was amused by two headlines in the past week:

Caring or creepy? UK banks turn to alerts to keep customers loyal from Reuters; and

Banks and Retailers Are Tracking How You Type, Swipe and Tap from The New York Times

The immediate reaction to both headlines is negative. Don’t track and trace me. Don’t dig into my financial life. Leave me alone and just keep my data safe. Then you read the article, and it makes sense.

In the case of customer alerts:

The digital banks also plan to increasingly use customer data to recommend a variety of products, from insurance to energy. HSBC expects its alerts will become increasingly tailored around customers’ spending habits in future. Some could take a more informal, friendly tone, said Josh Bottomley, HSBC’s global head of digital, data and development. “It will start to feel like your personal trainer in the gym,” he told Reuters in an interview.

Although the article then goes on to make it clear that banks aren’t doing this as some form of altruistic exercise, but to make more money out of customers. Maybe so, but mining customer data is the future competitive battleground so, if they don’t do it, they won’t survive.

In the case of tracking our digital habits:

The way you press, scroll and type on a phone screen or keyboard can be as unique as your fingerprints or facial features. To fight fraud, a growing number of banks and merchants are tracking visitors’ physical movements as they use websites and apps.

In other words, it’s to secure our access to our financial data and avoid fraudsters and hackers getting in. That’s a good thing too, isn’t it? Except the article makes clear that banks are tracking our identities using biometric analytics of how we type, swipe and tap without our knowledge or permission.

Now this gets to the heart of the matter. If banks, or any other organisation, taps into our data without permission, then I think that’s where the house of banks cards collapse. It’s all about communication. Communicating to the customer why you’re doing this is key:

We are analysing your data to make you more secure

We are leveraging your data to help you save money

We are sharing your data to get you a better deal

It only needs some decent customer focused communication to win the digital data analytics war. Unfortunately, banks just aren’t very good at doing this.