Banking

Banks Are Increasingly Trying To Monetize Data Troves

Banks Are Increasingly Trying To Monetize Data Troves

Banks are increasingly looking for ways to monetize the large troves of data they hold on customers, be it with credit card sales or offering discounts on a customers’ special interest, like food or fashion, Reuters reported.

To help their bottom lines, banks like JPMorgan, Barclays and HSBC are taking a page out of the Google, Facebook or Twitter playbook with advanced data analysis. Banks are using the data to help with stock predictions, marketing campaigns and to fuel artificial intelligence (AI) tools for credit decisions.

The new revenue, while it may be small, is helping banks during a time when regulation is high and interest rates are low.

“We are now seeing some amazing uses of data in banking, and the reason is pretty simple: they know their clients better than anyone, they have a name and address, information about what you’re buying and once you have those you can do so much,” said Craig Macdonald, head of data monetization at Accenture.

New rules introduced in the European Union last year allowing tech companies access to bank data with customer permission, as well as new privacy laws, have not hindered the movement. A poll done of 27,000 EU citizens showed that less than a third know their data rights, and that only about 13 percent read privacy agreements.

Banks also don’t disclose how much money they’re making from data mining.

“If there was a gold mine people would probably have found it by now,” said Benjamin Ensor, an analyst. “But if you can generate some marginal incremental revenue at relatively little cost why wouldn’t you do that?”

One of the main ways to monetize data is to team up with retail firms to offer customers special deals or services that align with their interests. Some banks, like Lloyds and Santander, have partnered with a data advertising firm called Cardlytics.

The banks offer a loyalty program that offers discounts at shops that a customer frequents, as well as deals involving favorite foods. The banks then get a percentage of the fee that Cardlytics charges to run the campaign.

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