Banks, big data and doing the right thing

How comfortable are we about our banks mining personal data?

Banks around the world are wrestling with the complexity and the opportunity around big data as a way to deepen their relationship with customers online.

According to a study earlier this month by Infosys nine out of 10 people would be happy sharing some data with their bank if they received more customisable offers or experiences.

The study compared consumers attitudes to sharing data with retailers, banks and doctors and, probably predictably, banks came out as slightly behind the other two sectors when it came to data trades.

However, despite the finding above the study clearly shows consumers are in some conflict over the benefits and drawbacks of banks using big data.

Almost half  (49%) also say they do not want their purchase and transaction data used to offer new services based on their habits but, almost in the same breath, 48% of bank customers would be happy for the bank to use email or social media to provide them with updates or insights.

The study also finds consumers are more concerned with their account security. Around four fifths (82%) want their banks and financial providers to mine their data to detect anomalies from identity thieves, with the same amount (82%) expecting their banks to already be doing this.”

It is such an important issue that just over three quarters (76%) agree that they would consider changing banks if one offered assurances that their data and money would be safer in their systems.

Financial services futurist – and co-founder of Moven – Scott Bales has an interesting theory that following Edward Snowden’s revelations the strength of feeling around how our data is used could create a new social and political movement around transparency.

Digital natives will come to demand complete transparency on how their data is being used not just by governments, but by corporates as well.

He says: “The reality of the modern world is that if your doing something wrong behind closed doors. The Facebook Generation will find out,  they will share what your doing, and you will be held accountable.”

The Infosys study shows consumers expect better deals from retailers in return for sharing personal information and better attention from their doctor’s office for a similar trade. But banks don’t have a great track record in utilising what they know about the customer: e.g. “Would you like insurance with that?”

Post-GFC, trust in banks generally is going to take some time to recover – particularly in Europe and the US where bank failures have destroyed consumer confidence. One UK survey predicts it will take a generation before banks are trusted again.

How banks use big data to interact with their customers online (and by online I really mean mobile) in the next few years is going to be critical to the relevance of banking and the securing of trust in the minds of a new generation of customers.

There is an amazing opportunity for banks to use the data opportunity to transform their customers online experiences for the better. Instead of going down the retail route of using the data just to flog more products what if banks decided their focus would be purely on using insight to create ways to make customers richer; safer and happier?

But above all there is an incredible opportunity for banking to use big data in a way that embraces openness. That combination of deep insight and transparency could be the difference between banks continuing to be relevant to a new generation of consumers. Or not.