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Banks, big data and doing the right thing

July 21, 2013 Leave a comment

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 MovenScott 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.

Flabby finances and fit bodies

April 15, 2013 3 comments

You would think personal finance management – the art of managing your money and achieving goals – would be the easiest thing to provide an online solution for.

That was certainly the thinking three or four years ago when every bank worth its salt started developing online tools that allowed customers to get a rich and useful picture of their overall finances – Kiwibank’s Heaps is an example.

heaps logo

Heaps! personal finance management

I mean it makes perfect logical sense – every bank has a wealth of transactional information that, when packaged right, can provide a huge amount of insight into where a customer’s money is going and also through automation take out all the hard work of having to manually pull together a budget.

This was the topic of a great cubicle conversation with one of my colleagues this week. D and I have been working together for the past five years on a number of major online projects – including online personal finance management.

Now D is probably one of the fittest and strongest men I know as he puts his body through a regular gym/cross fitness regime every week – and has done so as long as I’ve been working with him. His physical and mental discipline have given him a toned and hard-muscled body that would put most of us to shame. That’s his thing and even through major life interventions such as children, injury, work pressure he has kept at the training and never stopped.

My thing is Aikido. I’ve been training three times a week for as long as D and I have been working together – so it’s a good common bond that can set off some good conversations about the physical and mental sacrifices and rewards you get from long-term, dedication to doing something positive with your body.

And that’s how we got to talking about the similarities between personal finance management and physical body management – whether that be the cross-training gym, the dojo or even an organisation like Weightwatchers or Jenny Craig.

“Never be too rich…”

I don’t think there’s one person I know who wouldn’t have just a little sympathy for Wallace Simpson’s notorious quote that: “One can’t be too rich or too thin”.  By that I mean probably 95% of us would love to be a few kilograms lighter and a few thousand dollars richer. Not obsessively thinner or richer – just in control of both.

The trouble is 95 per cent of people who attempt to lose weight fail. This year it’s estimated in the US  100 million people are dieting trying to achieve the latter part of Mrs Simpson’s edict. It’s a billion dollar industry but for most it is a cyclical pattern of joining a gym or weight-loss program in January and abandonment sometime after.

With trying to get your finances into shape it’s a similar pattern – even with tools that take out all the hard work. Some people do stick at it religiously – but they are the people who were running a budget on a spreadsheet before they got these great online tools.

Finance writer Amanda Morrall says the trick is not to treat personal finances as something separate from the rest of your life. In her latest book Money Matters: Get Your Life and $$$ Sorted, Morrall looks at how average people, with ordinary  jobs, have achieved financial management, and indeed wealth, through actually connecting with their true selves. It’s a powerful insight and a great book that combines solutions with motivating tips to get people living the life they should be living.

A quote in the book has been resounding in my head since reading it. Morrall quotes the Dalai Lama responding to a question about what surprised him most about humanity:

“Man. Because he sacrifices his health in order to make money. Then he sacrifices his money to recuperate his health. And then he is so anxious about the future that he does not enjoy the present; the result being that he does not live in the present or the future; he lives as if he is never going to die; and then dies having never really lived.”

I think that describes too many of us.

Common link

But back to my cubicle conversation with D. After a bit we found a common link between building physical strength and muscle; mastering a martial art; losing weight and keeping it off or spending less than you earn and building wealth. What’s the secret?

I think it’s a mixture of truly understanding what your life’s purpose is and, as Morrall writes, building your life around that. Otherwise you end up risking falling “into the trap of consumption where financial vampires are only too willing to take advantage of your vulnerability and exploit your financial weaknesses”.

Joining a gym or a dojo or a weightloss programme are pretty much in the same vein as opening up a tool like Heaps, Xero or Sorted. They are all capable of enabling a life-changing action – but only if they can be coupled with some internal motivation to make a life-changing action.

True it may only take one small step to begin the journey – and online can be a powerful source of sparks of inspiration – but the first step must be followed by many others heading in the same direction to get somewhere meaningful.