Why Your Bank Needs to Think About Data Alliances
Hyper-personalization is changing the face of digital marketing. By unifying proprietary data with third-party and contextual data sources, customer-centric leaders in financial services can create experiences that meet customers’ needs in real time. Banks can push this evolution forward even further by creating alliances with other non-competitive brands and playing the role of “concierge” to tailor meaningful experiences down to the individual consumer.
When banks partner like this with other companies, they’re able to develop insights about their shared customers that can be used to create highly targeted outreach. This increases consumer engagement and conversion rates, while also boosting customer loyalty with the bank and associated brands.
For example, if a rewards card customer who enjoys fine dining experiences is traveling to London, her bank could send her a “Welcome to London” message upon arrival, recommending a top partner restaurant that serves her favorite cuisine. She could also be offered a discounted spa package at her hotel, given her status in the hotel’s loyalty program. These contextually relevant and valuable moments create an enormous opportunity for banks and partners to deepen their relationships with their customers and increase those customers’ lifetime value.
However, security and privacy concerns often stand in the way of this vision. Hyper-personalized outreach requires sharing extremely sensitive, proprietary information that most companies zealously protect. With no control over a partner’s data governance policies or security measures, sharing any data of value can be an enormous risk. This is especially true for banks, whose handling of sensitive financial data is highly regulated by the government.
Fortunately, new edge-of-the-cloud technology is making it easier for banks to safely create shared insights from data, without having to actually share the data itself. Its potential goes beyond simple one-to-one partnerships. This ability will catalyze the formation of data alliances in which large trust networks of associated companies work together to cross-promote products and build a valuable ecosystem around customers. And banks are uniquely positioned to be at the center of it.
The Rise of Banks as Data Vaults
Banks that want to leverage a partner’s capabilities to gain insights from sensitive data no longer have to co-locate that data on the partner’s servers. Instead, through data tokenization, they can share anonymized representations of the data, which can then be used for various forms of analysis. That analysis can take place at the edge of the cloud, in the no-man’s-land between the organizations’ respective firewalls, yielding useful insights without sacrificing privacy or security.
Especially when combined with decentralized technologies like blockchain, tokenization also opens the doors to creating new data marketplaces where customers gain greater access and control of their personal data. Customers are used to trusting banks with sensitive information, and often turn to banks for guidance on major life decisions like buying a home or taking out loans. As such, banks are ideally suited to become data vaults that store not only financial assets, but also customer data from any sources a customer opts in to share, like web browser histories, college transcripts, health records, and social media profiles.
Banks could then leverage their existing trust networks to create data alliances with other companies. Customers could select which of their banks’ data alliance partners they want to share data with in exchange for personalized experiences, offers, and content. Then based on those instructions, banks could share anonymized, tokenized data with partners without putting customers’ privacy at risk. At the same time, partners would be able to leverage a key digital communications channel — the bank’s mobile app — to send timely, hyper-personalized messages to customers.
How Would a Data Alliance Work?
Cross-promotion within data alliances would look very different from old-school referral programs and simple reciprocal discounts. Banks could use the data in their vaults and tokenized data from their partners to hyper-personalize digital and in-person experiences in creative ways.
For example, a bank could partner with a telecom firm. Thanks to tokenized data, the bank knows which of its customers are also customers of the telecom and which of those customers regularly pay their bills late. It could offer to send habitual late-payers a nudge via their mobile banking apps when their bills are close to due. The bank could also invite those customers to set up autopay so their bills would be paid on time automatically each month.
Data alliances could also draw in airline partners that want access to high-net-worth customers of a bank’s wealth management division. Imagine that a customer has recently booked a flight to Japan. Their wealth manager can be prompted to reach out and offer them an invitation to an exclusive shopping experience in Japan, courtesy of the bank and the airline.
A More Customer-Centric Future
The rise of decentralized data marketplaces will open up a new world of possibilities for banks. By forming alliances mediated by technologies like blockchain and data tokenization, financial services providers can share insights with partners and deliver hyper-personalized experiences to customers without compromising on security or privacy.
Banks and their partners will soon see the fruits of closer cooperation, including deeper relationships with customers. All it takes is the right infrastructure — and a customer-centric focus on offering more meaningful and valuable experiences.
