LONDON (Reuters) – the sending of special offers from restaurants, from burger-loving the current account of the holder from the sale of the anonymous credit-card records, the banks are in a race to earn money, and with the vast troves of data they hold.
FILE PHOTO: A computer keyboard that is lit up by a cyber-code that can be seen in this illustration photo taken on March 1, 2017. REUTERS/Kacper Pempel/Image/File Photo
Wall Street, the trails, the Silicon Valley, with the help of the information from the customer in order to increase revenues, but, with tech giants such as Amazon and Google do on their land, with side trips to the granting of credit and payment services, retail banks, including jp morgan, HSBC, and Barclays move to close the gap.
Mining mountains of market data to predict stock moves along with retailers on sales and marketing campaigns, and the use of artificial intelligence (AI) tools to try and speed up the credit decisions are just some of the areas banks will have to focus on it.
In the digital age, we know how much people earn and where they spend it, and what they will buy in, some of it would not pass them on to their closest confidants – are a valuable resource, particularly for the banks with the proceeds from borrowings, and trade-are under threat due to the continued low interest rate environment and stringent regulatory requirements.
“We are now seeing some fantastic use of the information in the banking sector, and the reason is quite simple: they know their customers better than anyone else, and they have a name and address, and information about what you are buying and once you have that, you can do so much,” said Craig Macdonald, chief of the information utilization in the Company.
With the surge in data mining is done against a changing regulatory landscape in the background. The new European Union (“EU”) regulations, which was introduced last year, the technology companies to gain access to banks ‘ information provided by the customer, if they have the customers permission.
The EU will also toughen the privacy laws. The companies will now have to ask for permission before they are able to collect and use the personal information of the people in the room.
However, even with the added protection of the sensitive data is still at risk of being exploited, because a lot of people are not aware of how they will be able to shield by yourself.
The banks do not disclose how much they earn and analyse the marketing information from the customer, or any other way to make money using the information that they have. However, in comparison to the billions that are earned from loans and borrowings, and trade and the amounts generated are likely to be small.
“If there’s a gold mine of people who would most likely have found to be true,” said Benjamin Ensor, an analyst at Forrester. “But if you’re in the generation of a number of marginal or incremental revenue at relatively low cost, why would you do that?”
The CUSTOMER is 12345
Tie-ups with companies in the retail industry, it is a way for banks to capitalize on their data.
The uk’s Lloyd’s and spain’s Santander, are able to take advantage of special offers from a variety of retailers after of the banks is connected to a digital customer loyalty program carried out by US on the basis of the information from the advertising firm Cardlytics.
The scheme makes use of the expenditure data of the customer to give a discount at stores they already frequent, whether that is in their area. So, burger-lovers will get the offers on the local burger restaurants and fashion fans to provide advertisements about discounts at the clothing stores.
The banks get a percentage of every purchase to the results, and Cardlytics will gain an insight into the behaviour of the consumer, the retailers and on the size and the financing of the offers and the discounts.
Cardlytics, Lloyds and Santander declined to comment on what is cut, and the banks of purchases made by the clients.
“We have to make use of the transaction data each time the card is tapped, each time a collection is made by a client in an anonymous fashion,” said Campbell, Shaw, London-based head of bank partnerships at Cardlytics.
“We just need to know that the customer is 12345, and we don’t need to know the name of the customer, for any reason whatsoever.”
Bank customers will have to sign up for the rewards program.
A spokesman for Santander, said: the customer will pay data may not be shared with Cardlytics if your customers have a choice in the retail offer. The bank said that the information would be shared on an anonymous basis, meaning that the name of the customer is replaced by a unique number.
Even with the stringent regulations surrounding ‘big data’, privacy experts warn that there is still room for abuse if, for example, there is a lot of very grateful people unsuitable for the high rates of interest on loans or credit cards.
“If you are able to make use of the information to get a customer to buy something they otherwise wouldn’t, it’s good for the bank, but not necessarily for the customer, and the potential for abuse is significant,” said Paul Bernal, an expert on the subject of data privacy at the University of East Anglia.
Ashok Vaswani, global head of consumer payments at Barclays, told those present at the AI conference in CogX in London this month that the bank would have to crunch the data in an ethical manner.
“We’re going to have to do it in a transparent and honest fashion,” he said. “If I can’t explain it [to the customer] that I’m not going to give him to you.”
Like many banks, Barclays capital markets, non-personally identifiable visitor spending information to a wide range of companies, including shopping mall operators, who are able to see the information that the retail chains to draw in the most customers and are therefore worth targeting as tenants.
With the help of data, risk analysis, faster credit decisions and to anticipate and meet the needs of the customer, and is particularly attractive to banks looking to cut costs.
HSBC plans to use the AI tools to achieve over 10 petabytes of data – roughly equivalent to the storage capacity of 2 million Dvd’s of investment banking services to customers in 66 countries.
Europe’s biggest bank has struck a deal with one Element of AI, and a Canadian company, to help touch on a this is called a ‘data lake’.
JPMorgan chase, meanwhile, has been the development of a raft of AI-based applications in order to more accurately inventory moves in, and in my 3-billion transactions are processed each year.
The bank has hired Manuela Veloso, the head of the machine learning department at Carnegie Mellon University, the head of the AI research of the last years.
In comparison to the newer, tech-oriented firms, banks are often at a disadvantage when they are looking to extract value from their data, the lack of in-house experts and their firms are often separated by outdated IT systems.
To speed things up, lenders have set up to spend $26 billion on big data and business analytics this year, according to analysis by the International Data Corporation, an increase of over $23 billion last year to $19.7 billion in 2017.
Candidates for the senior leaders in the digital experience with financial companies have doubled year-on-year over the past five years, according to the London-based head-hunters Heidrick & struggles.
“These skills are now a necessity, and within senior leadership teams,” said Mark De Luca, the u.k.’s financial services practice leader at the consultant.
“We are often asked if there is anyone that works for Amazon, Google, Netflix, or Facebook, which you might be tempted to do so.”
Editing by Carmel Crimmins