In the second part of our series about data-driven customer insights, we’ll show you how these tools can be put to work in the various life situations of your digital banking clients. Find out why insights are just what you need to send the right message or offer to customers who have changed their spending habits or are travelling abroad.
Imagine that a retail banking customer, Mary, and her two kids are travelling to visit Aunt June in Berlin. They are queuing to check in their luggage at Heathrow when Mary’s bank detects her location and sends a message advising her to set credit card limits and take out full-coverage travel insurance before the trip. It comes in handy as the kids’ game consoles are not covered and she can quickly buy insurance on her mobile with just a few clicks while waiting.
Sounds smart, right? But how did the bank do it? It uses a data-driven customer insight developed to target customers travelling abroad, it’s as simple as that.
We’ve already discussed how customer insights can be used to personalise marketing and sales in digital banking, and showed you some examples. Now let’s see some more, with related use cases.
Target customers when they travel
In Mary’s case, location and transaction data was combined to track travels abroad. The same can be done for any customer going on a trip. The complex customer insight used here is actually multiple insights wrapped in one, which are built around the four different stages of travelling: planning the trip, spending time at the airport, arriving at the destination and returning home.
Banks can either monitor debit transactions or use location data from mobile devices. Marrying these two types of data can radically boost effectiveness. Financial institutions can also build an overall travel profile of the customer, which includes frequency of travels, most visited destinations, amounts and categories of purchases abroad, or if the customer actually lives abroad.
Use cases for this package of insights can include bank offers for a whole array of products, ranging from credit cards through foreign currency accounts to travel insurance. Financial institutions may also use them to give advice on credit card settings, or integrate third-party offers on car rental or booking accommodation.
But let’s see the next example. John works for a multinational accounting firm in Paris and has recently been seconded to the company’s branch office in Prague for a project so he travels between the two cities quite often. When his bank notices that he has used his credit card to book flight tickets to Prague three times over the past two months, it sends him a message to offer a foreign currency account, making it possible for him to receive future payments from the branch office in Czech korunas.
Recommend budgets, monitor spending
Data solutions, including artificial intelligence tools such as algorithms and advanced analytics, have revolutionised marketing, allowing banks to create insight-driven campaigns. They can work wonders in several areas, depending on your bank’s strategy and most importantly, your customers’ needs.
Some clients can benefit from budgeting advice from their banks, while others might want more information about their spending habits, and would like to receive messages and offers based on their spending history. Customer insights are there to help in both cases, here’s how.
With the budget limits insight, banks can automatically calculate recommended monthly budgets for customers based on past purchases and keep an eye on current spending against this budget. Separate smaller budgets may be pre-defined for different transaction categories and customers can also set up budgets themselves.
Transactions are compared with the variables of the customer’s overall spending profile and the real-time insight is triggered if spending reaches a pre-set percentage of the set budget. Any transaction can trigger the insight, but they must be categorised. The budget limits insight has several potential use cases, let’s explore one of these.
Nicholas and Eve love all things Japanese, especially sushi. But their favourite maki restaurant is quite pricey. Based on her past purchases, Eve’s bank knows when she’s likely to eat out and can send alerts if she’s about to reach her monthly budget for restaurants. Or it sends her a message to recommend spending cuts in her shopping budget, a separate transaction category pre-set for retail purchases, to have more funds available in the category of meals. Nicholas can also receive similar alerts for grocery spending.
Detect changes in spending patterns
The spending trends insight also offers the most diverse benefits for banks. They can continuously follow the current spending habits of individual customers by collecting data on what clients typically spend on, where and how much they usually spend, which brands they prefer or what their typical spending is on their regular shopping days.
This insight helps banks spot significant changes in customers’ spending patterns and then take the right marketing action. It also allows them to put together spending reports or summaries on top spending categories or locations in the past month.
And how does it work in practice? Let’s take Juliet’s example. She’s a 34-year-old single personal assistant living in the suburbs of Seattle, who receives peer comparison reports from her bank, comparing her spending habits at specific retailers, as well as to a group of other customers with similar characteristics, in general. This can be a powerful money management tool for Juliet because it helps her make smarter decisions about her regular spending and see if she needs to start saving up or cutting back on certain types of expenditure.
Download our latest white paper Segments of one: customer insights in digital banking for more use cases and info on how financial institutions can benefit from data-driven customer insights.