Location intelligence puts the customer at the heart of financial services
To many of the most successful banks, Location intelligence (LI) is hardly a new concept. Frequently, financial institutions have expertly utilised LI to identify and exploit markets with the greatest potential. Many market leaders have also employed LI to determine which services to offer and ultimately, which markets to divest. Institutions large and small are using LI, demographics and historic customer insights to more effectively market their products and services to their clients in proximity to their locations.
A few decades ago the reigning community bank could set up shop in a town square and expect the surrounding community to depend upon the institution’s services. Today, given globalisation and how hyper-connected we are as individuals, the whole concept of a “town square” has shifted. Banks and other financial institutions have had to adjust in order to survive and thrive.
These changes to the financial services sector and how to adapt with the times were just a few of the topics covered at this year’s 2016 Cornerstone Credit Union League Annual Meeting & Expo. During the meeting, which took place between April 5-7 in Oklahoma City, attendees explored how optimizing a wealth of currently underutilised location intelligence can help institutions meet challenges and grow revenues.
LI puts the customer first
In broad strokes, when banks make business decisions based around LI, they are growing and strengthening their relationships with customers. The adoption of smartphones, mobile banking and offering relevant services that reflect the makeup of your community enables banks to stay relevant with their clients and ultimately have a real-time impact on every client’s experience.
On the most basic level, LI can be the driving force behind important decisions such as where to locate ATMs and branch offices. Location-based analytics can help determine whether existing bank sites are achieving their full potential, and how to change course if necessary.
For instance, a regional bank manager could look at the performance of a specific branch office by evaluating its trade area and its market potential based on demographics and transaction data. If, for instance, this branch isn’t achieving its projected business potential that the analysis indicates is available, a good course of action would be to reevaluate the products and services offered at that branch, its quarterly performance targets and even the leadership at that office.
With LI-enriched customer profiles, banks add value to customer relationships
LI can also help banks uncover fraud and potentially illicit behavior. Banks can develop profiles for each customer that identifies, geographically, where their purchases typically occur. As a result, the bank can better determine whether certain purchases are outside of the norm for a specific customer and flag irregularities as potentially fraudulent activity when appropriate.
A similar approach, when done responsibly and with respect to preferences and privacy, can enable financial institutions to build stronger partner networks of retailers by harnessing and anonymising their client’s LI data to electronically promote partner stores when clients are nearby. Banks can electronically send their cardholders relevant offers when they are in or near one of their partner establishments, and highlight products that the bank knows their customer frequently purchases with their debit or credit card. If done well, it provides value for the banks clients, its partner network and ultimately the financial institution.
Ethically and responsibly utilising location information enables banks to move from a faceless entity that stores customer money to a much more relevant position in the daily lives of its clients. Greater relevancy creates barriers to entry against third-party providers who can offer supplemental financial services.
While a recent Pitney Bowes white paper shows that currently only a small cache of organizations (roughly 12 percent) are effectively capturing and analysing location data, harnessing LI is the top technological focus of almost 40 percent of businesses polled. For banks, harnessing LI to stay relevant and profitable is especially prescient given how fast the financial services landscape is changing.