How do you get the right message in front of the right person at the right time? For years it wasn't within the grasp of marketers.
Even with the invention of digital technology, marketers still ran into trouble. They used IP addresses to identify where a person was conducting a search and would attempt to serve up relevant ads for local products and services. Unfortunately, IP addresses were often registered in an area far away from the actual user.
Retailers and restaurants operating on social media networks have depended on customer check-in to drive offers and collect data. They're closer to the customer than they had been in the days of radio and billboards but not as close as they could be with an always-on mobile device.
Geotargeting, based on location data from a person's phone or the nearest mobile signal antenna, opens up new doors of personalization. Now that nearly two out of every three Americans own a smartphone a vast array of industries have the opportunity to capitalize by delivering products and services tailored to customers based on where they are.
However, the financial services industry has failed to seize this opportunity. Gartner analyst Alistair Newton recently noted that "the potential for products and bank services to be tailored to customers based specifically on location is theoretically very powerful, but remains a challenge for many banks." Aside from leveraging geolocation for fraud management — ensuring that you are in the place where a charge is occurring — financial institutions have done little in this arena.
MoneySummit was curious about the future applications around location data and recently sat down with David Kaplan, Managing Editor of GeoMarketing, the media and content arm of Yext.
Here's the text from our interview:
Banks have struggled to take advantage of geolocation. How do they give consumers a compelling reason to let them track their whereabouts?
If you want to be able to track where a person is at a particular time and give them contextual information, it has to be an exchange. For example, if you're a person who's traveling and want to make sure your bank account is safe, you'll be able to say, "I will share my location with my financial institution. In turn, if you see any odd charges then you'll let me know without shutting off my bank account. Give me an alert." Things like that can definitely offer a reason. Another example we've seen is Wells Fargo. Wells Fargo has an interesting partnership with Yelp. Yelp was able to pick out restaurants and bars that are cash only. People don't like those extra charges when they withdraw cash. Yelp shows where a Wells Fargo customer can get some cash without having to pay an extra three dollars to a non-bank ATM. Those kinds of examples are really helpful.
I think that also raises another point about geolocation, the idea that people want both the physical option of having access to their money and the intelligence and simplicity that an app can give them. Being able to combine those offerings, saying here's where you can get your money, what's going on with your account. Matching both of those together is the location proposition that banks can take advantage of.
Do you foresee more credit card operators and banks rolling out location confirmation so that legitimate charges are not denied when consumers are on the road?
Absolutely. The idea that this allows them to ask, "Is this the same Jeff we know from all this time you spent in New York and now you're in Utah? Is that actually you?" You can avoid these embarrassing situations where your card has been denied. Immediately your location can be tracked by your phone and you can even check in with Apple and others, for example, to see what they're doing with mobile pay and using your fingerprint as an identifier. Your phone really is becoming your wallet by location as well. That inextricably links the location of a person with who they are. With risk and fraud detection, location is better than anything.
You mentioned Visa and MasterCard. Credit companies are developing closer relationships with a lot of businesses that maybe resent those processing fees. MasterCard has done a Priceless campaign where they highlight certain resorts or restaurants and that also offers a clear use of geomarketing and location-based targeting. They're not just about payment processing, they're also helping clients discover merchants. PayPal has been a major force in helping point the credit card companies in that direction. People are looking to their phone, asking where should we go … a credit card company or payment processor can offer a connection and serve both interests, both the business that they process payments for and the consumer using that card. Discover has been doing similar things around in-store deals or online deals based on where you are.
In turn, there are the analytics that go along with location, helping them figure out more quickly whether to approve someone for an upgrade of their credit card. There are a lot of extra things that go beyond this, the analytics and data that go along with that targeting.
These are all great applications of geolocation. What's the next frontier?
The big thing right now is predictive analytics in that you can tell a lot about someone by where they go. Over time you see certain patterns and can see those patterns not just at an individual level but in segments of an audience. You can slice things a little more precisely. That insight changes how products and services are marketed.
Small business has largely been an untapped area for marketing services, which were generally associated with larger enterprises. Individual businesses can now have those same tools at their disposal that a large enterprise does. A credit union can have the same services that a Chase can afford. They can say, "You're on vacation. You can write this off or send in receipts more quickly." The idea of knowing where you are, it all comes down to the wider idea of omnichannel. People aren't just in-store shoppers or e-commerce shoppers … you can predict, analyze and offer services at all of those touchpoints. Location is at the center of this omnichannel moment we're always referring to.
Beyond predictive analytics, we're always looking at adoption of mobile wallet. Five or six years ago Google lined up a lot of businesses but it's only in the last year with Apple Pay that it's really starting to take off and have some traction. What are the implications there? Even plastic is becoming something of a burden. People are going into places, checking in and paying with Open Table, apps like Cover that notice you're near a particular restaurant. You can tap a button and you're set to leave your tip … all of these things are accelerating the role of people discovering something and paying for it seamlessly without any friction.
It sounds like a new utopia of convenience but what are the consumer reservations? What's going to keep location-specific offers from further progressing?
Privacy, especially with financial apps. It's always a worry but still when it comes down to it, there's this impulse of convenience. Using location to head off any fraud is a major benefit that financial institutions can offer consumers and set their mind at ease. We know who you are, these are the locations you're at and if we see something unusual in Paris we can immediately see what's going on and alert you. Any kind of exchange like that is ultimately what eases people's minds. The idea that location targeting is creepy? As long as it's not annoying people will accept it.
If it's done in a way that is sellable and clear it becomes okay. Especially with location we have this idea of permission-based marketing and opting in to an app, where a users says, "This is what I'll agree to share and not share with you." Having that clarity, especially after years of congressional and FTC concerns about behavioral targeting, using cookies on PCs ... being able to have that openness helps. The mobile phone is more personal than a PC by virtue of being everywhere with someone. That's forced companies to deal more clearly than they have in the past with that privacy issue.
Geomarketing is one of the many ways that technology is affecting the range of ways financial institutions can increase convenience and improve the financial lives of their account holders. Learn more about how financial institutions can continue to appeal to rapidly changing demographics in our digital banking white paper, which discusses the wants and needs of various groups.