Mining the data goldmine within your institution

Illustration by: Sensibill

Think about data as a goldmine: this ‘gold’ can be used to understand your customers on a deeper, more personal level, enabling more relevant cross-sell opportunities that generate revenue and build loyalty for your institution. However, too often, financial institutions are just sitting on this data, struggling to find meaningful ways to use it. Meanwhile, companies outside of the financial services industry like Shopify and Wave are slowly chipping away at these goldmines, using their (typically less rich) customer data to offer new products and services that directly compete with banks and credit unions. 

Now, consider how much ‘gold’ can be found within a single receipt – date and location of the purchase, what was bought, merchant, form of payment. This SKU-level data can reveal major life stage events, psychographics such as values and lifestyles, payment preferences like patterns in off-card purchases, etc. Such information can indicate if that customer has an emerging business and needs a business account, if they’re headed off to university and need a student loan, or if they’re starting a family and need a 529 account. Financial institutions can leverage this data to proactively reach out to and engage a customer with targeted messaging and relevant product offerings, ultimately helping them make more informed purchases and healthier financial decisions. 

While banks and credit unions don’t need to rely on every single customer to upload receipts to receive meaningful insights, they can leverage existing data to make educated predictions. With enough receipt data, financial institutions can apply these trends and findings to customers who haven’t uploaded receipts, modeling to the rest of their customer base. This information can help identify different customer segments within your institution like gig workers hiding in consumer accounts or high-net worth individuals, who are often more profitable. For example, an institution may find that a customer is spending an average of $300 on sneakers, which indicates that the customer may benefit from being directed to specific footwear deals via the institution’s website or mobile app.  

Harnessing this data also typically leads to better partnerships and stronger loyalty programs, plus more targeted marketing spends. For instance, a financial institution might offer a co-branded card with an airline company and find those customers generally also book at Marriott hotels and drink Starbucks coffee. That institution can then use this data to drill down on these partnerships and loyalties, ultimately resulting in a win for the institution, airline, and customer. This data can be leveraged to identify off-card spend, helping the true road warrior find ways to earn additional points with their financial institution’s products. Partnership models have strong potential benefits, like optimizing marketing investments and creating meaningful experiences for all parties. 

Even if your institution has previously had trouble making insights actionable, starting to better leverage contextual, SKU-level data today can lead to compounded returns in the years to come. But institutions must act now, especially as nontraditional competitors are feverishly trying to break the competitive barrier. This means implementing solutions to collect the data even if it won’t be leveraged until later on. More accurately segmenting customers with receipt data results in stronger relationships, more effective partnerships and loyalty programs, and profitable cross-selling opportunities. The ROI is there – it’s time for institutions to start mining.