Financial institutions have relied on geocoding and location intelligence for decades to make better decisions regarding site selection and market potential. In recent years, the pace of innovation has accelerated at a fast clip, clearly evidenced by the near ubiquity of smartphones, mobile banking and reverse geocoding. Banks are now able to have a real-world, real-time impact on every customer’s experience and financial institutions that master the new location intelligence will gain a significant advantage over their competition.
While only 12% of all companies effectively capture and analyze location data today, a recent study by Ventana Research found that analytics, including location intelligence, is the top-ranked technology focus in 39% of all organizations. This new-found interest in location analytics is driven in part by the prevalence of mobile devices. The ability to pinpoint the location of every consumer, home and business in the context of service networks, transactions, competition, partners and regulators can enable financial institutions to deliver service at the right time and place for every person, improving the experience while minimizing both cost and risk.
Here are five ways to delight customers and grow profits using precise, real-time location intelligence:
More relevant targeting. Previously, banks would target consumers based on neighborhood clusters and demographic segmentations. Now, retail banks can pinpoint opportunities based on real-world shopping behavior. For example, consumers are “checking in” using the built-in Global Positioning Satellite (GPS) functionality of their smartphone devices, providing a clear indication of their most current wants and needs.
When Joan spends a day visiting auto dealers, for example, it could be an ideal time to text her with a car loan offer. If the Smith family tours colleges in a nearby state, information about education financing could be in order. If Julio just visited a number of real estate agents, a sales rep with that information could lock in a potential mortgage deal.
Reward loyalty in real time. Knowing where consumers are, where they spend time, eat, shop and travel, provides tremendous insight into their interests and lifestyle. With this level of intelligence, designing and promoting loyalty and affinity programs becomes both more intuitive and more exact.
Retailers and social media marketers have already tapped into reverse geocoding to deliver relevant, real-time messaging to their clients, such as text message offers as they walk into the mall. They can connect store discounts with a specific loyalty credit or debit card for customers to use at a partner store that’s just around the corner.
Validate risk and compliance. Real estate loans represent a core bank offering. By streamlining certain elements of loan underwriting, financial institutions can validate eligibility for programs such as Fannie Mae and automate Consumer Reinvestment Act (CRA) and Home Mortgage Disclosure Act (HMDA) compliance. More importantly, lenders now pinpoint pockets of opportunity and hidden risks by going beyond Zip code and address-based analysis to determining flood risk, housing trends and other factors that impact asset valuation with parcel-level precision.
Accurately Identify Theft. Credit card theft increased 31% between 2009 and 2011, so banks have incorporated complex models and algorithms into their transaction-approval platforms. As a result, more and more consumers are seeing valid transactions declined, especially when they travel or change purchasing behaviors. Fortunately, banks will soon be able to confirm that cardholders are in possession of their card by comparing the consumer’s physical whereabouts with smartphone global information system (GIS) intelligence so cardholders won’t be inconvenienced by unnecessary card declines.
Proactively Deliver Convenience. When it comes to day-to-day banking services, convenience still ranks as the most important factor among consumers. Most banks look at location convenience and retail deployment in the context of a single mailing address.
Understanding where consumers are during the day, from home to office to local and distant travel, provides a clear advantage in planning network expansion, future acquisitions and on-going investments. When banks proactively contact consumers and let them know the location of the nearest branch, ATM or service center, they demonstrate the convenience consumers crave most.
Nearly every customer interaction involves an opportunity to leverage precise location in valuable ways. Location data and geo-spatial analyses are no longer the domain of backroom analysts and GIS specialists. They can now be handled by employees across financial institutions and incorporated into day-to-day decision making and workflows.
Mr. Charlton is global portfolio director in the Customer Data/Location Intelligence unit of Stamford, Conn.-based Pitney Bowes Inc. He can be reached at [email protected].
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