Banks have struggled for years to take full advantage of the geolocation trackers embedded in their customers' smartphones, but U.S. Bank may be on the verge of a breakthrough.
The potential has always been tantalizing: if banks could send customers product information and offers at just the right time and place (say, as they passed near a bank branch), then presumably advice and sales pitches would have greater odds of success.
No bank has given consumers a compelling reason to let it track their whereabouts so far.
U.S. Bank launched an app Monday that it says could strike the right balance of customer control, privacy, practical technology and business potential.
Its "Your Community" app offers local news, financial education advice, branch and ATM locators, and bank-related news such as local events that U.S. Bank is sponsoring. Ultimately, it will provide users in many markets with offers from local merchants, but so far that information is limited to a San Jose, Calif., neighborhood called Santana Row.
It is the latest evolution in banks' effort to invent a geolocation product that fits smoothly into their customers' everyday lives.
Wells Fargo is testing location-based services to identify people as they walk into branches, greet them personally and offer them quick help. Capital One is experimenting with sending people offers from local merchants as they walk or drive by their shops. Westpac has launched geolocation services targeted at international travelers to prevent the inconvenience of transactions in a foreign country being blocked. MasterCard has been testing technology to authenticate card transactions based on the proximity to the phone to enhance security.
All such projects have been slow to get off the ground.
"We've seen mixed results to-date" in numerous efforts by banks, said Bill Sullivan, global head of market intelligence for Capgemini's financial services consulting practice.
"The challenge is for the services to provide specific value to the customer. Three key pieces of the equation are: first, does it make life simpler or more convenient? Second, what extra value will it deliver beyond what customers get elsewhere? And third, has it found the balance between providing relevant information the customer cares about vs. spamming them with ads?"
U.S. Bank's app, which is available to any consumer, intentionally does not push offers to customers as they walk down the street.
"That's touchy there are some folks that think that's a good idea and some folks that think that's bothersome and they might not want it," said Dominic Venturo, chief innovation officer at U.S. Bank. "So at this point, we'll wait to see what customers tell us they want."
For now, customers can click on a button labeled "Offers." They are presented with a map that shows nearby retailers and their special offers.
The app is designed to provide detailed information about housing, shopping, dining and live events (including a free summer yoga series, a beer walk and local sales). Unlike the average bank app, it is visually appealing, with high-quality photography and attractive fonts and icons. The bank used content-management software from BlueSoho to create the app, and it will add more communities beyond Santana Row as it goes along.
"Being able to add other major communities is trivial," Venturo said. "It's harder to approve the content than it is to actually make the change in the app. Because of the way the system is designed, being able to create custom content and then geotag it is a very simple thing that doesn't require any technical knowledge."
The merchants providing the offers are all businesses with which the bank has some sort of relationship.
"The local merchants will vary, depending on what the local small-business community wants to put into the marketplace," he said. "Our experience the first go-round with this was the small-business customers were excited to have a delivery tool to enable the awareness to be generated. So as a result, you end up with pretty interesting offers."
The app's other features include a library of articles about financial education topics like setting financial goals and paying off credit card debt. There is a section for the latest local news and bank news.
The bank's overall goal is to find innovative ways to connect with customers through mobile devices and strengthen relationships with business customers by allowing them to extend their offers to consumers.
It has been a trial-and-error process. Four years ago, U.S. Bank had a highly targeted project that would, say, let a customer walking down an aisle of Home Depot receive an offer directly tied to the specific hammer he was looking at. Technological challenges foiled that idea.
"Geolocation inside a physical store is difficult for a lot of reasons," Venturo shared. "GPS doesn't work very well. It's a complex technical problem."
At the time, it was testing mesh network technology, networks connecting very small nodes that could provide precise location-based information.
"That was the bleeding-edge technology at the time," Venturo said. "It was expensive and difficult to make reliable."
Perhaps more importantly, such efforts trip privacy concerns. To minimize those, U.S. Bank's app asks permission to track customers' locations and provides an extensive privacy notice. It assures users their location information will not be shared with third-parties.
It also lets the customer drive the location features, to make them as unobtrusive as possible.
"In a lot of the work we've been doing over the years, we have found a sweet spot, which is if you're looking to do something shop, buy lunch, go out to dinner there are some natural search characteristics that you are likely to execute on a mobile phone, which has sort of become a remote control for our lives," Venturo said. "One of those things is look for offers or price-comparison shop. Being able to answer the question 'what's available to me now?' contextually based on where I am, that's the current best thinking."