Getting to Know All About You

Financial services companies have to know their customers better if they expect to offer meaningful value and get more business. Get some insight on what tactics work well from U.S. Bank, Barclaycard, Green Dot and others at the 2014 Card Forum and Expo.

"If you do not serve your consumer right, that is the first product that they get detached from," says Bhargava, a panelist at American Banker and PaymentsSource's 2014 Card Forum and Expo in Orlando. "It's not like a checking account where you have 30 bill payees that you have to move."

Tactics for gaining customer insight and figuring out how to add value to card products — whether credit, debit or prepaid — proved to be recurring themes throughout the conference.

So did the myriad challenges to navigate in this effort, whether having to parse an overload of data for actionable information or contending with a regulatory burden that is increasingly complex and still evolving, all the while knowing that innovative newcomers are ready to swarm.

Conference speaker Jay Das, senior director of risk management at Barclaycard US, advises that the way to make the most of individual customer relationships is to distill big data into little data. "Little data is the insight you get out of that big data," he says.

Then, armed with an understanding of how a specific customer behaves, companies can tailor offers more effectively and generate increased loyalty. For example, data might tell you whether someone who does not use a particular card to buy fuel is a good target for marketing around gas rewards. Maybe the person lives in Manhattan and does not have a car. Or maybe those gas purchases are being put on a competitor's card.

This type of analysis also helps with risk management, Das says. If a customer is using a credit card to pay bankruptcy attorneys, that's valuable knowledge, and a bank might want to think twice about raising that customer's credit limit.

The timing of an offer is becoming just as important as what is being offered. Delivering a message at the exact moment a person might be inclined to act on it is a goal many are pursuing.

Three out of four consumers get offers, deals and price alerts on a mobile device, says Patricia Kemp, a venture partner at Oak Investment Partners. To achieve optimal timing with those spending nudges, payments providers and merchants are looking to beacons to pick up Bluetooth signals from consumers' phones to detect when they're near or in a store, she says.

Giving customers a choice about whether and when they receive offers is important, several speakers cautioned.

U.S. Bank, which is developing a program for real-time targeted offers, is letting customers set firm rules about when they can be contacted. The plan is to ask cardholders who have just made a purchase if they want to use reward points to cover all or part of the cost. If so, U.S. Bank would apply a credit to the card statement and deduct the amount from the rewards balance. "Is it relevant? We sure hope it is. You just bought that item," says Bob Daly, senior vice president of FlexPerks Rewards and loyalty management at U.S. Bank.

But customers can impose restrictions, such as blocking offers from being triggered unless a transaction exceeds $50.

While most companies are obsessing over the best tactics for delivering offers, Jake Fuentes, CEO of the startup Level Money, offered a contrarian point of view. Rather than focus on discounts and special offers, he says he prefers to build relationships with customers by helping them manage money better.

Fuentes' target users are millennials, who he says are abandoning banks because of limited features and deceptive fees. The Level Money app updates balances in real time as the user makes purchases to allow for better budgeting.

New features are especially important to mobile efforts like those at Green Dot, which has started letting customers remotely deposit checks into their "GoBank" branchless accounts.

"The whole thought process behind GoBank was everything happens through mobile," says Ralph Calvano, Green Dot's senior vice president of bank operations.

Though the company initially hesitated to integrate mobile remote deposit capture because of fraud concerns, Calvano says the mobile device ended up being a valuable fraud monitoring tool. For example, if someone tries to deposit a fraudulent check through the GoBank app, Green Dot can use location data to figure out which apartment the fraudsters are in.

Michael Strange, chief technology officer at Mitek, echoes Calvano's "mobile first" mantra, saying consumers on average check their phones 103 times a day. So with mobile, companies have a lot more opportunities to interact with customers than in the past.

Card Forum took place during a week in which many big companies with deep ties to mobile announced their earnings, including the likes of Apple and Starbucks, which 10 years ago would not have been on the radar of many payment executives. Despite the packed conference schedule, many people at Card Forum paid attention to these companies' calls and shared details from them on stage and in the hallways. Apple's disclosure that it now has almost 800 million iTunes accounts with linked credit cards raised more than a few eyebrows.

One whole day of the conference focused on the prepaid market, which in the past year has overcome regulatory burdens to expand beyond its original underbanked target. The appeal of prepaid cards as a budgeting tool has transcended all demographics.

One of the hottest new markets for prepaid is health care. With the rise of consumer-directed health care plans, patients must take more responsibility for their accounts and bills, says Beth Griffin, MasterCard's global business leader of prepaid products and services for healthcare solutions.

Wellness and prevention programs look to be an especially promising area. Griffin says employers could use prepaid as a way to incentivize employees to attend prevention seminars or participate in wellness programs.

Several other speakers highlighted their companies' new services to tap into the health care market. CVS Caremark recently began allowing customers to pay their monthly health insurance bills at the drugstore, and WEX, a corporate payment provider, teamed up with Alegeus last year to offer a virtual card for health care claims.

Card Forum and Expo
When: April 22-25
Where: Hilton Orlando Bonnet Creek (Orlando, Fla.)
For: Card issuers, payment networks, ISOs, and payment product and services providers
Attendees: 450
Key themes:

• Leveraging insights to drive innovation
• Competing with (and working with) the next generation of payments companies
• New opportunities, such as health care payments

Host: American Banker and PaymentsSource