Bankers hoping to increase cross-sales can now parse spending details from their customers' checking, brokerage and credit card accounts — at other financial companies.
This X-ray vision comes as a growing number of consumers use personal financial management software to keep tabs on their money. With PFM, people can track their spending patterns on multiple bank and credit card accounts, all in one place.
Though the technology was developed as a stand-alone product, it is now becoming an increasingly common element of consumer online banking services, and offering the service means banks also get a look at their customers' spending.
With this intelligence, banks can then offer customers loans, credit cards and other products that might dovetail with their established spending habits. "Having this data … is going to give us just this wealth of knowledge about our customer," said Steve Kruskamp, the e-commerce marketing manager at First Mariner Bank in Baltimore.
The bank is planning to offer customers a PFM application from Geezeo Inc. that uses specific transaction details, like merchants' names, to present ads for specific banking products. He said the software would let First Mariner pitch products only to people that might be receptive, rather than the "shotgun approach" it employs now with online banner ads.
Kevin Lynch, First Mariner's senior vice president of e-commerce, said the bank might use Geezeo's software to note customers' auto insurance payments, even those made to a rival insurance provider charged to another bank's credit card. The software could then present on the customer's online banking page an ad for First Mariner's own insurance — and possibly persuade a sticker-shocked motorist to dump his or her current insurance provider.
"It's timely because it's going to be tied to the transaction that shows up, and it's the time that people are ready to take some action," Lynch said.
First Mariner, a unit of First Mariner Bancorp, plans to begin offering customers Geezeo's PFM system by June and, by this fall, anticipates that it will be using the data for marketing purposes. The Geezeo software is replacing a bare-bones marketing system built into its Fiserv Inc. online banking system that "was never really built as a marketing tool," Lynch said. First Mariner remains a Fiserv customer and is installing the Geezeo PFM technology on top of its current online banking system.
(A Fiserv spokesman said some of the company's online banking systems offer greater levels of customization for marketings.)
Kruskamp said that now, because the Fiserv system cannot be customized, the same ad is displayed to all First Mariner online banking customers regardless of their demographic details or spending habits. This forces people to see ads for products that may be totally unsuited to their needs — an aggravation rather than an encouragement to do more business with the bank, he said.
" 'What we think is good for our customers' is really not the model we should be following," Kruskamp said. Instead, First Mariner should demonstrate that it is attentive to its customers' needs.
Lynch said it is important to wait before launching the marketing system so the system has time to collect relevant data. "If we just start marketing right off the bat, then we'll be doing the same thing we've always done," he said.
Geezeo's PFM application for banks has been available for four months and will be updated this fall to further tap data available through its PFM software by letting banks base pitches on the savings goals some people post online to help motivate themselves.
Pete Glyman, a Geezeo co-founder, said that the new feature could let a bank see that a customer is bolstering savings to make a car down payment, and could then pitch its auto loans.
Glyman compared his technology to Google Inc.'s AdWords system, which displays ads on its search-engine-results pages.
Google lets companies buy ads that appear only when Google users type certain search terms — a shoe store's ad would only appear to someone who is searching for "shoes," for example.
Geezeo's system works in much the same way, with merchant names acting as the keywords that trigger ads for bank products that appear on the edges of an online banking page or within the transaction view. "Think of it as Google AdWords for your online banking," Glyman said.
Geezeo is not the only company that has tapped the marketing potential of PFM. Before it was acquired last year by Intuit Inc., the Mint.com website offered free PFM services to consumers and collected referral fees from banks for matching its users' spending with financial products, such as promoting a gas-station rewards credit card to people who often charge gasoline purchases. (Geezeo initially had a similar model but last year began to focus on selling its software to banks.)
Cardlytics Inc. lets banks present ads for retailers on its online banking pages.
But Geezeo could be the first company to offer banks a way to market their own products through the PFM service they offer customers.
Nicole Sturgill, the research director for delivery channels at the TowerGroup research firm, said pitching bank products online in this way replaces teller intuition. Tellers might offer a certificate of deposit to customers depositing large sums into a checking account, she said.
But those interactions are limited to transactions made at the bank, Sturgill said. PFM expands the data available to banks, and "if you have a credit card at a different bank, being able to see what the credit card transactions are allows you to offer so much more," she said.
Though banks may worry that tapping this data may bring up privacy concerns, the opposite may prove true, Sturgill said.
Consumers like to think that their bank knows them well, she said, and this relationship can be strained by poorly targeted offers. "It is just annoying to keep getting offered the same thing over and over no matter how many times you say no," she said.
When banks request more customer data to better target pitches, "we haven't really seen consumers backing off," she said.