Imagine walking into an auto dealership with your smartphone in hand and, moments after arriving, the phone buzzes with a message from your bank offering options for car loans.
Digital Insight, an NCR-owned vendor that sells digital banking platforms, is testing such a technology for its bank clients. As banks continue to explore ways to boost wallet share, Digital Insight is aiming to capitalize on advances in location technology to help banks understand what customers need and when and then offer the right product or service on the spot.
"Financial marketers have more power than ever to expand relationships and generate loyalty," says Jim Marous, a financial services marketing expert and partner at The Financial Brand. Car loans are just one example; Marous also envisions shoppers receiving offers for consumer loans when they walk into a Best Buy store.
The technology may or may not catch on consumers would have to consent to receiving such alerts but its development illustrates how smartphones are changing the way banks are pitching products and services to customers.
Several banks are starting to experiment with targeted marketing campaigns in their mobile banking apps. Some, like Bank of America, are serving up cash-back deals for merchants such as Sears, while others, including Bank of the West, are touting targeted educational and bank products within their apps.
The broad idea is to present the pitch at the time when a consumer would want to consume it while shopping or after a big event like a data breach and in a format that doesn't interfere with banking tasks.
"They should be able to target ads specifically. Amazon does it already and banks need to be able to [show customers] what they want to see at the right time," says Mary Monahan, executive vice president and research director of mobile at Javelin Strategy & Research. "That's the holy grail."
In some cases, the mobile ads are actual calls to action: a person can connect to auto specialists in the bank's call center after tapping the ad, for example. In other cases, it could feature a discount from a retailer or a video about fraud that appears after a high-profile data breach.
To be sure, mobile banking ads are still in their infancy and some financial institutions have already encountered some resistance. Though not exclusive to mobile, ING said it wanted to send customers ads from retailers based on their transaction data. The Dutch bank got much pushback from the press, consumers and privacy advocates and stalled out the pilot before it even began earlier this year.
Even so, more and more U.S. banks are testing ways to instantly connect customers who are shopping and consuming content on mobile devices.
Bank of the West, the U.S. banking unit of France's BNP Paribas, quietly turned on mobile messaging capabilities late last year in its app powered by Fiserv. (The vendor says U.S. Bank offers a similar capability.)
The broad idea of the initiative is to provide useful information to customers in the way a personal assistant would: remind them what's coming up in their lives or offer information that matters specifically to them. "Personalization is a really big deal," says Matt Krogstad, vice president for mobile banking and payments for Bank of the West. "Dumb messaging wouldn't help us."
Based on a range of criteria, the bank will display an auto loan ad within the app of a person who is likely to be looking to buy a car. The bank described its predictive modeling as complex but says, for example, that it might pitch auto loans to consumers who recently bought a home because a new home buyer is often in the market for a new car as well.
There are other ways banks can predict who is likely to buy a car, say data specialists. Tactics include using the credit report to know when the consumer's lease expires, identifying payment data that reveals life events like having a child and hinting a larger vehicle could soon follow. A bank could also spot when an online banking customer got a raise and then decide to market him a loan or it could track the customer's digital behavior to influence what he might see within an app.
Bank of the West's targeted messaging strategy, meanwhile, is meant to reduce the pain of accomplishing something a person wants to do anyway. In so doing, the bank is trying to avoid missing out on a sale just because it required too many steps of the consumer to find out more about the product. In another use case, the bank may publish content about the home-buying process to someone it identifies as in the market for a mortgage.
"It's not a traditional hard sale," says Krogstad.
In addition to product pitches, the bank is also serving up educational content on such topics as fraud. Education is widely perceived as an extension of a brand's sales and retention strategy in the sense it's meant to help the company better connect with customers, says Thelton McMillian, co-founder and chief executive of the design firm Comrade.
McMillian says that ads should not be intrusive and need to take into account the small size of the devices and acknowledge that, in most cases, consumers are logging into their accounts to pay bills or transfer money quickly, not get distracted by ads.
"There's nothing worse than a banking experience that feels like walking down a big street with electronic billboards blinding you," says McMillian. "People are there to conduct a transaction."
Bank of the West says it has been testing its mobile marketing campaigns for about six months. Krogstad says it is happy with the engagement of the content to date, but declined to provide specific metrics.
As banks like Bank of the West work to target their customers better on mobile devices, tech vendors are already working on ways to crunch location data for added relevancy. With its technology, Digital Insight says it could allow a car buyer to quickly compare rates offered by his bank with those being offered by the dealer. Karishma Anand, director of product management at Digital Insight, says she believes such targeted marketing would be far more effective than running banner ads.
"Ads within the mobile banking experience are not just about slapping a banner ad in a task someone is trying to complete," says Anand. "It needs to be contextual."