Testing Location-Based Services for Itinerant Bank Customers

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Imagine arriving at an international airport and one of the first greetings you get is … from your bank.

That is now a reality for Westpac customers with smartphones. A push notification prompts travelers to inform the Australian bank through its app where they are going overseas and for how long. Then upon landing, another alert pops up to welcome them to the new country and details where to find free ATMs.

How did the bank do it? It "geofenced" international airports in a late-August upgrade to its mobile app. In other words, it set up software triggers that send a push notification when mobile banking customers enter an airport; they have to opt into the service.

Westpac's recent update offers a clever use of geolocation to balance the competing interests of security and convenience, industry analysts said.

Julie Conroy, research director for Aite Group's retail banking practice, said putting such alerts at customers' fingertips helps simplify their lives and minimize the odds of fraud.

Westpac aims to avoid annoying customers by, say, unnecessarily blocking their transactions — the source of many call center complaints. Some customers neglect to inform their banks about their travel plans, and account activity outside their normal living areas can trigger red flags.

The alerts are also meant to save Westpac customers the hassle of looking for information at the "moment of truth," said Harry Wendt, general manager of digital at Westpac. "Mobile is a fantastic personal device. Little things can make a big difference."

In theory banks could crunch their transaction data to see that, yes, a customer purchased a ticket to Costa Rica two months before swiping a card at Pura Vida surf shack, and that the transaction is likely legitimate. Similarly, it should know a lot about the habits of frequent travelers.

Certainly some large banks have been getting better at mining their data to better understand traveling customers. JPMorgan Chase, for example, recently contacted frequent international travelers to tell them they do not need to notify the bank about upcoming travel.

However, the fact that customers use multiple cards gives any one bank a limited view of their transactions — even if it were completely masterful with its data, Conroy said.

Smartphones add a new data source in the fight to enhance fraud prevention methods without inconveniencing or embarrassing the customer.

"It's putting the service where and when customers need it," said Stessa Cohen, a research director for Gartner. "It makes it easier for customers to do what they want to do."

The mobile alert enhancement helps a person avoid the need to call the bank or search through the labyrinth of a banking website for guidance.

U.S. banks also are looking for ways to make better use of — and in some cases directly profit off of — the use of geolocation with their smartphone apps.

Some banks such as Capital One are testing ways for small-business customers to send offers to nearby shoppers, for example. Others, like Westpac's New Zealand operation, are experimenting with the use of " ibeacons," Apple's indoor wireless location sensors, in their branches so bankers know who is coming through their doors. Wells Fargo, which announced a new boot camp for financial technology startups in August, has said location-based technologies and biometrics are among its top interests.

The use of location-based technologies requires customers to opt in to receive push alerts, or in some cases, share locations with their banks — which will appeal to some but certainly not to all.

Westpac, meanwhile, views its traveling alert update as the start of the longer journey of mobile banking.

"We want to keep finding ways to integrate more into people's lives," Wendt said.

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