My bank probably knew I’d sign up for a triathlon before I even committed to one. All the signs were evident in the transaction analytics: A competitive swimsuit, a book on racing triathlons, a new road bike, cycling shorts, and a triathlon shirt.
These “dip your toe” purchases follow my year and a half of snapping up running supplies and entering more than a dozen run-only races.
In fact, I’m pretty convinced a recent bump in my credit card limit was due to the bank observing my ramped-up athletics-related purchasing activity. An analytics engine somewhere in its glasshouse probably generated an alert on my account. It then likely crunched some numbers of what newbie triathletes typically spend, realized my limit was too low to support my habit, and triggered a virtual nod to marketing to assume the risk of extending me more credit via a low-interest/no-interest promotion.
While this might sound Big Brother-ish to my colleague Beth Schultz, to me it is a sign of the times. (See: Customer-Centric Banking Analytics Scares Me.) And were I someone who would have used the credit boost to purchase a high-end bike (I sensibly opted for a closeout sale model), I might have been glad it was there.
Banks have at their fingertips so much data that expecting them to look the other way and not customize offers based on a consumer’s granular behavior is far-fetched. They are spending millions each year on analytics software, infrastructure, and staff to figure out how to tailor offers and risk to individual customers rather than generic pools of consumers. The effectiveness of these efforts translates into return on investment.
They often share this data with other companies such as retailers. This practice, too, is offensive to some consumers. I agree with that camp when businesses don’t present customers with a clearly stated opportunity to opt out. If they do, then I am OK with the bank’s business arrangement with its partners.
Frankly, if I had started to receive coupons for all things triathlon, I actually would have been grateful -- this is an expensive sport! That said, if I were the father who started receiving Target coupons at his house for baby products before he knew his teenage daughter was pregnant, I might think otherwise of transaction-driven analytics. (See:Target Has You in Its Bullseye.)
Again, I do believe banks and credit card companies are compelled to be transparent in their use of analytics. They should clearly state their intentions to frequently review purchases, share data with partners, re-assess credit limits based on transaction history, and send offers based on their findings.
Once they’ve come clean on their mission, they are free to use analytics to their benefit within reason. And, yes, I am well aware that what constitutes “within reason” is, like many things in the analytics realm, a hot-button issue that has to be hashed out. Until then, I’ll wait patiently for that half-off deal for a new wetsuit.
Are you OK with your bank cranking up its customer intelligence initiatives? Chime in with your opinions below.