What’s In It for Me? What Banks Gain By Enabling Customers To Get Value From Their Data

In this special guest feature, Jeff Brown, Vice President in the banking and financial services practice at Genpact, discusses that in order to compete in a digital-first world, financial institutions must use the data they have to create better customer experiences. Any customer will tell you the bank’s effort here is lacking, but the conversation now happening is how banks can enable customers to monetize their own data for the customer’s benefit, without stepping on privacy laws. Jeff leads the company’s global consulting efforts to help BFS clients radically transform their operations by leveraging Genpact’s leading process reengineering, digital and operations capabilities. He is a global senior executive with over thirty years of delivering technology driven business transformations for start-ups through Fortune 100 firms. Jeff is a result driven leader who focuses on concrete solutions that grow businesses by creating high performance, organization-wide capabilities that produce rapid and sustainable outcomes.

You’d be hard-pressed to walk more than a block on a city street without seeing people interacting with their data. Whether it’s an Apple Watch tracking steps or a smartphone with a Mint app showing us how much we spent this month, consumers have become accustomed to viewing and manipulating their data. Consumers are a significant conduits for data. This trend creates a huge revenue generating opportunity for banks if they can help consumers get more value from their data. This is the future for banks: providing services and tools that enable consumers to manage, monetize, and get direct value out their own banking data.

The potential value goes both ways. It’s no secret that banks have faced pressure in recent years to grow fee-based service revenue while net interest income (NII) margins are shrinking globally. No longer can banks depend on the Holy Grail (Janet Yellen raising interest rates) to be their panacea for stagnant revenue growth. Increased competitive intensity and the rise of fintech ventures will continue to push NII margins lower. However, if banks can assist customers in controlling and leveraging their data, it gives them a new way to share in the profits from the data rich marketplace.

Having access to mountains of consumer data is nothing new for banks. Historically, consumer data was used by marketing departments to sell more financial services. This tactic proved ineffective and annoyed consumers. Banks also tried selling the data to third parties or “do deals” on their customer’s behalf from which they’d then get a small cut of the profits. These forays have created a resentful and wary consumer and have also created privacy challenges. Concurrently, consumers are realizing that their data has value, given their interactions in other parts of the digital economy.

Banks are in a unique position to help their customers get value from their data and tap a new revenue stream for themselves.  But they need to be willing to alter their paradigm about data. Banks already help generate and aggregate customer data through their role in the payment system. They are generally trusted more than start-ups and other app providers.  What they need to do is let go and let consumers control the management and monetization of their own bank- generated data.

Imagine a world where banks help consumers to collect and manage their financial and physical asset data themselves. The bank would serve both as the conduit that enables consumers to aggregate their various streams of data and link them to a portfolio of apps that help them monetize their data. The data might emanate from debit or credit transactions or to data related to consumer’s existing inventory of physical assets. For example, you could release your recent transaction and inventory of household electronics to get a better deal from Amazon or Best Buy.

Imagine what the average small business owner would do to know exactly how, where, and what kinds of deals they could be getting. By applying simple analytics and AI technology, the average small business owner can save hundreds on procurement by knowing if they are getting the best deal for them. It’s the benefits of the Rotary Club in a digital world.

So how can banks they make this happen? First, by switching their mindset from needing to monetize data for themselves alone to enabling customers to collect, manage and monetize their own data. Second, resist the urge to develop all the necessary monetization apps. When it comes to monetizing data, this stance is beginning to soften. Banks are looking increasingly to partnerships to be able to provide this value to consumers. For example, Citi Ventures recently invested Clarity Money, a firm that serves nearly like a financial advisor by analyzing where and how we spend our money. Banks should learn from Apple and encourage open ecosystems that encourage a wider diversity of app developers to create tools that enable consumers to monetize their bank generated data.

To thrive in a world of digital disruption, financial institutions must use the data they help generate with to create value for consumers. Leading banks can create significant value for customers by handing control of the data back to consumers and small business. They can do this by providing them the platforms, tools and linkages into ecosystems that enable them to monetize their own data in their own personal ways. They should start doing this and doing it fast – before firms in outside financial services find ways to beat them to it.

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