Dear customer… you’re not just a demographic!
Personalisation is a key technique to not only delight a customer but also keep a transaction secure
Bhairav Trivedi
Viewpoint
“Do you know me? Because the better you know me the more ways you will find to make me happy...”
This sounds like a line straight out of a soppy rom-com, not the kind of stuff that stereotypical bankers are known to go for. However, hearing this line at a presentation by IBM at a recent payments technology conference brought home to me how true it is for the financial services sector.
Now picture this: you walk into a multi-brand luxury store and the attendant steps forward to ask if you’re happy with the wallet you bought the last time you were there. And did the new perfume you tried suit you? Amazed, you take your gaze off the new collection on display only to be told that today, just for you, there is a discount on products especially selected keeping in mind your taste. How did they do that, you wonder.
Know your customer, or KYC, has long been standard procedure at financial institutions. But the point I’d like to make is that, at its best, KYC isn’t about a form with your mother’s maiden name and your passport number. It’s a process, with rewards built in at every level.
Long before Big Data became a marketing/loyalty buzzword, we have been collecting precise bits of information which can be matched with individual behaviour. We can call this Unique Data. Today, predictive and deductive behaviour analysis using a mix of Big Data and Unique Data is the basis for rolling out loyalty, security, fraud prevention and marketing applications suited to each customer.
Rewarding right
At its simplest level, knowing your customer means not offering a tea drinker a free cup of coffee as a reward. Behavioural science determines what kind of rewards you’d be most likely to select as opposed to what kind of rewards the company wants to give you. It’s no longer okay to give a vegetarian a free chicken meal, hoping he’ll take it and give it away to someone else. Now customers are more demanding. They say that people need to know who I am. I am not a nobody.
Most of our past behaviour is predictive of our future behaviour. For instance, if I pay my credit card bill on the 45th day of the billing cycle, I’ll continue to do so. And if I’ve maxed out my card in the middle of the month, every month, but I pay it all off, it means that the credit limit may be set too low and a responsive bank would recognise this and act accordingly, increasing my comfort and their revenue.
There are some industries, such as airlines and hospitality, which take the lead in creating such wow factors. A hotel would know a frequent guest requests a spare pillow and decides to surprise them by ensuring the bed is made to their taste the next time they visit. A five-star hotel chain has mastered the trick of addressing each guest by name as they enter the hotel. It never fails to impress.
Bad behaviour
That’s good behaviour. Some industries, such as financial services, recognise bad behaviour too pretty well.
After all, it depends on how much you stand to lose — a hotel may lose the customer to competition by not recognising good behaviour while a financial institution stands to lose money if it doesn’t recognise bad behaviour.
Decades ago, in the United States, a typical case of credit card fraud would involve unattended gas stations.
Fraudsters who had landed live cards tested the cards in their possession at the stations, where a customer would be allowed to pump after they’d swiped the card and it was approved for a transaction, proving that it was live. Now, the predictive pattern here was that a typical fraudster would not complete this transaction. Instead, having confirmed that the card is live, he would run off to make transactions of jewellery or electronics that sell very quickly.
In this case, the predictor was an incomplete petrol station transaction followed by an attempt to buy big ticket items. It would cause the card to be blocked immediately.
A step ahead
Now, of course, there’s an app for it. Staying a step ahead of consumers is when we put them in charge. With an app, a customer sitting in a coffee shop in New Cairo can now share their location and request that the card be activated for use in Egypt.
Security lies in not only separating the good guys from the bad but tracing your footprint across the globe.
Instead of a phone call asking you if it’s you who’s used the card in a new location, it’s now possible to enable transactions in Singapore — but not in Hawaii or Rio — if you’ve bought tickets to Singapore using the card.
And if your card is being used in multiple locations within minutes, the behaviour would be considered suspicious and the transaction blocked.
Proactive
The third level of behaviour recognition is proactive, rather than predictive or reactive. If the customer is sitting in a coffee shop in New Cairo, there is little use in sending them retailers’ offers for the Mall of the Emirates in Dubai.
Instead, the bank may direct you to collect your free coffee from the Coffeeshop Company opposite the Banks Complex. Or, alerted by the app and matching it to your transaction at that store, offer you precisely tailored promotions matched to suit your preferences as you enter that store. The writer is group chief executive officer at Network International. Views expressed are his own and do not reflect the newspaper’s policy.