To the Swiftest Go the Spoils

WHEN YOU SEE WORDS like “estimate” and “90 percent” flung about without supporting data, it’s wise to assume you’re dealing with a guess landing somewhere between wild and educated.

But when no less than IBM does the flinging, I’m inclined to pay attention.

IBM recently suggested that 90 percent of all data has been produced within the last two years. Whether the statement is informed or speculative, and regardless of what they include (or don’t) in “all data,” the point is well taken. We are compiling data at breakneck speed. There is no reason to believe the trend will slow, and there is every reason to believe it will accelerate.

“Accelerate” is the operative word. Marketers aren’t just upping the speed and volume of data accrual. Sophisticated tools analyze on the fly, cutting response time to seconds. The goal? To show up on mobile devices in hopes of influencing customers in the very moment they are thinking about buying.

In an article by John Adams, Ross Christi, manager of LoyaltyEdge at American Express, has this to say: “The volume of data isn’t necessarily the challenge. It’s about using it intelligently and managing it in an efficient way.”

Keeping and analyzing customer data isn’t new. Savvy marketers have done it since the early days of direct mail, the original interactive medium. They didn’t call it data back then, but a rose is a rose. Data at the time pretty much consisted of name, address, purchase type, frequency, and average spend. In today’s interactive and mobile world, data comprise much more. And while at first it seemed as though privacy fears and laws would curtail data gathering, something interesting happened, and fast: consumers began volunteering the very data that fear-mongers had earlier convinced them marketers should not be allowed to obtain on their own. Mobile device users willingly reveal the merchants and products they like, where they’re shopping or dining at the moment, what UPCs they’re scanning, and more. Add up enough of those voluntary data points (and, for existing customers, overlay them with established buying preferences), and a picture emerges of who is where and thinking about buying what. Respond to the picture fast enough with a compelling offer sent to a mobile device, and you increase the odds of winning customers while they’re still at the point of purchase and, hopefully, still in a buying frame of mind.

Fear-mongers are still at work doing their best to decry fast-responding marketers as manipulative or sneaky. Nonsense. Sound marketing is a win-win. Marketers win by creating or growing customers. Customers win by receiving usefully timed information and offers on products they actually care about. And, of course, no data is shared without express permission from the customer.

John Knuff, general manager of global financial services for Equinix, said (as quoted by Adams), “What we are seeing now with intelligent targeting is more data mining is going on and happening within the customer session—so if a consumer is getting instructions on what to do to access or redeem an offer, a lot of the information to drive that has to be transferred in real time.” Knuff adds a caution: “… if the data set is on the West coast, but the session is on the East coast, the data has to traverse three to five vendors and has to travel three thousand miles several different times during that session. That’s really going to bog things down.”

Time has always been money. But in the marketing arms race, shaving—by even an insanely infinitesimal amount—the time it takes to turn data into a well-executed marketing response will give the marketer a serious advantage over competitors.

Mobile payment and the business of predicting

For a while it looked as though Google Wallet was going to take the world by storm. At least, last year many an expert predicted as much. This year, they are predicting instead that the likes of banks, Visa and Paypal will grab and run with that ball.

In Gigaom.com, Kevin Fitchard writes, “Google and the carriers had their chance. Now it’s the banks’ turn.” He bases his prediction in part on a question Cheaton Sarma Consulting recently put to selected mobile industry leaders: “Who will define the mobile payment/commerce space?” Nearly 40 percent selected the answer, “Financial guys, e.g., Visa.” Less than 15 percent voted for Google, and only about 3 percent chose Apple.

I draw a couple of insights from survey results like that, one of them being that predicting the future is tantamount to setting yourself up to be inevitably wrong. The future has a habit of making hairpin turns even that even experts are powerless to foresee.

This is especially true for high-tech industries, which evolve blazingly fast. Not long ago, no one would have predicted that Apple Computer would one day drop “Computer” from its name, much less  turn the music, publishing, banking, photography and other industries upside-down by introducing—of all things—a phone. Or that, given its late start, the Android platform would have an iota of a chance in catching up, much less giving Apple a run for its money. Or that, speaking of late starts, old-tech Visa might stage a comeback and threaten to retake the reins of the electronic point-of-purchase future after all.

In that spirit, here is my other insight for mobile payments: Regardless of predictions, it’s decision time for banks. As Amir Tabakovic from BAI states, “Whether they fly solo or with partners, financial institutions need to begin placing their bets in the mobile wallet game.”

Top changes in financial marketing trends

Financial institutions have been forced to make considerable changes to their marketing strategies in recent years, due to the economy, new regulations and technological innovations. As a result, the same tactics most individuals grew accustomed to in earlier years are starting to be phased out as banks look to new ways to appeal to their current consumer demographic and attract new types of customers.

One of the most prevalent and notable trends that has emerged in recent years is a stronger reliance on social media services and mobile banking, as opposed to in-branch services. In fact, many larger institutions, such as Bank of America, have announced that they will be closing many ATM kiosks or branches across the country as online and mobile banking options have made it more costly to keep these locations up and running.

Instead, consumers are being encouraged to take advantage of new innovative online and mobile channels, which allow customers to engage in online chats with banking representatives, transfer funds, download alerts, access saving tools and remotely deposit checks, according to the Financial Brand. Further, banks with a strong online customer base may have a more affordable cost-basis than those whose business is primarily done in-person. As a result, more institutions are offering to exempt customers from fees and other costs if they enroll in online banking or agree to sign up for e-statements. While most experts dismiss the claim that banking branches will one day become obsolete, recent years have shown a dramatic decline in the number of physical branch locations.

Banks are not only changing their marketing strategies, but also the demographics they try to attract. Historically, most institutions targeted younger demographics of Generation Y because this age group presented banks with opportunities to acquire new customers. Members of Generation Y are typically undergoing significant life changes, such as purchasing a home, shopping for new credit products, raising a family and making large-scale investments.

As a result, most banks shaped their marketing initiatives to appeal to this group of consumers. However, analysts are now noticing a shift toward the underbanked Americans who lack traditional credit and banking products, the news source reports. In recent months, some banks have rolled out new prepaid debit cards and other products that are typically associated with underbanked Americans as a way to entice potential customers to view other products.

Will mobile apps make brick-and-mortar banks obsolete?

More financial institutions are beefing up their mobile channels to provide more variety and convenience to existing customers and boost customer acquisition figures. However, some industry analysts say that this strategy may backfire and only quicken the pace at which brick-and-mortar banks become less utilized by consumers.

Analysts say there are several features – ranging from basic to more complex – offered by mobile apps that make the need to visit a branch less pressing. For example, many apps provide financial assistance programs that allow users to balance their checkbooks, monitor their balances and establish a budget. These actions were previously accomplished in a branch or online, but now individuals have the flexibility to manage their finances on the run, according to the Huffington Post.

There are also now several types of financial transactions eliminate the need to visit a branch or an ATM in a financial institution’s network. For example, consumers can check balances, transfer funds and deposit checks via their smartphones. While remote check capture is still in the development stages, many consumers who are shopping for a new bank are factoring this option into their decisions.

Many industry professionals have dismissed claims that mobile technology will altogether replace banks in the future. Consumers may continue to need brick-and-mortar facilities to apply for mortgages, withdraw cash, make cash deposits and open an account with a financial institution. While studies show that the U.S. is becoming a more cashless society, few experts are confident that cash will ever truly be replaced as millions of Americans are hesitant to jump on the mobile banking bandwagon. However, recent reports from national institutions, such as Bank of America, reveal that many banks are scaling back services and employing more automated systems.