Beyond Banking: How Financial Institutions Are Leveraging Consumer Behavior Insights for Revenue Growth
In a bustling New York coffee shop, Sarah, a young professional, opens her Chase banking app to check her balance. She notices a new offer for a discount on her favorite brand of running shoes, seamlessly integrated into her app experience. Intrigued, she clicks on the offer and proceeds to make a purchase, earning rewards on her Chase credit card. This is not a futuristic scenario but a present-day reality, as JPMorgan Chase pioneers a new frontier in the financial services industry.
According to a recent article by the Financial Times, JPMorgan Chase has launched Chase Media Solutions, a new unit designed to help brands target the bank’s customers based on their spending history (source: Financial Times). This move signifies a broader trend among financial institutions to think outside the box and explore innovative ways to leverage consumer shopping behavior insights to drive additional revenue.
The Rise of Financial Institutions as Ad Tech Players
Traditionally, banks have focused on core activities such as lending, deposits, and investment services. However, in an era where data is the new oil, financial institutions are recognizing the untapped potential of their vast reservoirs of consumer data. JPMorgan Chase’s entry into the advertising business is a testament to this shift. With over $2.4 trillion in deposits and a customer base of 80 million, the bank is uniquely positioned to capitalize on first-party data to offer targeted advertising.
This strategic pivot is not limited to JPMorgan Chase. Other major players in the financial services sector are also exploring similar avenues. By leveraging consumer shopping insights, these institutions are evolving into ad tech companies, creating new revenue streams and enhancing customer engagement. For instance, banks can now pair personalized credit offerings with relevant products, creating a win-win scenario for both consumers and businesses.
The Competitive Edge: Learning from JPMorgan Chase
Financial institutions in emerging markets such as Brazil and Indonesia are closely watching these developments. To stay competitive, they must model after JPMorgan Chase’s latest revenue-driving strategies. The key to this transformation lies in accessing alternative consumer behavior insights, particularly telco data, which provides a holistic view of consumer activities beyond traditional financial transactions.
In Indonesia, where the embedded finance market is projected to grow by 40.8% in 2024 to reach $2.59 billion, the potential for leveraging consumer insights is immense. According to ResearchAndMarkets.com, the embedded finance revenues in Indonesia will increase from $2.59 billion in 2024 to $10.54 billion by 2029, driven by a young, tech-savvy population and rising internet penetration.
Harnessing the Power of Consumer Behavior Insights
The integration of alternative data sources, such as telco data, can revolutionize the way financial institutions approach customer insights. Telco data, for example, provides granular information on consumer behavior, including location data, app usage, and lifestyle patterns. This data, when combined with traditional financial data, creates a comprehensive profile of the consumer, enabling more personalized and effective marketing strategies.
1datapipe’s AI-powered GeoLifestyle Score and Insights offer a cutting-edge solution for financial institutions looking to harness the power of alternative data. By analyzing geographical and behavioral data, the GeoLifestyle Score provides deep insights into customer preferences and patterns, helping banks and fintech companies tailor their offerings to meet the specific needs of their customers.
Case Study: The Potential of GeoLifestyle Insights in Emerging Markets
Consider a leading bank in Brazil that decides to implement 1datapipe’s GeoLifestyle Score to enhance its marketing strategies. Brazil, with its diverse and rapidly growing economy, presents a unique set of challenges and opportunities for financial institutions. By leveraging alternative data, the bank can gain a deeper understanding of its customers’ lifestyle and spending habits.
For instance, the GeoLifestyle Score can identify clusters of high-income individuals who frequently travel for work. Based on this insight, the bank can create targeted offers for travel-related products, such as premium credit cards with travel rewards, exclusive access to airport lounges, and travel insurance. This not only drives additional revenue but also increases customer satisfaction and loyalty.
In Indonesia, where the unbanked population exceeds 74%, financial institutions can use alternative data to expand their customer base. By analyzing mobile usage patterns, banks can identify potential customers who may not have a traditional credit history but exhibit stable financial behavior through regular mobile payments and consistent app usage. These insights enable banks to offer tailored financial products, such as microloans and mobile banking services, to previously underserved populations.
The Path Forward for Financial Institutions & Fintechs
The journey towards leveraging consumer shopping behavior insights requires a strategic approach. Financial institutions must invest in data integration and analytics capabilities to unlock the full potential of alternative data. This involves building robust data infrastructure, adopting advanced AI and machine learning models, and fostering a culture of data-driven decision-making.
Moreover, collaboration with technology partners is crucial. Financial institutions can benefit from partnering with fintech companies that specialize in alternative data and AI analytics. These partnerships enable banks to access cutting-edge technology and expertise, accelerating their transformation into ad tech players.
The evolving landscape of the financial services industry presents both challenges and opportunities for banks and fintech companies. By thinking outside the box and leveraging consumer shopping behavior insights, financial institutions can drive additional revenue, enhance customer engagement, and stay ahead of the competition. The example set by JPMorgan Chase underscores the potential of this approach.
1datapipe’s AI-powered GeoLifestyle Score and Insights offer a powerful tool for financial institutions in emerging markets such as Brazil and Indonesia. By harnessing alternative data, these institutions can unlock new revenue streams and expand their customer reach. To learn more about how our AI-powered analytics can benefit your organization, contact our team at 1datapipe for a detailed consultation.
Are you ready to leverage alternative consumer shopping behavior insights to drive more revenue, increase customer LTV, and boost customer loyalty?
