Banks making a profit from customer purchasing history
Many banks are trying to find new ways to bring in revenue. A few banks are using the customer-purchasing data recorded by credit and debit cards in order to bring in more income. These new programs are providing customers with coupons and banks with extra money.
Banks selling customer data
Banks and financial institutions are partnering with third-party service providers to sell coupons to their customers. An advertiser will request the bank provide a list of customers that meet certain criteria, such as customers that make purchases regularly at a certain store. The bank will collate the data, and then send a message to the customers via text or phone call. Most often, these messages will contain a coupon or special offer. The bank will make a percentage of any sales made with that offer.
Banks stand to make billions
Using these coupons based on customer buying habits, banks stand to make billions of dollars. Research firm Aite Group estimates that these advertising initiatives will bring $1.7 billion into banks by 2015. This income will come from the 460 million card holders that banks will automatically opt-in to these marketing programs. The programs are relatively low-impact on labor costs, as credit and debit cards already record the location and amount of each purchase, and third-party program managers solicit the deals and send the information along to banks.
The customer reaction to bank coupons
These bank coupon programs are getting mixed reactions from customers. The programs are being tested as a way to replace credit cards reward programs, which are being cut in the face of limited swipe fees. For many, the programs are offering targeted coupons that are similar to the popular services like Groupon or Living Social. However, the automatic opt-in and privacy questions are both concerning customers. U.S. Bank, Wells Fargo, Barclays, PNC, and TD Bank are all considering rolling out programs like this.