ReportWire

Tag: customer data

  • It's time to deliver on the promise of the CFPB's open banking rule

    It's time to deliver on the promise of the CFPB's open banking rule

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    Thirteen years is a long time to wait for rules implementing open banking in the U.S. We should wait a little longer and get it right, writes Tom Brown.

    nito – stock.adobe.com

    In July 2010, Congress tucked a small provision into the Dodd-Frank Financial Reform Act, imposing a new mandate on firms that provide financial services to consumers. The mandate requires financial institutions to provide consumers electronic access to their banking account data. The law, called “Section 1033” of the mammoth bill, also gave the newly created Consumer Financial Protection Bureau the authority to issue a rule implementing that mandate. More than thirteen years later, the CFPB finally released its proposed rule.

    The proposed rule offers a solid foundation, yet its impact is limited. The original statute’s wording is expansive, requiring all consumer financial services firms to provide consumers with access to their data, except those explicitly exempted. However, the recent draft of the rule is restricted in scope, applying only to credit cards, checking accounts and digital wallets. To truly align with the statute’s broad intent, the CFPB should consider broadening the rule’s reach, including entities like payroll providers, Electronic Benefits Transfer accounts and billing companies. Greater data coverage would benefit more consumers and fulfill Congress’ original objectives.

    Section 1033 of the Dodd-Frank Act received little attention when President Obama signed it into law along with the rest of the sweeping bill. The creation of the CFPB, the imposition of caps on debit interchange for large banks and the remaking of the mortgage industry overshadowed it. Comprehensive summaries of Dodd-Frank from major law firms and even Senate Democrats did not mention it. How the language even made it into law was mysterious. The consumer fintech industry, as it exists today, did not then exist. Products on which hundreds of millions of people now rely, including Venmo, Square Cash, Propel, Earnin and Chime, had yet to launch. 

    Yet, Section 1033 was as far-reaching as anything else in the bill. By 2010, it was clear that technology could eliminate tedious data entry and reconciliation for the banking public. Intuit had acquired Mint, an early fintech pioneer, and had begun enabling consumers and small businesses to track transactions automatically. Consumers and small businesses that provided Intuit with account credentials for banking and wealth management accounts could reconcile their bank accounts and calculate their tax obligations without manually entering transaction details.

    Thirteen years after the passage of Section 1033, American consumers deserve more than the ability to delegate access to electronic data related to their deposit accounts, credit cards and electronic wallets. The market has already delivered those benefits. 

    Consumers have clearly benefited from giving third parties access to their account information, making it easier to switch account relationships. Even those who don’t switch benefit from new services that guard against overdrafts and other bank-imposed charges. This trend has led to notable declines in overdraft revenues as the impacts of open banking gain popularity. Moreover, since checking accounts reflect a person’s financial health, real-time transaction and balance information can aid lenders in responsibly extending credit to those who can afford it while avoiding burdening those nearing financial distress.

    The consumer demand landscape is evolving, with a growing interest in granting innovators access to a broader range of financial data, including payroll data, EBT and bill payment information. Like data from checking accounts and credit cards, access to these new data points can enhance competition, reduce unnecessary fees and widen financial service access, including credit. 

    The CFPB plays a crucial role here. Market dynamics that influenced traditional financial service providers might not similarly impact payroll companies, EBT processors or billers, primarily because consumers often don’t get to choose these service providers. Unlike consumers’ free market leverage in choosing banks or credit card companies based on data access, this influence doesn’t extend to payroll and EBT services, underscoring the need for clear regulatory guidance. 

    Thirteen years is a long time to wait for anything. Urging the CFPB to expand its current proposal could further prolong this period. Fortunately, the language of the statute largely solves that problem. It is self-executing. In the absence of a new CFPB rule, the law mandates that all financial institutions under the umbrella of the Dodd-Frank Act provide electronic data access to consumers and their agents. On this dimension, no rule is preferable to a limited one. Having waited this long, we can afford to wait a bit more to include meaningfully more consumer data.

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    Tom Brown

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  • To Maximize Your Profits This Black Friday, You Need to Collect More Than Your Customers Dollars | Entrepreneur

    To Maximize Your Profits This Black Friday, You Need to Collect More Than Your Customers Dollars | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    Black Friday — the day after Thanksgiving — is the biggest shopping day of the year and the start of the holiday season, which, for many retailers, can contribute as much as 30% of their annual sales. So it’s a big day. But if you think Black Friday is just about the holiday season, you’re wrong.

    Of course, the day is important for the holidays. Black Friday was the biggest day for in-store shopping in the U.S. in 2022, reaching 72.9 million consumers, up almost 15% year over year. But it’s just as important for after the holidays. That’s because Black Friday isn’t just about sales. It’s really about data.

    My smartest clients know this. And they make it a priority to leverage Black Friday as a way to collect as much information as they can from everyone entering their store. Why? Because the data they collect will help drive sales long after the holidays have ended.

    Retailers of all sizes face a significant drop-off in sales after the holidays, and it’s always a struggle to generate demand. But it doesn’t have to be that way. The data you collect from your Black Friday traffic can boost your sales in those slow winter months. So, how to do this? You need a reason for the customer to stay engaged.

    For starters, collect an email at checkout. Asking for a “like” or a positive online review is great, but you’re not collecting data that way. Asking for an email is a way for you to control the engagement. It’s true that sometimes some won’t want to share, and that’s fine, too, because people have to opt in if you’re going to market to them online. So encourage them. Say that you’ll add them to your special “VIP Customer Club,” which will make them eligible to receive future discounts and special promotions. Some retailers ask if a customer would like a receipt emailed, and that’s another good way to collect that information.

    Another strategy is to push your visitors to your website. Hopefully, you’re selling your products not just in your store but also via an ecommerce platform. If you don’t, you really should because my most successful clients sell products through multiple channels. On Black Friday, offer a special promotion for customers who choose to purchase products online or special products that are only offered online. When someone buys from you online, you’re collecting their data, and you can give them the option to have their email added to your VIP club at checkout. At the very least, you’ll be collecting physical shipping/ordering data that can be used for future postcard mailings.

    Consider a raffle. It’s simple and old school, but it’s an effective way to collect an email address or physical mailing address. Have them drop a business card or fill out a form to get a product or service for free and, of course, ask on that form for permission to add to your VIP Club. Your cost of giving away free stuff is minimal compared to the benefit of using that data for future marketing.

    Many of my retail clients do events. These are the businesses that generally offer experiences or lifestyle products, and they enjoy doing in-store events to further educate their community. The pandemic taught us that doing these events online can also work. Schedule an event for January or February and promote it in your store. People would need to sign up for this event, so have an online or physical way to do this in order to capture their information.

    Partner with others. All of the above activities can be replicated by friends of yours on the Main Street. By offering co-promotions with some of them, you can pool your resources and share your data. This way, you can potentially double the amount of information you’re collecting on Black Friday.

    Finally, use a loyalty program. The suggestions I’ve made above would incur minimal cost. But if you want to step things up – and pay more — you can subscribe to retail loyalty platforms like Clutch, Recharge, Smile.io and others. These platforms — which are mainly designed for mobile use — allow your customers to accumulate points, get access to gift cards, belong to a recurring program, join certain membership tiers and take advantage of VIP “exclusive” offerings. They provide real-time data analysis of program usage, can be customized, and also integrate with other software.

    These are all great ways to collect the data you need. But the most important thing is what to do with the data once you have it. And for this, you need a good customer relationship management (CRM) program.

    A CRM is merely a database that will store whatever information you obtain about anyone who’s walked into your store. Some loyalty platforms and most point-of-sale systems either offer this capability or can be integrated with a standalone CRM system, and there are many platforms available at an affordable price. You will use this database to build demographics and sales history about your customers.

    When a CRM system is used the right way, no customer — or prospective customer — falls through the cracks. Using the data you’ve collected on Black Friday and throughout the holiday season, they should be receiving regular (opt-in) emails or postcards from you about product offerings, events or other activities at your store. You can leverage the data to target specific customers based on what they’ve purchased from you. You can use the data to create lookalike campaigns on both Facebook and Google, where you can target online ads directly to them. As you build this database, you’ll build a community of customers that you can go back to year after year.

    And that’s the most important thing about Black Friday. It’s not just one day of sales. It’s also a day to collect data for future sales. If you approach it that way, you’ll see a revenue increase that can extend far beyond the holiday season.

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    Gene Marks

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  • You Have to Tap Into Your Customers’ Subconscious to Keep Them Coming Back

    You Have to Tap Into Your Customers’ Subconscious to Keep Them Coming Back

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    Opinions expressed by Entrepreneur contributors are their own.

    When your app or website was just a small seedling of an idea, you probably had big plans for how people would use it. As you built and tested it, you imagined your product becoming as integral to users’ days as brushing their teeth or checking their emails. That was the hope, at least. But making your product a recurring part of users’ lives is easier said than done.

    To understand why we must first look at the mechanics of human behavior. Per the Society for Personality and Social Psychology, about 40% of people’s daily actions aren’t tied to conscious decision-making. Instead, they’re automatically initiated by situational cues and other triggers. This isn’t necessarily a bad thing. Rather, it’s a way to compartmentalize the myriad decisions we have to make every minute, hour and day. By eating the same thing for breakfast every morning, for example, we free up our mental capacity for more important decisions.

    The question is: How can you make your product so inviting that users have no choice but to incorporate it into their subconscious routines? This is especially important today, as McKinsey & Company found that more consumers have switched brands in 2022 compared to 2021 and 2020. What’s more, 90% of them plan to continue doing so. Here are three tips for creating product usage habits in your users, so they are more inclined to stick with your brand:

    Related: 5 Ways to Set Good Habits That Actually Stick

    1. Dig into your product usage data

    No amount of self-study or controlled testing will teach you more about your user journey — the good, the bad and the ugly — than product usage data (i.e., the information users generate as they interact with your product). From geolocation to session length to tasks completed, these rich insights span numerous types of data and actions.

    For instance, when you open the Grubhub app, it’s not just logging your food order. It’s also looking at where you were when you opened the app, which features you explored versus which ones you bypassed, how long it took you to decide between chicken nuggets and a burger and how long it took for your order to be fulfilled and delivered.

    If that sounds like a lot of data, it’s because it is. But when segmented and analyzed, this treasure trove of information can help you tap into your product’s habit-forming potential. To that end, you should plot two key product usage data points: frequency (i.e., how often users repeat a specific behavior) and perceived utility (i.e., how useful and rewarding users perceive that behavior to be).

    Plotting these points is only step one, however. Next, you need to understand the bigger story behind the actions and what they tell you about the user journey. For example, imagine users are clicking a specific button at a higher frequency. Can you link those button clicks to higher retention among that group? That might tell you the button is a “sticky feature,” or a dependable engagement driver that encourages repeat uses. With that information, you can more easily identify and clear the friction points in your product to deliver greater value and encourage recurrent use.

    Related: Using Data Analytics Will Transform Your Business. Here’s How.

    2. Deploy user-centric reminders

    Unfortunately, developing products isn’t a “build it, and they will come” situation. If you want your product to become second nature to users, you need to develop a messaging strategy that taps into intrinsic motivators and helps users bust through inertia.

    Take 15Five, for example. The team management software platform allows employers to keep a pulse on their employees’ goals through weekly check-ins. Employees must log in to their accounts on a specific day to answer a series of questions and set goals for the upcoming week. But how does 15Five build and maintain engagement in its platform beyond the check-in? Well, mid-way through the week, it sends every employee an email reminding them of their goals.

    Because employees were the ones who set the goals, the reminder acts as an intrinsic motivator to provoke action toward goal completion or adjustment. The messaging that 15Five uses is effective because it’s inherently user-centric: Review your goals. Plus, even if employees don’t go into the app itself, the email nudges them to at least think about their goal progress.

    We know this kind of messaging works. Language-learning platform Duolingo, for example, prompts users via notifications to practice every day and continue their learning streaks. The company’s research shows that these reminders and streaks are highly motivating for users.

    Related: People Love Playing Games. Use These 4 Psychological Hacks to Keep Customers Coming Back for More.

    3. Use hooks to turn behaviors into habits

    Turning conscious behaviors into subconscious habits ultimately comes down to repeatedly linking your users’ problems to your solution. This methodology is what tech entrepreneur Nir Eyal calls the “hook model” in his book “Hooked.” The hook model is made up of a four-phase process with consecutive cycles:

    The first phase is the internal (e.g., users’ intentions or goals) or external (e.g., a “buy now” button) triggers that cue a particular behavior. The second is the completed in-app behavior or action in anticipation of a reward. The third phase is the variable reward, or the result of taking action that leaves users wanting more (e.g., connectedness or physical products). Fourth is the investment that sweetens the deal for future cycles through the hook model.

    When building hooks, you need to get to the heart of each phase in the cycle. For instance, when looking at internal triggers, ask yourself what users want and what pain points your product alleviates. In contrast, if you’re brainstorming external triggers, focus on what brings people to your specific product.

    When looking at actions, try not to overcomplicate things. Instead, look for the simplest action users might take if a reward is involved. Remember, if users don’t have sufficient motivation or ability to complete the action, they won’t. When it comes to the variable reward phase, ask yourself how you can fulfill the reward without veering into finite variability territory. The last thing you want is your experience to become so predictable or boring that users have no reason to return.

    Although variable rewards are about immediate gratification, investments are more focused on long-term rewards. Therefore, think about how much work users are willing to put into your product to enjoy those lasting rewards. Consider a product such as Pinterest, for example. A user might find satisfaction in an individual image on the platform, but that image alone isn’t what builds lasting engagement. Instead, the collection of images across all their Pinterest boards makes the platform more valuable and harder to leave. That’s the investment.

    Every business owner’s dream is to lead a company that’s indispensable to customers’ lives — but doing so requires more than just a good product. Habits are made, not born. So, follow these three tips and see how customers start to incorporate your offering into their routines.

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    Nick Chasinov

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  • Listen: How banks can use data to optimize client relationships | Bank Automation News

    Listen: How banks can use data to optimize client relationships | Bank Automation News

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    Banks can onboard and meet the evolving needs of business customers when they integrate and use data analytics to tailor the customer experience.  Understanding what the data reveals about clients— and the gaps financial institutions can fill through partnerships or vendors’ digital products — is paramount, Dean Jenkins, vice president of product marketing at e-banking […]

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    Brian Stone

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