The collection of consumer
spending data has always been valuable to merchants, but a growing
number of companies are packaging that data for consumers. Charles
Davis looks at how banks can use this to add value for their
customers
Go deeper with GlobalData
The corporate sector has long
prized the richness of transaction data for reporting and expense
management, but the consumer side of the business has left all that
data unused for the most part.
That is set to change, thanks to
the increasing popularity of online personal financial management
tools that bring all of that data alive in exquisite detail.
A new online
personal financial management (PFM) company is taking the data a
step further, aggregating cardholder spending numbers so users can
compare themselves against one another and join social networking
conversations about their spending habits and money management
goals.
Bundle Corp wants to become the
“Facebook of money management”, letting users compare their own
spending habits against their peers in ways that cardholders have
never seen before.
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By GlobalDataBundle, which is backed by
Citigroup, Microsoft and Morningstar, launched its website in
January with a service that lets people examine their spending
habits by comparing them against other anonymous households.
Bundle uses massive pools of
aggregated transaction data, collected from Citi and other sources
that can be tracked by a wide range of parameters, including age,
location, income and family status.
Using the Bundle app, a cardholder
in Los Angeles could discover how much a married couple in New York
pays for rent on a comparable apartment, or how much a family in
San Francisco spends monthly on groceries.
Users can enter their age range,
income range and other factors to see how their own spending on,
for example, dining or travel compares to median spending levels of
other people like them.
The system generates actual dollar
figures that people can adjust as they try to develop budgets, if
they want to rein in their spending at restaurants, for example.
The data is presented visually, with colour-coded transaction
details to help people see when and where they are spending
money.
The site also lets people set
savings goals, and tells them when overspending in one area
threatens their ability to put away enough money toward those
goals.
Further, the site also allows users
to adjust their budgets in real time – if a person overspends on
food in a given month, they can temporarily cut their entertainment
budget to keep their overall spending in line. People can even drag
each bubble around the screen as they try to plan their
budgets.
Those adjustments will stay in
place until changed, or the user can choose to have the modified
budgets revert to their original values at the end of each
month.
Individual users’ data is kept
separate from the aggregated group spending data, though Bundle
might later allow people to contribute their own transaction
details to the community data.
Bundle CEO Jaidev Shergill says
there is tremendous knowledge tucked away in all of that data. It
is what he calls “socially informed money management”, which is
money management but with the context of how other people are
spending and saving.
“A lot of financial planning
products are strictly numerical in nature, but we want to bring a
little more humanity to the process,” Shergill says.
“Money management is typically
viewed as somewhat painful, something you want to get over with and
move on, and yet there are great stories in financial data, stories
we want to tell in order to inform people’s financial lives.”
With its latest offering –
restaurant ratings – Bundle demonstrates the potential for new
types of data to inform financial management with a strong social
component.
“Until now, all the data on
card-based spending moved in only one direction – the merchants,”
says Shergill.
“We want to give all of this data
back to the consumer in ways that democratise it and get back some
value for the cardholder.”
The restaurant ratings could give
banks a new way to give their customers another reason to frequent
their websites – creating cross-sell opportunities.
Bundle plans to rate restaurants in
all major US metropolitan areas, but its pilot programme, which
began in December last year, focused on New York.
Instead of using subjective
customer feedback to compile its rankings, Bundle will use the
aggregated MasterCard and Visa credit card spending data of 20m
people, provided by Citigroup to rate restaurants based on the
amount of repeat spending by consumers.
Higher amounts of spending, and
repeat spending, at particular restaurants will correlate to higher
scores.
Bundle will present three rankings.
One is a ‘confidence score’, which represents the likelihood that a
consumer would dine at a recommended alternate restaurant, based on
the initially selected restaurant.
The second is a ‘loyalty score’,
which is diners’ share of total spending at a particular
restaurant. A third component will show ‘local favorites’, or
restaurants in the same neighborhood that earn a high loyalty
score.
Shergill says that Bundle would
later this year launch a merchant review service based on the same
architecture that will allow consumers to receive ratings on
virtually any merchant.
Meanwhile, Bundle’s staff is
combing through the data looking for insights that it features
regularly on the company’s website and send out over social
networks, leading new users to the site.
Recent examples included a story on
the most expensive Valentine’s Day cities, a look at rental
property warning signs based on repair data, and an article ranking
the “best and worst places to get sick in America” based on average
household expenditures on health care services.
The key to the data’s use is to
make it entertaining as well as useful, Shergill says.
“The data is incredibly engaging,
and even entertaining, if it is presented in ways that make it
usable,” he says.
“We used a billion transactions to
build the merchant loyalty scores, and that sort of massive data
crunching can provide real insights for consumers.”
Online banking
Bundle is not the only player
experimenting with new forms of data aggregation around payments.
Fiserv has launched a PFM service that focuses on the online
banking experience and lets people manage their finances according
to their coming expenses.
Geoff Knapp, vice-president of
online banking and consumer insights at Fiserv, says the firm had
offered its financial institution clients a PFM tool within its
Personal Money Manager product for a number of years, but has
decided to restructure the product and make it a central part of
its Corillian Online banking platform.
“Before, PFM was really something
that a customer would have to buy and that consumers would have to
recognise,” Knapp says.
“We saw that PFM was really taking
off, so we have put it front and center in the Corillian product,
so when one of our client’s customers logs in to their online
banking site, the PFM view is one of the first things they
see.”
The service, which already unites
bank account information and transactional features such as money
movement within a single screen, now includes a financial
management page that includes customisable budgeting tools and
spending overviews.
Many of the new tools are highly
automated, requiring little ongoing input of information and making
them easy for consumers to incorporate into their regular online
banking routine.
“The simpler we can make it, the
better,” Knapp says.
“Our research shows that only 15%
of all bank customers are using any PFM at all, but of that small
percentage, 68% of those are using a bank’s application.
“So we know they will come to bank
sites for their PFM needs, if we can make it accessible.”
Fiserv’s latest release blends
online banking and PFM, and it captures all that online banking
data and pre-categorises spending in some simple categories that
can then be broken into other segments by the consumer at their
convenience.
“Most people don’t want to spend
hours scrutinising receipts and categorising transactions, they
just want to quickly see where they stand,” Knapp says.
“Integrating at-a-glance financial
information with the transactional capabilities of online banking
makes that possible.”
Personalised budgeting tools allow
consumers to add budget categories to reflect their spending
habits. Consumers can add categories such as ‘dining out’, and
purchases at restaurants will automatically be added to the
category total.
A bar moves from left to right as
the amount spent increases, and changes from green to yellow to red
if the amount spent exceeds the budgeted amount for that point in
the month.
Consumers can set rules to classify
and “memorise” transactions to designate that they should be
categorised under specific spend categories, such as prescriptions
under ‘medical’ or the electric bill under ‘utilities’.
Memorised transactions will be
continually and consistently applied to the correct category,
ensuring that spending is accurately reflected.
Scheduled payments and transfers
are also listed, giving the overall system a more forward-looking
view than PFM traditionally has.
Knapp says that shifting the focus
from aggregation to future spending reflects how people interact
with their primary bank and encourages consumers to seek an
advisory relationship with their bank.
“We see online banking becoming
much less passive – integrated financial management is where we are
headed,” he says.
“Alerts, predictive variables,
offers based on behavioral traits, all must be part of a more
advisory relationship, and the data allows that to happen.”
Optional e-mail alerts can notify
consumers if spending in a specific category exceeds a
pre-specified amount, helping them gain more financial control.
Consumers can also enable security alerts to notify them of changes
to their accounts.
Finally, there is Intuit’s
Mint.com, which, like Bundle, is testing a counterintuitive theory:
that consumers will ignore privacy concerns for features they find
compelling.
Mint announced that anyone can view
the transaction data that its roughly 4m users originally provided
for their personal use, though the data is shown only in aggregated
form to keep individuals unidentifiable.
The feature, called Mint Data,
resembles the main offering of Bundle, with a key distinction: Mint
includes the data of people who signed up with it as a personal
financial management site.
“If I think of my bank as just a
place that charges me fees and keeps my money, then my bank won’t
be around long,” says Fiserv’s Knapp.
“If there is no self-help, no
alerting, no advising going on, I will be left behind. The data is
the future differentiator between those who excel and those who
just get by.”
“The real power of data lies in its
aggregate use,” says Shergill.
“Trends and insights that can be derived from the data can truly
change the customer relationship.”
