The benefit of data in mobile banking

People are increasingly comfortable sharing data over mobile networks. The success of applications such as Facebook, Instagram, Google, PayPal, Uber and many others shows they are happy to do so, so long as they get a benefit in return — whether it’s connecting with friends, faster and easier internet searches or finding a car to take them home. And this is reflected in the astonishing growth of mobile data usage: according to telecoms group Cisco, traffic rose globally by 63 per cent during 2016 to 7.2 billion gigabytes a month, representing an 18-fold increase since 2011.

We’ve experienced a similar boom in mobile banking. The number of payments made through apps is predicted to reach $125 billion worldwide next year, up by 50 per cent on 2015, according to a recent report by Juniper Research. The number of banking app users will reaching two billion by 2020 and the value of payments made through mobile wallets hit $1 trillion already last year.

In the UK, trade body the British Bankers’ Association said customers used their apps 11 million times a day, compared to 4.3 million sessions on desktop machines. No wonder BBA chief executive Anthony Browne said: “We are in the midst of a consumer-led revolution in the way we do our day-to-day banking.”

All these sessions, all these transactions represent a rich source of data for financial institutions. Every interaction with a mobile app tells a story about a customer, their financial status, and their relationship with other customers, including the companies they buy goods and services from. The question is, are they making the best use of it? Many banks are grappling with legacy technology, the result of years of underinvestment. There are understandable concerns over security and sensitivities over intruding into customer privacy. But banks, other financial institutions and technology companies still have an opportunity and an obligation to do more.

Research from consultancy Accenture identified that customers are increasingly aware they are yielding information when they use mobile apps or shop online. On the whole, they are happy to share their data in return for ease, speed and convenience. However, they are increasingly aware that the data has value and are becoming more demanding with regards to the benefits and rewards they expect.

One of the most obvious ways to reward them is a straightforward financial incentive. Some banks are already offering customers a discount on purchases when they buy from selected retailers in return for having their spending patterns tracked. Incentives can be even more straightforward: Accenture point out that telecoms group AT&T slash the cost of their monthly Standard Plan by $29 to customers who sign up to sharing their internet preferences.

We believe there are better, sustainable ways to reward customers. One of the reasons for Facebook’s success is the way it uses data to customise the information users see. Banks and other organisations could use their data to offer customers tailored services based on their financial circumstances or to promote deals and products that better meet their needs than the ones they have. One example would be to offer a cheaper consolidation loan to replace a chunk of expensive credit card debt. Others include proactively sending an alert when a customer is in danger of going overdrawn, automatically offering to unblock a card when they travel abroad or providing up-to-the-minute budget analysis so they can understand where their money is going. Payments data shows the lifestyle of a customer — banks can use this to offer better credit terms, improved insurance or even tailored special offers from non-banking partners.

Individual banks only have a partial view of their customers’ financial information, however. Many customers have a current account with one bank, a mortgage with another and a credit card with a third. The real richness and innovation will come when that data is pulled together through aggregation apps, allowing financial institutions and other trusted firms to gain a much more granular insight into customer behaviours. This will happen: the UK is in the process of introducing Open Banking, which will force banks to share their data with others, while in Europe, the Payment Services Directive 2 means they must share payments information with each other through a series of standard interfaces and protocols.

Centralway Numbrs is already there. More than 1.5 million accounts in Germany are managed through the app, and we are looking to launch in the UK this summer, offering customers a range of tools to make their banking simpler, smarter, and faster, in the most secure way thanks to encryption. Every function of our app exists to aid in our users’ own decisions. We don’t work as an advisor nor as a bank. We are completely independent and don’t offer bank products such as savings accounts or credit cards.

To provide these services, we work with banks, and data is central to our business model. Security is at the forefront of our mind — it is paramount. We have a dedicated team of cyber security professionals, with more than 60 years’ experience, whose sole job is to protect our servers and customer data. Personal information is stored on separate servers to any transaction. Even in the highly unlikely event of a successful cyber attack, our users are protected by another layer of security. No transaction can be performed through our app without a partner bank’s authentication process, whether using a card or a phone, which we do not have access to. And, of course, also the data is encrypted and our systems subject to regular and rigorous testing.

All this means customers can enjoy the rewards and benefits we offer with complete peace of mind.

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