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Author: Internal Customer Services Agent
The depth of what our Banks know about our spending habits
The introduction of Chip and Pin in the year 2005 meant the amount of information the Banks have at their disposal, in terms of our spending habits, changed forever. In years gone by it would have been considered common place for the bank to make simple suggestions concerning your spending based on ‘obvious’ information concerning your account. For example, those consumers who had a sizable amount of disposable income left in their accounts at the end of the month, would have been recommended to open a savings account to house it. Equally those consumers who regularly spent their wages quickly, may have been targeted for a suitable overdraft facility. Nowadays though the amount of information the banks can gain through our vastly debit and credit card based transactions is much more advanced and useful. This fact is supported by recent research detailing that for every £4.00 which is spent with retailers, £3.00 of which is made up of debit card transactions, therefore providing a clear and accurate spending ‘log’ for the Banks to review. Before the introduction of Chip and Pin card based transactions accounted for only 55% of transactions with the rest being mainly made up of cash, and before then the percentage was even lower. Obviously times have changed quite considerably in terms of the methods we prefer for spending our wages and the ability to shop online has added to this massively. In fact as early as the year 2020 cash based transactions could become a thing of the past entirely. What is clear is that this shift in the way we spend money gives the Banks the opportunity to understand what we buy and when, whether this be our groceries or annual holiday, the banks have a log of all this data which is then being combined with our salary data to create a staggeringly accurate picture of the ‘type’ of consumer we are.
Advances in technology mean that banks are able to use a series of computers and robot based systems to analyse our spending habits and as such understand what products and services we would be likely to be interested in and even more terrifying, when we would be most likely to take them up. It is not just the banks who are using this data in this manner, in fact, the big High Street Lenders are sharing data and understanding to spot sales opportunities. Take for example America Express, who monitor their customers spending to understand which of their partnership retailers the customer may be interested in, for the likes of promotions and discount codes. The same can be said for most of the High Street Banks who through their retail partnerships share data to understand consumer spending habits in a multitude of different consumer sectors. Many banks are able to assess spending habits in a precise and straight forward manner thanks to our move to not only debit card spending but also online based banking tools. Many of the smartphones currently available are partnered with some of the High Street Banks and as such have apps designed to not only assist us with our banking but also encourage us to understand our spending better. With this of course is the fact that in turn they are able to also understanding our spending therefore effectively ‘target’ customers on an individual and personal basis for products which may be of some use.
The head of digital banking at RBS, Chris Popple advised how banks are also using data concerning our spending habits to ‘coach’ us into more sensible spending habits. What has become clear over the last few years is that our spending habits are becoming more wide-spread thanks to the internet and its vast spending capabilities. This fact means that banks are able to better understand when we may be over-spending and offers specific apps to advise us of such; very clever indeed! As the technology used by banks becomes more and more advanced it would be fair to say that we can expect more advice and more products to be placed in our path. Currently the range of apps available extend to monitoring your spending habits, making recommendations and suggestions as to how we should and should not be spending our money, as time passes it is likely this will only ever become more advanced. In reality it may soon be the case that we allow our banks to take greater control over salaries (with our agreement of course) and as such, actually prevent us from over-spending when it is becoming increasingly likely we may do so. For now it’s a question of watch this space.