Data Mining Makes Retailers a Promising Target

In 1943, Britain’s Royal Navy used a ruse known as Operation Mincemeat to trick Germany into relocating a significant number of troops from Sicily to Greece and Sardinia. Aware that Germany’s military would use the discovery of Allied forces to their benefit, British officers dressed the body of a corpse as a Royal Marine officer, included documents indicating plans to invade Greece and Sardinia among his belongings, and released the body near the southern coast of Spain. Operation Mincemeat was a success: once German intelligence found the documents, German reinforcements were shifted to Sardinia and Greece, providing the Allies with an edge for their invasion of Sicily.The benefits of being able to predict people’s behavior extend well beyond military tactics and have become increasingly important among retailers. Well aware of the value of such knowledge, the banking industry has begun looking for ways to monetize the data it has on customers’ spending behavior. Predictive Data Retailers in the US are expected to spend more than $81B on media ads in 2025, according to research from market intelligence provider Advertiser Perceptions. As major financial institutions seek new ways to boost their revenue streams, attention has turned to the value of the data that financial institutions have on people’s individual spending habits. JPMorgan Chase recently launched Chase Media Solutions, a service that lets retailers target marketing efforts so that ads go only to the people most likely to be receptive to them. By analyzing data on customers’ spending patterns, Chase identifies individuals whose past purchases indicate relevancy to specific retailers, then sends promotions and advertisements from those retailers solely to customers likely to have an interest. The service is particularly attractive for retailers because Chase has set it up so that participating retailers are only charged when a customer interacts with their ads and subsequently makes a purchase. Following a 30-day pilot launch of the program, Chase reported that participants, including fast food restaurant Whataburger, Air Canada, and the coffee chain Blue Bottle, all experienced increased sales and customer growth. Chase’s nascent program, which has not gone without notice by competitors, is not actually the first of its kind. Among others, Bank of America’s BankAmeriDeals has also been offering small businesses a way to get promotional offers to customers, but without the benefit of data-driven targeting. Under BankAmeriDeals, retailers pay to deliver promotional offers to Bank of America customers who participate in the program, and then choose which brands or types of offers they would like to receive. Opting In With data privacy remaining a major concern for consumers and regulators alike, the opt-in approach that the above offerings have taken provides financial institutions a way to benefit from the value of mining customer data with minimal risk. Because financial institutions control the flow of retail ads and promotions, advertisers never see the customer data they are mining — an important fact, given heightened regulatory concern surrounding the ways that artificial intelligence is being applied to consumers’ personal information. Fortunately for financial institutions, consumers trust the banking industry with their personal data more than any other sector, according to the global technology and security provider Thales’ 2024 Thales Digital Trust Index. But Thales’ research also highlights the importance of ensuring that customers opt in to such marketing tactics and understand exactly what they are agreeing to. Thales found that 71% of consumers cite pop-up ads as their top area of frustration with online and mobile providers. Enhanced ValueWhile community financial institutions (CFIs) lack the deep pockets and vast resources of competitors such as JPMorgan Chase and Bank of America, that doesn’t necessarily mean that the benefits of retailer-specific data mining are out of reach. It may just mean that CFIs need to be more intentional with their approach to such offerings, but may not be able to provide extensive services. One way of providing similar offerings is through third-party partnerships with fintechs such as Cardlytics, Kard Financial, and Prizeout, among others. Before heading down this path, however, it is important to determine the extent of support that would be needed from your organization’s marketing team and whether those efforts would truly be viable. With the potential for additional revenue sources and the ability to provide enhanced value to small- and medium-sized business customers, CFIs should not rule such offerings out without investigation.Given that the security of customer data is of the utmost importance to CFIs, and customers place their trust in that security, creating partnerships with retailers as an additional revenue source would require transparency to allow customers to opt in to be included in such programs. By taking a thoughtful approach, CFIs could take advantage of this opportunity to put their data collection to good use.