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In today's digital age, data is more than just information. It is a strategic asset that can unlock the immense value behind it. The aphorism that data is the gold of the 21st century applies here. One area where this trend is particularly evident is the world of payment data. Mining this "gold vein" of the 21st century is what we at Tapix are focused on. How do we do it? Through digital tools that unlock the hidden value of payment data and harness its power to drive new revenue streams and a better customer experience.
Payment data is often seen as mere infrastructure in the financial world. In reality, this data is a treasure trove of insights into daily customer behaviour and needs. Banks and payment companies process billions of transactions, making payment data an essential part of their business. However, until recently, this valuable resource has been largely neglected and underutilised.
Competition: large technology companies have already been able to generate valuable insights from vast amounts of data and offer rich personalised digital experiences. These companies are increasingly looking to the financial sector to strengthen their position and grow. Examples include Apple and its Apple Pay, Apple Savings or Apple Card services. This is described in more detail in the article.
Technology: thanks to advanced technology, particularly advanced data analytics, we now have the ability to gain real-time insights and unlock the value of data faster and cheaper than ever before. Open banking and simple APIs, for example, play a big role here. An example of the benefits of this technology can be found in the article.
Consumer expectations: people and businesses now expect a high level of personalisation and instant service in all areas of their lives. At the forefront of this is Generation Z, also known as post-millennials. They are the first generation to grow up with widespread access to the internet and smartphones, which has led to significant changes in the way they engage with the world around them.
New sources of revenue: these can be built in data-driven non-financial services that are complementary to traditional banking products. For example, card-linked marketing. Insights gained from payments need to be analysed. These insights based on customer payment data will enable a full understanding of customer preferences, behaviours and needs.
Payments can no longer be seen as just an infrastructure issue. Banks need to look at payments as a revenue generator, which will help them better understand and listen to the needs of customers and businesses, as EY's findings confirm.
The biggest obstacle for banks has always been the sheer difficulty of accessing the right data, in real time. Advances in technology, such as cloud-based solutions, have made this process cheaper and easier. Not all data processing needs to be done in-house by the bank, but it is important to start and find the right partners. You can read how to find the right ones in the following article.
It is also important to recognise that it is not just payment data, but also data from other sources, such as behavioural and location-based data. When combined with payment data, they will generate richer insights and contextual knowledge. This ability to generate specific targeted insights using large amounts of data from a variety of complementary sources is a competitive advantage that will become apparent over time.
The main goal that banks and fintechs can set with this amount of data is to gain a deeper understanding of their customers. The goal is to create insights/patterns specific to each customer's situation, allowing banks to engage in moments that matter to customers. For example, offering a discount on a coffee to a customer who likes to drink coffee. Or offer travel insurance when a customer's first transaction is abroad. This will improve the customer's relationship and loyalty to the bank. It will also lead to additional revenue for the financial institution.
To turn this knowledge into revenue, banks need to take inspiration from other sectors. For example, the way digital entertainment platforms recommend and create bespoke programmes. This is done based on tracking data, or smartphones recommending apps based on location and time. Similarly, banks can use insights from payment and other data to design new products and services that are tailored to customers' needs.
Payment data and the behaviours it reflects can significantly improve banks' ability to understand customer needs. Understanding will allow them to identify the right product and offer it in the context of that need, at the right time and in the right place.
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Ondřej Machač
Executive officer
