What enriching transaction data means?
The process of enhancing raw transaction data by adding valuable context, such as merchant details, categories, and locations, is known as payment data enrichment. For instance, enhanced data can include the merchant's name, category (restaurant, clothing, etc.), GPS location, or even carbon footprint estimates.
These solutions, like Tapix’s transaction enrichment API, enable banks to turn basic payment details into a source of powerful insights that can drive decision-making and improve the customer experience. The result? A deeper understanding of customer spending history that allows banks to provide hyper-personalised services and targeted offers. It's a win-win for both banks and its customers, since both sides are getting something useful out of enrichment.
Once we understand what transaction data enrichment means, it's equally important to understand how this process translates into real-world benefits for different stakeholders, especially banks and financial institutions (FIs). At its core, transaction data enrichment turns a flood of raw transaction details into actionable insights that banks can leverage across multiple facets of their business, from customer engagement to operational efficiencies. For banks, enriched insights serve as a powerful tool to make data-driven decisions that were previously challenging with traditional financial records. For FIs, this type of banking data improvement offers a unified view of customer information across various banking services, from credit and debit cards to loans and investments. By creating this cohesive data set, FIs can foster a holistic understanding of customer needs, leading to innovative solutions that go beyond traditional banking.
To simplify it, enhanced data can be look at from two different perspectives, creating two layers that work synergistically: visual enhancements for user interfaces and internal insights for better decision-making. These two layers combine to create a banking ecosystem that both attracts and retains customers while giving banks actionable intelligence to work with.
Visual Layer - The modern banking experience is heavily influenced by the quality of its digital interface. It's no wonder first impression is everything. Customers expect more than just functional apps - they want an aesthetically pleasing, user-friendly experience. Enhanced data plays a key role in this transformation, turning basic transactional details into visually appealing and informative insights.
Internal Insights - When raw financial records are enhanced, it allows for instant categorisation of spending among other things - whether it's groceries, travel, dining, or subscriptions. Rather than listing obscure merchant codes or unfamiliar names, an enriched app provides users with clear merchant details, categories, and even locations and additional helpful features, like ATM Nearby or CO2 insights. All this gathers valuable client information banks can further use to make better services and add more features that users are craving. Enhanced data are also internally crucial for focusing on the right KPIs and making informed decisions, rather than lucky guesses.
Why Do Customers Want Enriched Payment Data?
With digital banking becoming more of an integral part of customer's lives, they expect more than just traditional banking services. They demand tailored experiences, real-time insights, and proactive solutions that simplify their financial lives. According to a 2023 Accenture survey, 91% of consumers are more likely to bank services that offer personalised recommendations based on their spending history.
By leveraging enriched payment data, banks can help customers gain insights into their spending habits, offering a clear breakdown of how they allocate their income. For example, with enriched data, customers can easily see that they spend 30% of their income on rent, 25% on dining, and 10% on travel. Banks that provide this level of transparency enable their clients to make smarter financial decisions, leading to increased customer satisfaction and loyalty.
Furthermore, enhanced data allows banks to create much higher engagement by delivering personalised offers such as cashback, discounts at preferred stores, or recommendations for financial products based on a customer’s unique spending patterns.
From a consumer perspective, enriched payment data is a game-changer for managing personal finances. With enhanced data, customers gain deeper insights into their spending patterns, making it easier to stay on top of finances, avoid overspending, identify recurring payments and feel more in control of their budgets.
Where Can Banks Use Enriched Payment Data?
Fraud Prevention
Fraud detection is one of the most critical applications of financial data enrichment. By enhancing transaction data with detailed merchant and category information, banks can better identify anomalies that signal fraudulent behavior. A 2023 study by Juniper Research estimates that financial institutions using advanced data enrichment solutions can reduce fraud-related losses by up to 30%.
For example, enriched data enables banks to detect suspicious patterns - such as purchases made in different geographical locations within a short time frame - allowing them to take action and block unauthorised transactions quickly.
Improving Customer Service
Enhanced payment data allows banks to better understand individual customer behavior and preferences. This, in turn, helps banks offer more relevant services. For example, if a customer frequently shops at specific merchants or spends on particular categories (e.g., travel or dining), the bank can offer targeted discounts or promotions that align with those spending habits.
Personalisation driven by enriched data can significantly boost customer loyalty. According to Forrester’s 2022 Digital Banking Engagement Survey, banks that use enriched data to tailor customer interactions saw a 32% increase in mobile app engagement.
When customers contact their bank with questions about transactions, especially those that appear vague or unfamiliar, enriched data allows representatives to respond quickly with clear and detailed information. This added clarity enables representatives to immediately verify transactions, answer customer inquiries more accurately, and prevent unnecessary escalations. The result is a smoother experience for customers, who appreciate quick and straightforward responses without having to wait for further investigation.
Accurate data also enables customer service teams to be proactive in addressing customer needs before they arise. For example, if a representative notices an upcoming subscription renewal or a potential overdraft risk, they can proactively reach out to the customer with a friendly reminder or suggest services like subscription tracking or low-balance alerts.
Identify New Cross-Sell Opportunities
There are many new revenue opportunities hidden in enhanced payment data, enabling banks to identify customer needs that aren’t immediately visible from raw data. By analysing spending patterns, banks can recommend additional financial products, such as loans, savings accounts, or investment options, that align with customers’ goals.
For instance, if a customer makes frequent transactions related to home improvement, the bank could offer home equity loans or cashback deals at relevant retailers. Deloitte’s 2022 report on banking innovation found that banks using enriched data for cross-selling experienced 20% growth in product sales.
As you can see, many departments can benefit from the accurate data. By equipping representatives at fraud detection department with the information, they are able to resolve inquiries quickly and accurately. By enhancing the data available to customer service teams, banks improve efficiency, reduce response times, and elevate the quality of service provided.
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Data Enrichment: Functionality or Competitive Necessity?
Back in early 2021, Mastercard introduced revised rules for its card issuers in the European region, known as AN 4569 Revised Standards for the Display of Enhanced Merchant Data. These introduce standards for so-called enriched payment data, which must now be provided by all global payment network card issuers in selected countries and are focused on helping both customers and businesses better understand transactions. As such, the importance of data enrichment in modern banking cannot be overstated.
Introduced revised rules - see Mastercard mandate standard for more.
Cross-sell via a payment card with enriched data
One of the most compelling examples of the value of enriched data is in cross-selling opportunities via payment cards. Imagine a new bank customer sets a financial goal of purchasing a car. By analysing this data and enhancing it with transactional insights, the bank can offer targeted promotions - such as discounts at car dealerships or cashback on fuel purchases - tailored to the customer’s specific goal. A 2022 study by BCG found that banks offering personalised cross-sell opportunities experienced a 15% uplift in card usage and a 12% increase in customer retention rates.
Here’s why this model benefits everyone:
The Bottom Line
With enriched payment data, banks can not only enhance operational efficiency but also deliver more secure and personalised customer experiences. This is especially important for the Generation Z demographic, which values seamless, digital-first solutions and personalised banking services. According to a 2023 PwC report, 72% of Gen Z consumers said they would switch to a bank that offers a more personalised experience, highlighting the need for banks to invest in enrichment technologies.
Customers expect banks to use technological innovation to provide better service and protect their interests, and banks that do not invest in improving their data processes will fall behind in the competition.
