Banks and other financial institutions possess a wealth of historical data about their customers but are struggling to convert that into ways to generate new revenues. As the trend of “open API” sweeps Asia, some banks view it as a threat to their operating models. But commonly used APIs might also be the key to helping banks unlock the value of their data.
Pioneering fintech companies such as Hong Kong’s gini enterprise have developed solutions to help commercial banks, credit card companies and other lenders turn data into insight – and insight into action.
“Banks struggle to understand the information they have on their customers, and we help them make the right decisions and create the right products that their customers want,” said Ray Wyand, CEO and co-founder at gini.
The company began three years ago as a consumer-facing business, offering individual users of its app a holistic look at their finances, from savings to spending, across financial institutions and merchants.
It has developed the technology behind this to help banks and lenders derive the same insights. While banks may have plenty of historical data about their customers, until now they have been flying blind in terms of seeing a customer’s entire portfolio or behavior.
First gini acquires transaction data and “cleans” it, eliminating errors, and “enriches” it, making it machine-readable. That data is now being turned into analytics and use cases for banks that need to either reduce their operating costs, or generate new revenues.
We help banks make the right products that their customers wantRay Wyand, gini enterprise
One of the earliest benefits gini is delivering is removing costs from chargebacks. In Hong Kong, over 10% of calls to banks’ call centers involve questions about card transactions at venues that people do not recognize. This is because many merchants operate under confusing holding-company names.
This may sound simple, but each investigation costs banks on average around US$100, which adds up to tens of millions of dollars, for every one million customers, over a year. However, gini’s data includes geolocation, enabling it to map venues to corporate names – and even to identify individual stores among chains, which are often impossible for banks to figure out. Such data insights not only save banks money on investigations, but also reduce the number of incoming calls.
“If you give us the raw data, we can clean it, structure it, enrich it, and tag it, so our clients can build a set of structured data,” said gini enterprise COO and co-founder Victor Lang. “That’s the first step for a bank looking to use machine learning and AI to improve customer experience and lower operational costs.”
Helping banks grow revenue
The same kind of structured data can also be used to make money, not just save it. One of the biggest demands among banks is to personalize rewards and offers, delivering the right product to the right customer at the right time.
To date, banks have relied on their proprietary demographic information to come up with new product offers, which tend to be one-size-fits-all pitches. Gini augments this with behavioral data built from many sources, a process far more complex than merely “scraping” information from websites used by a customer.
If you give us the raw data, we can clean it, enrich it, structure it, and tag itVictor Lang, gini enterprise
For banks to be able to leverage more data better, the advent of open API is a game-changer.
Harnessing open APIs
APIs, or applied programming interfaces, have been around for a long time: they are the bits of code that let two software programs talk to each other. APIs power every app. “Open” means these are developed in an open-source environment, making the sharing of data a two-way street. Indeed, more banking regulators are mandating that (with consent) consumer data be shareable among banks, merchants and the customers themselves.
For banks used to serving as guardians of customer information, open API is a scary prospect. In many cases, they do not want to share their data. However, gini allows them to work with third-party data without necessarily having to give away their own.
Because gini works with so many sources to enrich the data, it can deliver insights that no bank or lender could derive on their own. A financial institution can work through gini to access the data from, say, an e-commerce site or a merchant, and develop new products for those customers. And as banks become more comfortable with data exchange, they will begin to embrace the greater value from open API collaborations.
Even better, companies like gini don’t need to see any personal identifying information (PII) in order to deliver this kind of insight to banks. Gini doesn’t know who a given customer is: the company just knows that this app user has a certain profile that can be categorized.
“Acquiring and analyzing this data fits with our mission to make anyone in the world great at managing their finances,” said Lang. Now gini enterprise is partnering with banks and lenders to power them with similar insight.