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PCBB Banc Investment Daily August 06, 2015
Banc Investment Daily
August 06, 2015

Location, Location, Location

Since the launch of Match.com in 1995, online dating has not only shed its stigma, but has become a commonplace method of finding a partner. Not everyone is interested in the time commitment that finding the right match through online dating sites can involve, however. Perhaps that is why Ren You, a 29Y old recent Harvard graduate who typically works 12 hour days or more for private equity firm, decided to offer $10K to anyone who could find him a girlfriend for at least six months. To facilitate his search, he created DateRen.com, a website where people can nominate women they believe would be good girlfriend candidates for him. Women who nominate themselves are ineligible for the reward. After news broke of this unique dating approach, his website received more than 400 submissions - many from women nominating themselves, regardless of their ineligibility for the reward. It appears they liked the directness of the approach.
This specifically targeted dating effort by a lonely finance professional made us think about the unique ways the banking industry has begun using mobile technology to marry up with customers. A small group of banks have begun to experiment with geolocation services and applications, which use the GPS chips found within smart phones to determine a mobile user's exact location. These new applications have opened the doorway for an entirely new form of marketing catered to an individual's location. Capital One is currently testing a geolocation application that will text a retail offer to a user's phone whenever they are in the vicinity of that particular retailer, while Wells Fargo is exploring ways to use the same technology by identifying specific customers who walk into their branches so that all employees can automatically greet them by name.
It is not just the major banks that are exploring geolocation services. Roughly a dozen small and midsized banks have begun experimenting with the location-based software applications of firms like Larky (a startup fintech company), that has designed the app specifically to smaller banks and credit unions.
For community banks, geolocation applications can serve a dual role by providing a new vehicle for individual banks to keep their own brand on consumers' minds, while at the same time allowing them to provide other community businesses with a whole new form of support. For example, if a small clothing store is offering a special 25% discount on coats, any customer of the bank who has signed up for its geolocation offering would be alerted with a message about that specific discount any time they are near the clothing store. The alert would include the bank's own brand.
The ability to provide customers with real-time offers is not only a good way for banks to appeal to younger customers who love their smartphones, it is something that has the potential to be equally appealing to all generations interested in discounts relevant to their daily lives. Besides that, offering unique services that help businesses market themselves allows banks to support existing customers and lure in new ones.
Beyond marketing, geolocation services open the doorway for an additional level of security. This occurs by providing the ability to confirm that purchases made with a bank card are being made by the owner. This is done by confirming that the person's cell phone is in the same location as their card, an idea already being explored by MasterCard. Like offering a reward to help a busy professional find a date, geolocation is likely to increase the odds for achieving the outcome your bank wants - greater security, happy customers and a growing business.