Back in the day, the imposing classical stone architecture of banks was meant to signify that customers’ life savings were secure in the vaults inside. Today, banks mostly deal in bits and bytes, but the trust remains that your money is safe with a bank. However, today, there is an important question of whether customers trust banks and insurance companies with their data.
Nearly half of Canadian consumers would be willing to share significant personal information, such as location data and lifestyle information, with their bank and insurer in exchange for lower pricing on products and services, including more-rapid loan approvals, discounts on gym memberships and personalized offers, according to Accenture’s global
Financial Services Consumer Study1.
At the same time, however, Canadian consumers believe that privacy is paramount, with nearly three quarters (72%) saying they are very cautious about the privacy of their personal data. In fact, data security breaches were the second-biggest concern for consumers, behind only increasing costs, when asked what would make them leave their bank or insurer.
Canadian consumers are willing to share their personal data in instances where it makes their lives easier but remain cautious of exactly how their information is being used. With this in mind, banks and insurers need to deliver hyper-relevant and highly convenient experience in order to remain relevant, retain trust and win customer loyalty in a digital economy.
Insurers are paving the way
Consumers globally showed strong support for personalized insurance premiums, with 64% interested in receiving adjusted car insurance premiums based on safe driving and 52% interested in getting life insurance premiums tied to a healthy lifestyle. Four in five consumers (79%) would provide personal data, including income, location and lifestyle habits, to their insurer if they believe it would help reduce the possibility of injury or loss.
Some insurers have been offering similar incentives in their auto insurance programs for a few years, with Allstate’s Drivewise (in Alberta, Ontario and Nova Scotia at the moment), Desjardins’ Ajusto, and Intact Insurance’s my Driving Discount. All programs are offering discounts up to 25% in exchange for driving habits and trip analysis data. Intact’s program was already counting over 350,000 members only a few months after being launched, and the company teamed up with business school HEC Montréal to improve the accuracy of collected data.
Banks are joining the dance
In banking, 81% of consumers would be willing to share income, location and lifestyle habit data for rapid loan approval, and 76% would do so to receive personalized offers based on their location, such as discounts from a retailer. Approximately two-fifths (42%) of Canadian consumers specifically want their bank to provide updates on how much money they have based on spending that month and 46% want savings tips based on their spending habits.
In June 2018, RBC launched Carrot Rewards. The program is currently available in Ontario, BC, Newfoundland and Labrador. Carrot Rewards works with an app that rewards physically active users who can earn points by walking, running or completing health questionnaires. Customers can then use the reward points to shop at Apple, Best Buy, The Home Depot and other stores, and even pay their bills.
This openness to reciprocal exchange of value is a tremendous advantage for the banking industry in that it gives banks an opportunity to use digital demographics to find ways to build new revenue streams and improve customer service. But it also creates a real challenge — if they don’t tread carefully, banks could easily lose the hard-earned trust of their customers by not treating their data with the same level of care they take with their money.
Customer data can be used to power targeted cross-selling, but it can also be used to protect customers by flagging potential credit card fraud in real time or predicting that a customer may overdraw an account and automatically rescheduling a bill payment date to compensate. While there are many great customer benefits, banks have to be careful not to violate customers’ trust.
Overall, Quebecers have always been more open to novelty, including open banking2. This represents an opportunity for banks and insurers to start pilot projects, in order to test their markets with reward programs in exchange for significant personal information.
About the author
César is a Managing Director in Accenture’s Financial Services Customer Insights and Growth practice. A digital transformation executive with a proven track record of delivering innovative solutions to drive strong business performance and results. He has strong Wealth Management experience having led Canada’s top online brokerage digital offering and launching the first online brokerage advice service and bank delivered Robo Advisor. He holds a Masters of Business Administration from INSEAD.
The opinions expressed in this post are those of the author and do not necessarily reflect those of the Chamber of Commerce of Metropolitan Montreal. As a result, the Chamber cannot be held responsible for published content.
1 The study was based on a survey of 47,000 consumers in 28 countries and included 2,000 Canadians.
2 2019 Accenture Survey