The ability to take technology with you, wherever you are, has opened up new possibilities for commerce. But with that power comes new challenges.

One of the biggest problems that’s asserted itself has been the fact that technology needs to be responsive to our locations. For instance, if you’re visiting a company’s website, that site needs to decide what country you’re in so they can redirect you to the right version of their site.

Traditionally, this is done by checking the device’s IP address. But sometimes these aren’t accurate (due to VPNs and other rerouting), or a company may want to pare things down a little finer.

In these cases, the company looks at the GPS or RFID data on a mobile device to determine exactly where the user is located. The app, website or other service responds to this information accordingly. This technology is called geofencing, and it’s getting a lot of attention in the world of mobile development.

Verifying Transactions

Despite catching on in much of the app development world, companies have been slow to roll out geofencing-enabled software for financial purposes. However, several banks and other financial institutions have begun to explore the possibilities of this technology, especially for security purposes.

For instance, in 2014, MasterCard and Syniverse announced they were teaming up to allow their users a new authentication method. This opt-in service is specifically designed for use while traveling abroad. When a card is swiped and a purchase initiated, the service checks the physical location of the card owner’s mobile device (under the assumption that the card owner will be carrying the device on their person at all times).

If the card owner’s device and the card are in the same location, the transaction goes through. If they aren’t, the transaction is declined, and the card owner receives a notification.

This not only prevents unauthorized transactions, but prevents frustrating and superfluous declines of authorized transactions, which happens to many people while traveling abroad.

Partnering With Merchants

Some financial companies are exploring the possibilities of partnering with merchants with geofencing.

For instance, when you walk into a store the financial company is partnered with and you have the financial institution’s app installed on your phone, the app might notify you of special offers or deals.

Merchants generally assume that offers presented while you’re actually in the store are more likely to be explored than offers presented while you’re elsewhere.

However, this kind of technology needs to be deployed carefully, and perhaps on an opt-in basis: at this point in the technology’s development, some customers find this type of application of geofencing to be an invasion of their privacy.

Companies like U.S. Bank, which are using geofencing this way, are taking care to not send these notifications while customers are outside the store or restaurant, since customers are more likely to find these offers intrusive, irritating or otherwise distressing.

A less unsettling type of partnership, for many customers, is loyalty programs: financial companies and merchants can team up to offer you bonuses for your frequent shopping at a store, or even just for your visits.

Another option Wells Fargo has introduced involves teaming up with Yelp to determine if a merchant is cash-only when the customer walks in. If they are, Wells Fargo will guide you to the nearest Wells Fargo ATM so you can get money without an ATM fee and continue your purchase as normal.

Dealing With HNWIs

Many banks, credit unions and financial service companies know that high net worth individuals (HNWIs) make an impressive number of transactions in their institution. In some cases, the company’s success or failure depends on HNWIs and their repeat business.

If an HNWI’s account is set up so their phone notifies the company when they enter a bank branch of comparable location, this can give employees the chance to take special care of the HNWI’s needs.

This increases the chances of the HNWI remaining a loyal member or customer of the financial institution.

Geofencing in Insurance

While insurance companies are only beginning to explore what geofencing makes available to them, it holds tantalizing potential.

For instance, some car insurance companies are thinking of deploying geofencing to assist drivers on the road. If the driver has the insurance company’s app installed, it might send push notifications notifying drivers of bad traffic, hazardous road conditions, construction and other trouble.

Alternately, if a driver is young or elderly and shouldn’t travel very far, the app might send a notification to an emergency contact when they leave a pre-specified zone.

Some insurance policies only cover a specified geographic area. In this case, when an app recognizes you’re moving outside of the coverage zone, the app might notify you and attempt to upsell you on an insurance policy that will cover you in the new area.

Financial and insurance companies are starting to open their eyes to the potential of geofencing. It allows companies, and their apps, new ways to interact with customers. This has the potential to increase company revenue and customer brand loyalty, while offering customers deals and information that are genuinely valuable to them.


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