Leveraging Geofencing For Financial Services Marketing
With the growth of smartphone technologies, many companies are tweaking marketing efforts to include geofencing capabilities.
However, the financial services industry seems to be a bit behind the times, hesitant to adopt new marketing strategies even when they’re beneficial.
Slowly, though, it seems this trend is starting to change as geofencing shifts to become the “next big thing” in the world of marketing financial services.
An Overview of geofencing in financial services
For those who are unaware, geofencing is a fairly new technology that allows smartphone software to create a boundary around a user’s location using GPS and/or RFID.
It allows companies to market directly to consumers with location-specific products and services.
It’s used in a variety of applications and wasn’t strictly developed for marketing, but the benefits of marketing via geofencing are unparalleled.
Geofencing for Financial Services – how it works
Though geofencing had a slow start in the world of financial services, it’s quickly gaining traction due to its versatility.
Some of the biggest names in the business, including U.S. Bank, Wells Fargo and Citigroup, use geofencing in their smartphone apps to market products to customers or simply enhance their current services.
Fraud Prevention and Security
Geofencing is often used for security purposes, which greatly benefits account holders as well as the banks they use.
By tracking a user’s location, it’s easy to ensure that they are near a merchant when a card transaction is processed.
If, for example, a customer lives in California but travels to New York, the card may be declined due to suspicious activity.
With geofencing, the bank can verify that the customer is in New York so the transaction isn’t flagged. The customer is unaffected, and no further action is required by the bank or the merchant.
Merchant partnerships are a huge source of revenue for financial services, and geofencing helps expand those partnerships.
Using geofencing, financial services apps can recommend nearby merchants to customers based on location and/or customer behavior.
This type of marketing is extremely targeted and is more likely to elicit a direct response from consumers than more traditional marketing techniques.
By the same token, apps can also push special deals and promotions that are targeted to consumers in a certain area.
For example, a customer near a local hardware store may receive an alert for a percentage off their purchase. Of course, they’re much more likely to act on this offer when they’re already near the merchant.
In addition to direct marketing, geofencing also allows financial institutions to tailor services for each unique customer.
This is especially helpful for high-value customers, such as High Net Worth Individuals (HNWI).
For example, when a HNWI steps into a local bank branch, the manager is put on alert so that customer receives prompt attention.
The Barriers to Geofencing for Financial Services
The largest barrier for financial services when it comes to geofencing is, of course, privacy concerns. Tracking a customer’s location requires consent from the user, and some users have reservations about granting this access.
However, most companies find that they can assuage consumer concerns by providing something of value in exchange for privacy permissions.
Oftentimes, consumers are happy to give location information if it increases security against fraud. For others, discounts and enhanced services are considered a fair tradeoff for geofencing access.
Like most other industries, financial services must learn to adapt to new technologies if they want to stay current. Geofencing isn’t likely to disappear soon; on the contrary, it seems that this is only the beginning of its partnership with the financial services industry.
Geo-fencing (geofencing) is a feature in a software program that uses the global positioning system ( GPS) or radio frequency identification ( RFID) to define geographical boundaries. Geo-fencing allow an administrator to set up triggers so when a device enters (or exits) the boundaries defined by the administrator, an alert is issued.
How do you get the right message in front of the right person at the right time? For years it wasn’t within the grasp of marketers. Even with the invention of digital technology, marketers still ran into trouble.
The increasing use of mobile devices, ability to gather and analyze consumer data and advances in location technologies are providing new opportunities for retail banking. With the growing adoption and use of mobile banking, the financial services industry is building new functionality and selling models that can enhance the consumer experience.