With the so-called ‘big data’ revolution now in full-swing, a wealth of opportunities have been opened to developers and data analysts to improve people’s lives. For example, it’s easier to track rising food prices in third world countries, or predict outbreaks of flu.

But for every ying there’s a yang, and the vast pools of data that exists about you and me can also be used to track our every move. That in itself isn’t all that surprising, but it’s interesting to see how companies such as Cardlytics are helping big banks harness this data to target customers based on their spending habits.

Cardlytics’ technology is already widely used by major financial institutions in the US, such as the Bank of America. In a nutshell, Cardlytics enables banks and retailers to target customers in a very precise way, based on their prior purchases. So, for example, if you use your card to buy a Big Mac Meal from McDonald’s, a promotion for Burger King could well feature under that item on your online bank statement.

The offers can actually appear beside transactions, in a dedicated area on the transaction page, or on a standalone rewards-summary section.

Cardlytics, Facebook and international expansion

Thus far, Cardlytics has really just been available in the US market, but the company is gearing up for major international expansion, and is looking to enter Latin America, Asia and Europe. Indeed, the UK is set to be its first port-of-call this year, and it’s already liaising with at least one big British bank.

We met up for a brief chat with Cardlytics UK Managing Director Jason Brooks earlier today, where the company was demoing at Finovate Europe – a 2-day London conference showcasing the future of financial and banking technology. But the big news today wasn’t specifically related to any international launch – those details are still being kept under wraps – the news was a little more low-key than that: Facebook integration.

Thus far, Cardlytics-powered ads (or ‘rewards’ and ‘offers’, as the official lingo goes) have been available to customers via their online and mobile bank statements, as well as via e-mail. Facebook is an obvious route to go too, given the additional data available through the omnipresent social network. So now spending habits AND your other online activities (e.g. ‘Liking’ Starbucks) can be combined.

The Facebook app isn’t yet available, but it seems that a white label version will be made available for banks to personalize and use to invite customers to connect on Facebook. So, in addition to seeing a slew of offers (e.g. 10% off your next Body Shop purchase) in your online statement, these can also be displayed in your Facebook News Feed. And naturally, this also means that anything you interact with on Facebook can be used in future targeted offers.

The company stresses that no personal banking information is entered or shared anywhere in this process. The software uses the Facebook API to create a link from an anonymous token ID at the bank to their individual Facebook ID.

“Extending our reward programme to Facebook is a really exciting development; this functionality will increase engagement between banks and their customers,” says Brooks.  “Now banks have an option to interact with their customers in new media like Facebook, without compromising any principles on security and data protection.”

Opt-in/opt-out?

In the US, the targeted advertising enabled by the likes of Cardlytics is opt-out, which means customers can click a button in their online account to tell their bank they don’t want the offers. And according to Brooks, the opt-out rate is only 1.5%.

With the Facebook app, of course, this will have to be opt-in. And when the technology is finally made available to British banks (and possibly elsewhere) later this year, it will be opt-in at first, which is perhaps reflective of the cultural differences between the two countries.

However – and this is entirely speculative – the longer term knock-on effect of this could see a sort of freemium-style banking system emerge. With banks keen to increase profits and set the economic recovery wheels in motion, it could be that customers have to sign-up for a premium, monthly-subscription account to remove the ads, though at this early stage (it’s not even available yet), it’s worth stressing that there’s no indication that this will be the case.

Cardlytics’ card-linked marketing technology has seen it partner with more than 300 banks, delivering data into the spending habits of around 70% of US households. Moreover, Cardlytics also works with businesses to help source marketing offers from retailing, restaurants, and consumer brands.

With the UK/European launch on the horizon, this is one company we’ll likely be hearing a lot more about in 2013. And the debates over targeted ads/offers/rewards in your online bank statement will commence henceforth.

Meanwhile, you can monitor all our coverage from Finovate Europe here.

Cardlytics

Feature Image Credit – Thinkstock