FIs adopt advertising transparency rules to protect customer loyalty in banking
2010-08-26
Through investigating how to prevent customer attrition, financial institutions have collected customer data that is more detailed and personal than the information many other industries possess. This information has been an invaluable tool when banks begin deciding how to market new products and services. However, a coalition of trade groups is seeking to place regulations on how it is used.

The American Association of Advertising Agencies, the Association of National Advertisers, the Council of Better Business Bureaus, the Direct Marketing Association and the Interactive Advertising Bureau have joined together to launch a new online service that will place a special icon on online ads.

The icon, called the "Power I," will allow consumers to click and view the data that banks, FIs and other companies use to create online advertising that targets them.

"It's about giving consumers transparency and control," Scott Meyer, CEO of the advertising information and tracking firm Better Advertising told American Banker.

However, the new service is actually part of an effort to prevent further regulation. For the past 18 months, the financial industry has been the focus of extensive financial reform legislation that has placed new regulations on customer fees and reporting. Last year, the Federal Trade Commission warned that if the advertising industry did not introduce better rules, it would begin to regulate, the magazine writes.

FIs are well aware of the sensitive information they possess and that they must be "hyper vigilant" to protect it and guard "against consumer perception that they are abusing their trusted role by using data in an intrusive manner," according to the magazine. Banks, especially during the current slew of unfavorable media attention, are extremely sensitive to the importance of retaining customer loyalty.

Many FIs have already adopted proactive measures to ensure their customers that they are serious about providing the best service possible and keeping their trust. American Express is one of four FIs that will be participating in a pilot program, the source reports. The test will incorporate "an image onto some of our online ads to inform viewers when they are being shown the ad based on their online activity, and will allow them to opt out of receiving such targeted ads," the financial services provider explains.

Additionally, this move could help FIs allocate resources and funds more wisely. Those who do opt out of the targeted ads are probably those who would not have been receptive to the product or service anyway, Meyer said.

Banks are also forming partnerships with companies to link their services to the transactions that specific customers makes. Earlier this year, Crain's Chicago Business reported that companies including Macy's, Staples and McDonald's had partnered with FIs to offer consumers special deals when they sign on to their online banking accounts.

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