data means opportunities and challenges · big opportunities and ... u.s. economy should be a...

BigDataMeansBigOpportunitiesand

BigChallenges:PromotingFinancialInclusionandConsumerProtection

inthe“BigData”FinancialEra

October2013

Big Data Means Big Opportunities and Big Challenges, October 2013 i

BigDataMeansBigOpportunitiesandBigChallenges:PromotingFinancialInclusionandConsumerProtectioninthe“BigData”FinancialEraOctober2013JeffChester,CenterforDigitalDemocracyEdmundMierzwinski,U.S.PIRGEducationFundAcknowledgements:ThankstoGaryLarsonofCenterforDigitalDemocracyforeditingandcitationreview.ThankstoJuliaChristensenofU.S.PIRGEducationFundforbackgroundresearch.ThisresearchwasfundedbytheAnnieE.CaseyFoundation.Wethankthemfortheirsupportbutacknowledgethatthefindingsandconclusionspresentedinthisreportarethoseoftheauthorsalone,anddonotnecessarilyreflecttheopinionsoftheFoundation.

2013U.S.PIRGEducationFundandCenterforDigitalDemocracy.SomeRightsReserved.Exceptforphotosandillustrations,whicharecopyright

IStockphoto.comandusedunderlicense,theremainderofthisworkislicensedunderaCreativeCommonsAttribution‐NonCommercial‐ShareAlike3.0UnportedLicense.Toviewthetermsofthislicense,visithttp://creativecommons.org/licenses/by‐nc‐sa/3.0/deed.en_US

AbouttheU.S.PIRGEducationFund:Withpublicdebatearoundimportantissuesoftendominatedbyspecialinterestspursuingtheirownnarrowagendas,U.S.PIRGEducationFundoffersanindependentvoicethatworksonbehalfofthepublicinterest.U.S.PIRGEducationFund,a501(c)(3)organization,workstoprotectconsumersandpromotegoodgovernment.Weinvestigateproblems,craftsolutions,educatethepublicandofferAmericansmeaningfulopportunitiesforcivicparticipation.Formoreinformation,pleasevisitourwebsiteatwww.uspirgedfund.org.

AbouttheCenterforDigitalDemocracy,alsoa501(c)(3)organization:TheCenterforDigitalDemocracyisattheforefrontofresearch,publiceducation,andadvocacyonprotectingconsumersinthedigitalage.Ithashelpedfosterwidespreaddebate,educatingaspectrumofstakeholders,andcreatingalegacyofgovernmentandself‐regulatorysafeguardsacrossavarietyofInternetanddigitalmediaplatforms.CDD’spubliceducationprogramsarefocusedoninformingconsumers,policymakers,andthepressaboutcontemporarydigitalmarketingissues,includingtheirimpactonpublichealth,childrenandyouth,andfinancialservices.Formoreinformation,pleasevisitourwebsiteatwww.democraticmedia.org.

ii Big Data Means Big Opportunities and Big Challenges, October 2013

Table of Contents Introduction ....................................................................................................................................... 1

I. The “Connected Consumer” and the Underbanked Consumer Now Live in a Big Data World ...... 3

1. The Data‐Dependent World We Live In ..................................................................................... 3

2. The Role of Unbanked and Underbanked Consumers in the Digital Marketplace .................... 4

3. We Face a Mobile Moment of Opportunity for Reform ............................................................ 4

4. It is an Opportunity, However, with Looming Risks ................................................................... 6

5. Multicultural Communities are at the Epicenter of the Digital Marketplace ............................ 7

6. The Data‐Driven Financial Marketplace Focuses on Today’s “Connected Consumer” ............. 8

7. The Growth of the Consumer‐Financial Data Complex ............................................................. 9

8: How Will Invisible Predictions Affect Our Financial Future? ................................................... 12

9. New Variables Used for Credit Scoring: Ubiquitous, Around‐the‐clock, Year‐round Surveillance Tracking Systems ..................................................................................................... 14

10. The Role of Online Lead Generation ...................................................................................... 15

11. Alternative Credit Data Scoring ............................................................................................. 16

12. Prescreening, Scoring, and the Fair Credit Reporting Act ...................................................... 17

II. The Underbanked in the Emerging Mobile Financial Marketplace ............................................. 19

1. Prepaid Cards, Mobile Payments, and Digital Wallets ............................................................. 20

2. Protecting Vulnerable Consumers in the Smartphone‐Connected Prepaid Card Market ....... 21

3. Mobile Payments and Mobile Wallet Markets are Growing Rapidly ....................................... 22

4. Mobile Apps and Wallets Pose Privacy Threats that Could Lead To Adverse Behavioral Targeting ...................................................................................................................................... 23

5. Loyalty Programs and Rewards Help Firms Collect Information ............................................. 23

III. Big Data and the Shopping Experience ....................................................................................... 24

1. SoLoMo and Other “Shopper Science” Technologies .............................................................. 24

2. You Don’t Decide Anymore, They Decide for You ................................................................... 24

3. Financial Marketing on Social Media ....................................................................................... 26

4. Food, Beverage, Retail, or Bank Account: All Can Play ............................................................ 26

IV: Where Do We Go from Here? Recommendations for Next Steps ............................................. 28

1. The Need for Public Education, Transparency, and Advocacy ................................................. 28

APPENDIX: Walmart Positions Itself for the New Financial, E‐commerce, and Shopping Marketplace ..................................................................................................................................... 31

End Notes ......................................................................................................................................... 33

Big Data Means Big Opportunities and Big Challenges, October 2013 1

BigDataMeansBigOpportunitiesandBigChallenges:PromotingFinancialInclusionandConsumerProtectioninthe“BigData”FinancialEraAreportbytheCenterforDigitalDemocracyandtheU.S.PIRGEducationFund

Introduction DramaticchangesaretransformingtheU.S.financialmarketplace.Far‐reachingcapabilitiesof“Big‐Data”processingthatgather,analyze,predict,andmakeinstantaneousdecisionsaboutanindividual;technologicalinnovationspurringnewandcompetitivefinancialproducts;therapidadoptionofthemobilephoneastheprincipalonlinedevice;andadvancesine‐commerceandmarketingthatchangethewayweshopandbuy,arecreatinganewlandscapethatholdsbothpotentialpromiseandrisksforeconomicallyvulnerableAmericans.1UsingadvancesindataanalyticsspecificallytopromoteeconomicinclusionandfairnessduringthisperiodoftransformationintheU.S.economyshouldbeaproactivestrategyembracedbyallstakeholders.Whilenotapanaceatoaddressgrowingfinancialinequality,awiseinvestmentinstrategiesthatharvestthepotentialofthenewdigitalfinancialsystemmaybetterenablestrugglingAmericanstomaneuveradifficulteconomicfuture.Itisalsopossible,however,thattheemergenceofapowerfuldata‐driven“Banking3.0,”(asitissometimescalled),andtheshifttoadigitalandmobileservicesfinancialsystem,couldprovidefurtherobstaclestotheconsumersmostatrisktoday—imposingnewformsofunaffordableloans,discriminatorypricing,escalatingfeesforservices,andunfairmarketingpractices.

Theconsequencesofthefinancialmeltdown,alow‐wage‐centeredeconomy,historicbarrierstoequitableaccesstoeducationandopportunity,andthetoo‐long‐ignoredone‐in‐sixAmericanswholivebelowthepovertyline,haveplacedtensofmillionsatthemargins—oroutofreach—ofthefinancialsystem.2Familiesandchildrenareatparticularrisk:Morethanathirdofsinglemothersandtheirchildrennowlivebelowthepovertyline;since2000,povertyhasgrown54percentinoursuburbsalone.3Butbeyondthegrimstatisticsandtheheart‐breakingdailystrugglesthatsomanyface,thereisalsotheglimmerofapotentialopportunity.UnderbankedandunbankedAmericansarenottotallycutofffromthechangesthatarereshapingfinancialservices.Infact,theycanhelptoinfluenceitsdirectionandgrowth.Digitalservices—especiallymobilephones—playanextraordinaryroleinhowthenewfinancialservicesmarketplacedeliversproductsandservicesforbanking,credit,shopping,andmore.ManylowerincomeandotherconsumersalreadyrelyonmobilephonestoaccesstheInternet(illustratingtherealitiesofthe“digitaldivide”thatmakeswireline‐basedbroadbandconnectionsoutofreach).4Nearly90percentofunderbankedconsumershavemobilephones;morethanhalfhave“smartphones.”Nearlyhalfoftheunderbankedalreadyusetheirmobilephonesforbankingservices.5AstheFederalReserverecentlyexplained,

2 Big Data Means Big Opportunities and Big Challenges, October 2013

“smartphoneownershipgrowthforunderservedconsumersishigherthanotherconsumergroupsbecauseofthelowcostandPC‐likefunctionalityoftoday’smodernmobilehandsets.Assuch,manyoftheunderservedaremigratingdirectlyfromcash–basedpaymentstomobile(prepaid)accounts.”Thepolicyissuesraisedbythelackofaffordableandequitableaccesstoresidentialbroadbandcontinuetorequiredebateandinterventionstrategies.However,itisincreasinglyrecognizedthatmobilephonesarequicklybecomingtheleadingonlinedevice,overtakingtherolethatpersonalcomputershavetraditionallyplayed.6Asthemarketplacelookstodefine“best”mobilemarketingpractices,asregulatorsseektoestablishrulesandguidelines,andasthefinancialandotherdigitalindustrysectorsseektobuildnewmarkets(suchas“hyper‐local”targetedonlineadvertising),ensuringthateconomicallyvulnerableAmericansbenefitshouldbeastrategicgoalduringthistransitionperiod.Thisreportisintendedtoprovideanoverviewofkeyissuesforpolicymakers,thoughtleaders,andothersconcernedaboutfinancialinclusionandeconomicopportunity.Theauthorshopethatitsrecommendationsforfurtherresearch,engagement,andoutreachprovideguidelinesfornextsteps.

“But beyond the grim statistics and the heart-breaking daily struggles that so many face, there is also the glimmer of a potential opportunity. Underbanked and unbanked Americans are not totally cut off from the changes that are reshaping financial services. In fact, they can help to influence its direction and growth.”

I. The “Connected Consumer” and the Underbanked Consumer Now Live in a Big Data World

1. The Data‐Dependent World We Live In Today,weliveinanincreasinglydata‐dependentworld.Ahistorictransformationofsocietyistakingplace,asdataprocessingandthedigitalmediafurtherconverge,ultimatelyblurringthedivisionsthatnowexistbetweenthephysicalandonlineworlds.Powerfulcomputers,communicationsnetworks,sophisticateddata‐processingtechniques,andtheuseofInternet‐connecteddevicesarethefoundationoftheeconomyandcontemporarysociety.Eachday,billionsoftransactionsfrommillionsofconsumersareinstantlycollected,analyzed,andmadeactionable.7Financialservicescompaniesarerepositioningtheiroperationsandrelationshipswithconsumerstotakeadvantageofthesechanges.Banks,credit,andretailcompanieshaveinvestedtoensuretheyhavetheabilitytogather,analyze,andmakeactionable—instantly—informationaboutourofflineandonlinebehaviors—especiallythoserelatedtoourfinancesandspending.Theyunderstandthattheymustbeabletoengageinteractivelyinrealtimewithconsumersusing“omni‐channel”communications—reachingcurrentandpotentialcustomersthroughmobilephones,socialmedia,instoresandthroughdigitalTVs.Theflowofpersonalandotherdatacomingfromthesedevicesisbeingcombinedwithotherinformation—aboutourneighborhoods,race,ethnicity,buyinghabits,socialrelationships,andmoretocreatedetailedprofilesandpredictionsaboutusandourcommunities.Increasingly,wearebeingplacedunderapowerful“BigData”lens,throughwhich,withoutmeaningfultransparencyorcontrol,decisionsaboutourfinancialfuturesarebeingdecided.

AsanofficialofFICO(thecompanybestknownforitsconsumercreditscoringservices)recentlyexplained,“Companieswilldecidehowtoconversewiththeircustomersbasedonadeepandtimelyanalysisofeachcustomer’scontext,behaviorandhistory….”Weareonthecuspofamajorshiftinhowenterprisesformulateandmanagetheirinteractionswithcustomers.”8FinancialservicescompaniesareleadingtheadoptionofBig‐Datatechniques,coveringsuchactivitiesassalesandmarketing,riskmanagement,andnewproductdevelopment.U.S.bankswerepredictedtospend$41.5billionontechnologyin2013,withJPMorganChase,BankofAmerica,Citigroup,andWellsFargosaidtospend“$7billionto$10billionannually”alone.9Lastyear,thefinancialservicessectorspentnearly$4.75billionfordigitalmarketingtotakeadvantageofhowmobilephonesandtheInternethavechangedhowconsumersinteractwithbanks,loan,andcreditcardcompanies.10AnexecutiveatFidelityInvestmentscandidlynotedthat“we’veseenaproliferationofdatathatgivesmarketerstheabilitytotargetconsumersmoreprecisely….[W]e’reatanewgoldenageofmarketing[and]havemoretoolsatourdisposalthanwe’veeverhadbefore.”11Takeaway:Thefinancialsystemisatacriticaltransitionperiod,asitrepositionsitselftotakeadvantageofthechangesmadepossiblebyadvancesindataprocessingandthegrowingconsumeruseofonlinemedia,especiallymobilephones.AdvocatesandothersconcernedaboutpovertyintheU.S.shouldtakeadvantageofthisuniquewindowofopportunitytoensurethattheinterestsofboththepoorandthosewithlowincomesaremeaningfullyaddressed.

2. The Role of Unbanked and Underbanked Consumers in the Digital Marketplace Theconsequencesofthefinancialmeltdown,alow‐wage‐centeredeconomy,historicbarrierstoequitableaccesstoeducationandopportunity,andthetoo‐long‐ignoredone‐in‐sixAmericanswholivebelowthepovertyline,haveplacedtensofmillionsatthemargins—oroutofreach—ofthefinancialsystem.12Nearly30percentofU.S.householdsareconsidered“eitherunbankedorunderbanked”andconduct“someoralloftheirfinancialtransactionsoutsideofthemainstreambankingsystem,”accordingtoa2012FDICreport.Seventeenmillionadultsliveinunbankedhouseholds(8.2percentofallU.S.households),while51millionadults—20percentofU.S.homes—areconsideredunderbanked.Minorities(exceptAsian),unemployed,younger,andlow‐incomehouseholdsaregroupswiththe“highestunbankedandunderbankedrates,”accordingtoFDIC’ssurvey.13Sadly,morethan48millionchildrenunder18todayliveinlow‐incomeorpoorfamiliesacrosstheethnic/racialandgeographicspectrum,withhigherpercentagesforchildrenfromAfrican‐American,Hispanic,NativeAmericanandother(non‐whiteor‐Asian)households.Underbankedandunbankedconsumersrelyonincreasinglypopularprepaiddebitcards,aswellasproductsfromalternativefinancialservice(AFS)providers(non‐banks),forservicessuchascheckcashing,paydayloans,rent‐to‐own,andrefund‐anticipationloans.Today,debitcardsandtheAFSmarketplacearerapidlyadoptingmobileandonline‐connectedproductsandservices.AstheCenterforFinancialServicesInnovation(CFSI)andothershaveidentified,providingservicesforeconomicallyat‐riskconsumersisanimportantwayforbanksandothercreditproviderstogeneratenewbusiness,deliveringsignificantprofitandgrowth.AccordingtoCFSI,underbankedAmericansspent$78billionin2011infeesandinterestforfinancialservices.“Thisrevenuewasgeneratedfromanoverallmarket

volumeof$682billioninprincipalloaned,fundstransacted,depositsheld,andotherfinancialservicesrendered,”itexplained.14Therevenuepotentialoftheunderbankedisjustoneoftheemergingmarketsnoweyedbythefinancialservicessector—whichalsoknowsthattherewardsofservingmulticulturalconsumers(especiallyHispanics)andthegrowingmobilecommercemarketplacewillbecriticalfortheirnear‐termsuccess.Seekingtoexpandintothesevaluablesectors,aswellasservecurrentcustomersandbuildnewbusinesses,establishedandventure‐backedstart‐upcompaniesarecompetingtooffernewservicesforcreditandloans,banking,andpayment.Theseincludedebitcards,lendingservices,mobilepaymentproducts,andotheronline‐consumer‐friendlytoolsenablinggreaterpersonalcontroloverone’sfinances.Companiesnottraditionallyidentifiedwiththefinancialservicesindustry—suchasWalmart,Google,Verizon,andscoresofothers—nowprovideagrowingrangeoffinancialservicesandproducts.Takeaway:Newopportunitiestoserveunderbankedconsumersbettermaybepossiblebytakingadvantageofrecententrantsinthefinancialservicesmarket.Telephone,computer,andothertech‐basedcompaniesmayhavedifferentpolicyprioritiesandmarketgoalsthanthetraditionalmarketparticipants.

3. We Face a Mobile Moment of Opportunity for Reform Theimpactofthemobilephoneasanonlinedeviceisatthecoreofthefundamentalchangesthatarerestructuringhowwecommunicateandengagewithboththemarketplaceandsocietyatlarge.Aswewilldiscuss,themobiledevicewillbethekeytoaccessingfinancialservicesandmuchmore—topayforgoodsandservicesandparticipateineverydaylife.Financialcompaniesarecurrentlymakinga“massive

investment”intheirabilitytousemobiledevicestoreachandserveconsumers.U.S.financialservicescompaniescomprise“thesecondhighestspenderinpaidonlineandmobilemedia”marketing.15Inone2013surveyofthefinancialindustry,“mobilebanking”toppedthelistofthemostimportantproductstopromotethisyear(followedbyautoandmortgageloans).Morethantwo‐thirdsofrespondentssaidthat“onlineadvertisingandsocialmedia”weregoingtobethe“mostimportant”mediachannelstouse,withthree‐quartersofretailfinancialinstitutionsinvolvedwithatleastonesocialmediaservice(andwith“nearlyoneoutofeveryfourfinancialinstitutionsisonFacebook”).Almost60percentsaidthatmergingofflinedataforonlinetargetingwasgoingtobeveryimportantaswell.Thefocusonmobileandonlinebankingispartlybeingdrivenbydemographictrends,especiallyyoungerconsumerswhoaremorecomfortableconductingtheirfinancialactivitiesonline,withouttheneedtowalkintoabank.Morethanhalfofallbanktransactionsarenowmadeonline(althoughwestillheavilyuseATM’sandother“physical”bankingfacilities).16Thegrowthofmobilefinancialservicesalsointersectswithotherdevelopments.Intheaftermathoftheeconomiccrisis,“householdshaveadoptednewfinancialanddecisioncriteriatodeterminetheirlifestylesandcreditbehavior,”explainedEquifax.17Financialinstitutionsarekeenlyawarethatthereisagrowingnumberofdissatisfiedcustomerswhocaneasilyswitchtootherservices,especiallythoseofferingdigitalaccess.CompaniessuchasWalmartvietoservewhattheycallthe“unhappilybanked,”consumersnotcontentwiththeservicesofferedbytheircurrentinstitution,andwhoseekalternativesthatprovidethemwithbetterfinancialcontrol.18.Thereisalsogrowinginterestbyconsumersinhavingaccessible,easy‐to‐use,andinformativeservicestocontroltheirfinancesmoreclosely.At‐riskconsumerscannowaccessservicesthatjustrecently

wouldhavebeensolidlythepreserveoftheelite.Forexample,theycannowusemobilephonestopaybillselectronically,depositacheckwithoutavisittothebank(usingthesmartphonecamera),receiveabalancewarningbytextmessage,andadd(“reload”or“topoff”)moneytodebitcardsatthousandsofconvenientlocations.19TheavailabilityofmobilepaymenttechnologiesprovidedbyPayPal,Square,andothersenablesnewandcommunitybusinessestocollectfundsfrompaymentcardswithouthavingtomakeamajorinvestment.20Awaveofchangeinhowwebankandbuywillbeahallmarkofwhat’scalledmobilepayments—aswipeofacard(ormerelycarryingyourmobilephone“wallet”)willpayforservicesandenablebankingalmostanywhereandanytime.Allconsumerswillrequiresomeformofmobile‐enabledpaymentcardtomaneuverthroughthisnewlandscapeintheverynearfuture.Thecombinationofallthesedevelopments—mobilepayments,newcompetitionandservices,digitalmediabehaviors—isunderstoodasauniquemomentfortheindustry.“We’veneverseenamarketopportunityofthissizeandmagnitude…,”explainedoneventureinvestor.“Thereisamassiverestructuringtakingplace.”21Takeaway:AscreditisextendedtomoreAmericans,theuseofnewformsofmobileandonlinebankingservicesbythiscommunitywillalsolikelygrow.WebelievethateconomicallyvulnerableAmericansformthebasisofaveryimportant—andpotentiallyinfluential—constituencythatshouldplayaproactiveroleensuringthatthisnewmarketplaceevolvesfairlyandwiththegoalofpromotingassetbuilding.Throughavarietyofcoalitionoutreacheffortsfocusedonindustryandpolicyleaders,asetofbestpracticesandrulesshouldemergethatdirectlybenefitslow‐incomeAmericans.

4. It is an Opportunity, However, with Looming Risks However,whilethenewfinancialmarketplacehasthepotentialtoprovidegreatereconomicopportunity,italsoposesnewchallengesandrisksforeconomicallyvulnerableAmericans.Itispossiblethattheshifttothedata‐anddigitallydrivenfinancialmarketplacecouldmakelifeharder.Forexample,thegrowinguseofhighlysophisticatedandpowerfulonlinetechniquesthatenablethe“micro‐targeting”ofvulnerableconsumerstoapplyforhigh‐interestpaydayloansisjustoneexample.Soistheexpansionofso‐called“e‐scores”—aformofinvisible(totheconsumer)onlineratings—thatcanhelpdetermineourcreditworthiness,“lifetimevalue,”oreventhepriceswepay.Thesee‐scorescanbeusedtoblacklistorengageindiscriminatorypracticesagainstindividualsorevengroupsofconsumers.Neweconomicstressmayalsobeplacedoneconomicallyvulnerableindividualsandfamilies,iffinancialmarketersusetheirnewdata‐drivencapabilitiestofocusprimarilyonmoreaffluentorfinanciallyrewardingconsumers.Howmuchinformationaboutone’sfinancialbehavior,race/ethnicity,orhealthconcernscanorshouldbeusedinmakingdecisionsoncredit,nowthatadvancesindataprocessingenableaperson’sactionsandbehaviortobetrackedandanalyzedonlineandoff?Inaworldwherethereistheabilitytoreachandengagethedesiredindividualwithgrowingprecisionandcost‐effectiveness,whataretheeconomicconsequencesforthosecitizensandconsumerswhodonotofferthedesiredfinancialreturns?Anotherloomingproblemisthatconsumerswillbecontinually(andcreatively)urgedtospend,asalluringreal‐timeoffers—increasinglytailoredtotheirinterestsandbehaviorbecauseofdataprofiling—appearontheirmobilephonesandonsocialmediasites.Marketing,sales,andpaymentwillallseamlesslyconvergeonthemobiledevice,creatingendlessopportunitiesformarketerstoconvinceus

tobuyproductswhenwearemostvulnerable.Theforcesshapingpersonalized,data‐drivencommercecouldunderminethefinancialsecurityofthoselivingpaychecktopaycheckandontightfamilybudgets.Inaddition,whiletheriseof“alternative”dataishelpingmakemorecreditavailabletotheunderserved,thereareimportantquestionsthatshouldberaisedaboutthereliability,fairness,andproprietyofusing,forexample,socialmedia,utilitybills,andotherrecordsassourcesofinformation.Typicalofwhatisemerginginhyper‐localconsumertargetingistheworkofonecompanythatisnowmapping“datafrommultiplesourcesontoagridoftilesthatcovereverysquarefootoftheU.S.Eachtileis100metersby100meters,andweinjectthird‐partydemographicinformationaboutthetile,aswellasdataonwhat’sphysicallylocatedthere—…retailersandsoforth.Then,weconnectthatdatawithwhereamobiledeviceisinreal‐time,orwhereithasrecentlybeen….”22Thegrowingcapabilitiestoanalyzeandmakenontransparentoraccountabledecisionsaboutpeopleandtheir“micro‐neighborhoods”couldusherinnewformsofdigitalredliningforallkindsofservices.23Newformsofdiscriminationmayemergeasfinancial(andother)marketersdeploygeospatialmappingsoftware,tiedtodemographic,financial,andotherdatabasestocloselyidentifyandclassifythebehaviorsofindividualsresidinginadistinctneighborhoodor“micro‐community.”Communitiesacrossthenationaresubjecttointensescrutinyas“location‐centricdatascience”closelymapsandassesseswhoweareandwhatwedoinverynarrowlydefinedgeographicareas.Geo‐mappingcanidentifylocationaldifferences,classifyingneighborhoodsby“socialgrade,”“buyinghabits,”and“bluevs.whitecollar.”24Marketersareable,forexample,to“learn”about“whereusersgoandhowoften;whentheygoandhowlongtheystaythere;perhapsasimportantly,wheretheydon’t

go.”25Suchanalysiscanbeusedtomakedecisionsaboutinvestinginsomecommunitiesandbypassingothers,ortotakeadvantageofconsumervulnerabilitiesthatmaybeharmful(suchastherelianceonfastfoodbyaneighborhood’sfamilies.26Takeaway:Whiletherehasbeenunderstandableenthusiasmandsupporttohelppromotenewfinancialproductsandservicestolow‐incomeAmericans,therearecriticalconcernsthatmustbeaddressed.Technologyandtheuseofdatacanplaybothapositiveandnegativeroleinoursociety.Itisessentialtoidentifyandaddresstheobstaclesnowpresentoremergingfromthemarketplacethatposearisktoalreadyeconomicallyvulnerableconsumers.Thegrowingroleofgeo‐spatialcommunityanalysisneedstobereviewedtopreventpossiblediscriminatorypractices.

5. Multicultural Communities are at the Epicenter of the Digital Marketplace Overthelastseveralyears,arobustsystemtoidentifyandtargetHispanicsandAfricanAmericansonlinehasemerged.27MarketersareespeciallyawarethatHispanics,AfricanAmericans,andAsianAmericansareearlyandenthusiasticadoptersofmobilephoneuse,socialmedia,andonlinevideoservices.28Thedevelopmentofdata‐drivenprofilesthatarebuiltaroundtakingadvantageofconsumers’raceorethnicity—whethertosellinsurance,acreditcard,orfastfood—canbeusedtosteerindividualstowardmakinggoodorpoordecisions.Theuseofracialandethnicdataforfinancialmarketing,includingidentifyinganindividual’s“language,”“assimilation,”and“Hispaniccountryoforigin,”whichcanbecombinedwithincome,religion,theiruseofadebitcardandmore,raisesimportantquestionsaboutensuringthathistoric

discriminatorypracticesarenottoleratedinthenewfinancialmarketplace.29Morethan63percentofAfricanAmericans,60percentofHispanics,and62percentofAsianAmericanswerepredictedtoownsmartphonesin2013,outpacingthewhitepopulation(at54percent).HispanicsandAfricanAmericansspendmoretimeonthe“mobileWeb”andalsowithapps.Three‐quartersofAfrican‐Americanand68percentofHispaniccellphoneusers“goonline”fromtheirphone.MorethanhalfofallAmericanswithincomesbelow$30,000ayearandwhohavemobilephonesrelyonthemtoconnecttotheInternet(asdo60percentofthoseearningbetween$30and$50,000ayear).30Thesegroupsarethesubjectofintenseresearchandanalysisontheirbuyingandfinancialbehaviorsbymarketersthatalsoincorporateculturalanalysesintotheirtargetingplans.OnestudyofHispanicsandtheiruseofmobilephonesexplained,forexample,that“ForHispanicuserstheWebismoreorganicallyintegratedintotheirlives.It’sonthego,rightnow,accesstotheirfriends,familyandinformation.”31Thecommercialdigitalmediacultureplaysapowerfulroleinhelpingshapetheidentityandbehaviorsofyouth(fromallbackgrounds).Theseyoungpeopleareenthusiasticparticipantsinandcreatorsofthedigitalculture,helpingdevelopthismarketplace(suchasthroughthegrowingpracticeofwatchingTVandbeingonlinesimultaneously).32However,theyarebeingdeliberatelysocializedthrougharangeofdigitalmarketingpracticestoembracebrands,engageinimpulsebuying,andcarelessaboutprotectingtheirprivacy.America’smulticulturalcommunitiesincludeamuchhigherpercentageofyouthandyoungadultsthanthegeneralpopulation.33Youngermulticulturalconsumersarehighlyprizedbymarketersbecausetheyareconsideredkey“influencers”helpingtodefinetrendsforthewiderculture.34Consequently,these

“digitalnatives”areoftenthefocusofintensivecampaignsdesignedtogettheminvolvedwithbrandsandproducts.35Foodandbeverage,retail,andgamingadvertiserstargetmulticulturalteens(andtheiryoungersiblings)usinganarrayofhighlysophisticateddigitaltrackingtechniques,especiallyonsocialmedia(suchasFacebook)andonmobilephones.Youthofcolorarethefocus,forexample,ofmorejunkfoodadsthanothergroups.36Totakebetteradvantageofhowtheseandotheryoungpeopleareonlinetoday,fastfoodcompaniesarequicklybuildingnewwirelesspaymentsystemsthatwillenableateentoorderandpayforamealinstantlyusingamobileapp.37Bypurposelytappingintothedevelopmentalandemotionalvulnerabilitiesofyoungpeopletofosterspontaneousdecision‐makingaboutbuyingproducts,marketersplaceboththeirphysicalwell‐being(suchasfromobesityanddiabetes)andtheirfamiliesfinancialresourcesatgreaterrisk.Takeaway:Asakeytargetfordigitalmarketing,multiculturalyouthwillbeespeciallyatrisk.Notonlywilldigitalmarketinghaveanimpactonthehealthandwell‐beingofchildrenandteens,itwilllikelycausenewstrainsontheemotionalrelationsandbudgetsoftheirfamilies.Low‐incomeyouthwillseektohavethekindofInternetaccessavailabletotheirbetter‐offpeers,andtheywillalsobevulnerabletothenearlypervasiveonlineadcampaigns.Onprivacy,whilechildrenhavesomeonlinemarketingsafeguards,teensarelargelyunprotected.Adolescentsaresubjecttoagrowingonslaughtofmarketingonsocialmediaandontheirmobiledevices.Encouragingabroadrangeofstakeholderstoaddressunfairdigitalmarketingpracticestargetingmulticulturalyouthshouldbeorganizedassoonaspossible.

6. The Data‐Driven Financial Marketplace Focuses on Today’s “Connected Consumer” Theexplosionofconsumerandtransactiondata,alongwithourcomputerdevice‐drivenlifestyle,andthegrowingcapabilitiesofmarketerstoanalyzeandusethosedataeffectively,havecombinedtobecomethedrivingforcebehindtheemergenceof“BigData”inourlives.38Financialservicescompaniesareinvestinginanarrayofdatamanagementandothercustomerrelationshipmanagementplatformstotakeadvantageofthe“poolsofdatathatusedtobeunreachable.”39Reflectingthevolume,velocity,andvarietyofdataassociatedwiththecurrentBigDataera,“2.8trilliongigabytes[ofinformation]werecreated,replicatedorconsumedin2012.”40Financialservicescompaniesnowengagein“PrecisionMarketing”usingfine‐tuned“customersegmentation”techniques;incorporate“timetoevent”andother“predictive”modelsdesignedto“optimize”themarketingprocess;andcreate“microsegments”—datathatcanallbeusedintheconsumercreditreviewprocess.Theyuse“textmining”and“semantic”analyticssoftwareto“discoverpatternsandhiddenvalue”inwhatconsumerssayonline(suchaswithsocialmedia).41Companiesareworkingtoconnectalltheirinformationthatwaspreviously“silo‐ed,”sotheirvariousbusinessdivisionscanaccess“customer‐leveldata”andusethatinformationtomakedecisionsoncredit,collections,fraud,andmarketing.Prof.RobertStine,whoteachesstatisticsattheWhartonSchool,UniversityofPennsylvania,andwhoresearchescreditscoring,observedthat“we’reseeinganewleapinthekindof[accessible]dataandthetechnologythatisavailabletomanipulatethatdata.”42Forexample,CapitalOne“continuallyseekstorefineitsmethodsforsegmentingcreditcardcustomersandfortailoringprojectstoindividualriskfiles….”Thecompany“conductsmorethan65,000testseachyear,

experimentingwithcombinationsofmarketsegmentsandnewproducts.”Ituses“transactionhistories”thatindicatea“customer’sapproximateannualincome,spendinghabits,onlineusagepatterns,andtransactiontypes,alongwithhowheorshetypicallymakespayments….”43Usingitsnewdatacapabilities,oneunnamedbank

createdasystemabletomonitorthefinancial“lives”ofcustomers—trackingdeposits,withdrawalsandothertransactions.Whenanactivitytwostandarddeviationsormorefromthenormwasdetected,thesystemimmediatelyalertedandbriefedthecustomerservicefunction.So,areal‐timeoffertailoredtothatchangecouldbemadeatonce.Usingimmediacyandfamiliarity—hallmarksofasocialinteraction—thebankcreateda60%actionrate,anda38%conversionrate,byofferingrelevantcontactatthatmomentofgreatestopportunity.Thesamebankalsoexploredlocation—bycombiningthewhenofcustomerinteractionswiththewhere….44

Thisabilitytoanalyze,predict,andimmediatelyactonaconsumer’sdataillustratesthechangeshelpingtransformthefinancialservicesindustry.Companiesinthissectornowenjoy“unprecedentedlevelsofinsight”touseintheirconsumerdecision‐making.AsTSYS,aleadingpaymentprocessornoted,mobile“technologieshavegreatlyenhancedthisdatacollectionbygivingorganizationsvaluableinformationaboutindividuals’transactions,preferencesandonlineinteractions.”Theharvestingoftransactiondata,accordingtoTSYS,“willprovideamorecompletepictureofcardholderbehaviorand,inturn,identifywhichcardholdersaremostprofitable.”45Suchcommentsreflectanintenseinterestbymanyintheindustrytobypassindividualswhohavebeenidentifiedashavingaloworlessprofitable“lifetime

value,”andfocustheirbestoffersandservicesonthewell‐to‐do.Takeaway:Inthiserainwhichmarketersknowsomuchaboutindividuals,andcanreachthemliterallyanytimeandanywhere,criticalquestionsaboutequityshouldberaised.Willthemostattractiveoffersandopportunitiesforfinancialgainbeofferedonlytothefortunate?Willalreadyeconomicallyat‐riskconsumersbeidentifiedfortheir“value”togeneratehighfeesandratesofinterest,creatinganewcyclethatwillcreateadditionalobstaclestotheirsurvival?

7. The Growth of the Consumer‐Financial Data Complex Financialinformationonaconsumerhasbecomeahighlysought—andnowdailysold—commodity.Theamountoffinancialdatathatcanbereadilyobtainedtodayonanindividualisstaggering.46Thereisaliteralexplosionofcompanies,includingdatabrokers,retailers,creditcompanies,andmanymorethatvietobuyandsellinformationonaconsumerinordertoassessmoreaccuratelyhowtotreatcurrentandprospectivecustomers.Creditbureausandotherdatacompanieshaveestablishedonlineproducts—overflowingwithfinancialinformation—tocomplementtheirtraditionalofflineservices.Acxiom,Experian,andEquifax,forexample,nowhavewell‐defined—andgrowing—digitaldivisions.47Inapresentationtoits“FinancialServicesandInsurance”clientslastyear,Merkledescribedtheneedforcompaniestohavea“singlerepository”thatprovidesa“consolidatedviewoftheconsumeracrossalltouchpoints.”Thatincludescapturingandunderstandingindividuals’offlineandonlinemediause(includingmobile,social,andprint),“lifeevents,”demographics,andwhat“Life‐TimeValue”segmenttheyarein.Theeaseofmergingofflineandonlinedata(so‐calleddataonboarding)haspresented

marketerswithnewopportunitiestoevaluateconsumers.48“Nothavingtheabilitytolinkthedigitaladdresswiththeircustomerhistorymeansyoucouldbemissingrevenueopportunities,”explainsAcxiom.Its“SingleCustomerView&Value”capturesallthewaysaconsumercaninteractwithdigitalandin‐storemarketing,includingtheuseof“bankdata.”49Real‐timedatacollectionpracticesbringtogetheradiversesetofinformation,includingwhat’scalled“first‐party”and“third‐party”information(dataonanindividual’stransactionscombinedwithdemographicandonlinesources,respectively).Consumersarelargelyunawareoftheextentofdatacollectedtodayontheiractivities,andhowthisisdone.Marketing‐automationsoftwareenablesthousandsofcompaniestohavethecapabilitytocaptureaconsumer’s“digitalbodylanguage.”Theycancapturedataateachinteraction,including“websitevisits,downloads,socialnetworks,andsearches,”forexample.Theycanknowwhenaconsumerhasopenedupanemailandhowapersonhasinteractedonasiteorseriesofwebsites.Companiescanincreasingly“monitorsocialconversationsto…gaininsight,dislikes,andperceptionsand[then]drive[consumers]directlybackintoyoursocialcampaigns,socialpropertiesandcommunities.”50Facebookandothersocialmediaarekeyplatformstopromoteproducts,includingfinancialservices.OnFacebook,campaignscanbetailoredto

“regions,cities,zipcodes,languages,brands,andproductstogaincompletecontrolofcustomertargeting…[and][d]rivetraffictospecificoffersorexclusivesocialdeals,”explainsoneleadingdata‐orientedmarketingcompany.51SomeofthelargestdatabrokersintheworldarenowpartofFacebook’sdatatargetingapparatus.52Thesedevelopmentsreflectthecontinuousmonitoringandassessmentofindividualconsumers,formsofwhattheNewYorkTimeshasreferredtoas“commercialsurveillance.”53Asaspokespersonforglobaladvertisinggiant(andincreasinglydata‐driven)WPPrecentlyexplained,“We’reallmovingtosomepointinthefuturewherewecanallmonitorexposureatanindividualorhouseholdlevelandthatwillallgetfedintoadatamanagementplatform.”WPPcoinedtheterm“adaptivemarketing”todescribenewcapabilitiesofusingdataforcontinuoustargeting,usingaconsumer’s“dataexhaust”tohelpinformthenextmarketingcycle.54Takeaway:Datacollectionpracticesthatimpactallconsumersaregrowing,helpingtofundamentallyrestructurehowwebuyandpayforproducts.Individualconsumerscannowbetrackedbymarketersandspecificallytargetedwithpersonalizedoffersandevenprices.Thisprocesscouldfosteradditionalandunnecessaryspendingthatmayharmalreadyfragilebudgets.

ThereIsARangeofToolsAtMarketers’Disposal

Financialmarketerscanmixandmatcharangeoftoolsthatidentify,bothonlineandoffline,financiallyvulnerableconsumers,suchasthefollowing:• Nielsen’sP$ycheproductuses“financialbehaviors”thathelpmakeupits58“actionable”

segments,whichare“basedonage,familystructure,incomeandassets.”Onecanidentifyconsumerslabeled“PaydayProspects,”“ethnicallymixed,”andthosewho“oftenfindthemselveslivingpaychecktopaycheck.”Oracompanycoulddecidetomarketto,orignore,“themostfinanciallychallengedsegment.Thoseclassifiedas“BottomLineBlues”“haveloweducationsandinsecurejobs,survivingoncashinsteadofbankorinsuranceproducts.”55

• Datalogixsellsour“knownfinancialbehavior”soaconsumercanbetargetedonline,includingonFacebook.Thedataitusescover110millionU.S.householdsandare“verifiedbyatleasttwo3rdpartysources,”collectedfrom“creditheadersourcespermissibleformarketinguse,”“estimationsfrommodeledcreditdata,”andpublicrecords(deedsandthecensus).Consumerscanbetargetedbasedontheiruseof“creditcards,creditstatus,networth,investments,householdincome”anduseof“financialservices”forbankingandinsurance.Datalogixidentifiesconsumers’estimated“creditworthiness,”listingwhethertheyare“poor,fair,good,verygoodorexcellent”prospects.56

• Data“co‐ops”orexchangesbuyandsellanarrayofconsumerinformationthatcanbeboughtandsold.ThroughBlueKai’sExchange,forexample,companiescanpurchaseinformationtoidentifyconsumersbasedon“estimatedhouseholdincome,”“employmentstatus,”whethertheyarea“homeownerorrenter,”andiftheyhave“propensities”for“personalfinance”products.”57

• LeadingdatacompanyAlliant’sinformationcontains“detailedonlineandofflinepurchasetransactionsandpaymenthistoriesonover135millionconsumers”thatare“updatedmonthly.”Foronlinetargeting,Alliantsellsinformationonthe“FinanciallyChallenged”(“PaymentScore:Bottom50%,Bottom20%,Bottom5%,etc.),“CreditCardRejects,”“CreditChallenged,”and“RiskyConsumers.”58

• InSeptember,Acxiomintroducedanewproductsothat“forthefirsttimeinhistory…marketersareabletofullyleverageallkindsofdata—first‐party,transactional,digital,social,mobileandotheraudienceinformation.”59

• Mobilephonescanbetargetedwith“trueprecision”byfinancialmarketersusingAcxiom,consumer,andpurchasedata,accordingtoAdHavenBullseye.60

Usingsuchdataproducts,underbankedconsumerscanbeidentifiedandtargetedonlineforpaydayloans,prepaiddebitcards,moneytransfer,andsimilarservices.Forexample,onedatatargetingcompanythatfocusesontheunderbankedreliesona“proprietaryformulaof127predictors”basedontheanalysisof“1000sofrawdatapointsperindividual.”Thisinformationcomesfromdatabasesthatcontain“profileinsightsonalmosteveryU.S.householdandadultconsumer,”including“financialdata,geo‐location,purchasehistory,householddata,[and]lifestages.”ThesamecompanyalsoranksU.S.neighborhoodsontheir

“financialhealth”—theabilityoftheirresidents“tosatisfytheirexistingfinancialobligations”(brokendownusing9‐digitZipcodes).61Theexpansionoftheconsumerdatafinancialprofilingsystem,anditsuseinreal‐timedecision‐makingonawiderangeofproductsandservices,requirescrutinyonbehalfoftheunderbankedandunbanked.Financialproductsandservicespromotedtotheunderbankedandunbankedshouldbereviewedfortherolethatdatacollectionplaysintheiroperations.

8: How Will Invisible Predictions Affect Our Financial Future? Today,companiesusedecision‐managementsystemstobuilda“sophisticatedpredictivemodelforeverydataminingfunctionunderthesun.”Oneoftheoutcomesofthisprocessisthegrowingarrayofso‐called“e‐scores.”62Thesescoresrateindividualconsumersbasedonanumberofvariablesconnectedtotheirfinancialstatusandbehaviors.Suchidentifierscansignalwhatcompaniesbelieveconsumers’“lifetimevalue”(LTV)tobe,their“propensity”forpurchasinggoods,andhowtheyshouldbetreatedintermsofoffersandcustomerservice.63Thescoringfunctionisincorporatedin“decisionmanagementandprediction”softwareusedbybanksandothers,capableofratingmillionsofcustomersin“minutes.”64Scoresaremorethanjustamoreprecisesegmentationstrategy.Theycanserveasadigital“scarletletter”toconveyapotentiallynegativeassessmentofindividualsthatcanaffecttheservicestheyareoffered,whetherornottheybecomeamagnetforhigh‐interestpaydayloans,oraregivensecond‐classcustomertreatment(madetowaitlongeronthephoneforassistance,forexample,asthosewith“better”e‐scoresaregivenpriority).Newformsofbothovertandsubtlediscrimination,hiddenfromview,maybeoneoftheconsequencesthate‐scoreshaveoneconomicallyvulnerableconsumers.Inadditiontoscoringusedtoinfluenceordetermineourfinancialstatus,so‐called“propensity”scoresaresoldtohelpmarketerskeenlyunderstandconsumers’potentialinterestinspecificfinancialproductsorthattheyarelikelyassociatedwithsomenegativeevent.Usingdataonourbehavior,spendingpatterns,assets,whatwehavepurchasedpreviously,themediawepreferandmore,propensityscores“providerichinsight”intohowaconsumerislikelyto“respond,convertandremainloyal….”65Theycanbeusedtoidentifycustomerswho“arelikelytospend

more,”ordon’trequire(orneed)significant“discounting.”Banking,creditcards,insurance,retailandothermarketsbuythese“propensity”scoringproducts.(Acxiomalonehas“[t]housandsofprebuilt,propensitymodelscores…available.”)66Theexpansionofdatacollectionenablespropensityandpredictivemodelingonaconsumertoincorporateinformationconnectedtoour“favoriteATMsclosetoworkorhome,favoritegasstationsalongadailycommute,preferredsupermarketsandpreferredonlinestoresforshopping…[andeven]ourfavoritecashwithdrawalamounts.”67Itcanalsoinclude,amongthe“decisionmodelvariables,”datarelatedtoour“lifetimevalue,”whatwepurchase,our“clickstream”activity,andhowwehaveinteractedwithacompanypreviously.68Fornow,wecanonlysurmisewhattheimpactofsecretive,data‐drivenscoringmaybeonfinancialopportunity.Ifafinancialmarketeridentifiersconsumersashavinga“propensity”tobuymorethantheycanafford,orincontinualneedofpaycheck‐advanceloans,willthistriggerafloodofpaydayloanadsontheirmobilephones,aswellasenticingdigitaldiscountcouponsthatpromoteover‐spending?Financialmarketersarealsointerestedinidentifyingindividualsbasedontheir“influencer”potentialonsocialmedia—whetherwhattheysayanddoonlinecanswaytheirfriendsandotherstolikeorpurchase.“Influencerscores”arebeingusedbasedontheanalysisofanindividual’spostingsandrelationshipsonFacebookandothersocialmedia.69Althoughnotgenerallyusedincreditdecisions,financialservicescompaniesaregatheringandanalyzingsocialdatathatisused—fornow—intheirmarketingofproducts.

WillScoresBeUsedToDiscriminate?TheroleofscoresasapotentialdiscriminatorytoolthatcanharmtheinterestsofAmericansseekingbetterfinancialopportunitiesisreflectedinhowsomeoftheseproductsarenowbeingused,asthefollowingexamplessuggest: DataandscoringcompanyAlliantexplainsthatits“ProfitSelectaccessesthecurrenttransaction

historiesofover130millionconsumers”andallowscompaniesto“cultivatethegood,weedoutthebad…,”“knowwhotheslowornon‐payersare,inadvance…”and“identifythebestcustomersearlyonandfocusyourbestoffersonthem.”70

ScoresfromNetmining,whichuse“vastpoolsofdatainreal‐time,”measurethe“valueeachindividualis.”Consumersaregiven“true‐interest”scores,whichdynamicallychangebasedontheiractions.71

Consumersareawarded“customerqualityscores”using“predictivebehavioralmodels[that]evaluatethousandsofdatafeatures.”Thesescoresareusedto“‘tellapart’highqualityvisitorsfromtherest….[E]achofyourvisitorswillseeauniquesectionofproducts.”72

“P3scores”thatreflect“Personal,PurchaseandPropensity”informationonconsumers,basedontheirspendingandbehaviors,areintegratedinto“300millionuniquecookies”amonth)usedforonlinetargeting.(Cookiesareaformofonlineprofilingsoftware.)73

Location,onlinebehavior,andscoringaremergedinAlliant’s“real‐timeofferdecisioning”“GeoPerformance”scores.“Peopletendtolivenearpeoplelikethem.Soifyouknowthearea,youcanpredicttheperformanceofthepeoplewholivethere,”Alliantexplains.Datausedforthescorecoverthebehavioralwaterfront:householdincome,recencyofpurchase,productpreferences,detailedpaymentandtransactionhistories.74

Mobilephoneusersarescoredaswell.Data‐targetingcompanyDstillerysaysitcan“scoreandranktheuniverseofmobileuserevents…throughourobservationofbillionsofuseractionsovertime.”75

Forexample,creditscoringcompanyFICOhasdevelopeda“predictivescorecard”thatanalyzestherelationshipof“socialinfluencers.”76Epsilon,anothermajorproviderofdataandwhichworkscloselywithFacebook,gathers“public”socialmediainformationaspartofitsconsumerservices,including“tweets,posts,comments,likes,shares,andrecommendations,”aswellas“users’IDs,names,ages,genders,hometownlocations,languagesandnumbersofsocialconnections(e.g.friendsorfollowers).”Epsilonsaysthatit“doesnotassociatesocialmediadatawithanyotherinformationstoredinourdatabases.”Butitalsosays,onitsfinancialservicespage,that“Understandingcustomersandwhentheyare‘inmarket’forfinancialservicesand

insuranceiscriticalfortoday’smarketer,”raisingquestionsabouthowsuchsocialdatamayultimatelybeused.77Takeaway:Questionsshouldberaisedabouttheoverallroleanduseofscoring,especiallyforeconomicallyvulnerableAmericans.Inadditiontopossiblediscriminatorybehavior,itwillbeessentialtoknowwhatsuchscoresmeanintermsofadditionalservicesofferedtohard‐pressedconsumers.78Oneglaringproblemisthatunliketraditionalcreditbureaureports,whichbylawmustgiveconsumersfreeaccessonceayear,e‐scoresareunregulatedpractices.Thepublicneedsaccesstothesescores,alongwithapublicdebateontheirroleintoday’sfinancialsystem.

9. New Variables Used for Credit Scoring: Ubiquitous, Around‐the‐clock, Year‐round Surveillance Tracking Systems Theemergenceoftheseproductsraisesotherquestionsthatreflectthedirectionsoftoday’sfinancialmarketplace.Companiesmaywishtosurveilunderbankedconsumerscontinually(inordertoidentifywhentheymaybeconsideredforapproval).Forexample,Experianurgesitsclientstoconsider“radicalprocessing.”Tocapturethese“newentrants”and“creditseekers”better,itrecommendsimplementinga“continuousprospectmonitoringprocess,usingpropensityscores,triggersandattributes….”Thisinvolvesusingdataonconsumersabouttheiruseofcreditandtheir“behaviorpatterns”foraslongastheprevioustwoyears.Thisanalysiscanhelpfinancialcompanies“confidentiallyidentifyprospectswithinthenear‐primesegmentswhoaretrendingupwardand…makeanoffertothesereceptiveconsumers.”79Therearealsoemergingcreditmodelsthatrelyonawidervarietyofconsumerdatafortheirdecision‐making.Forexample,ZestFinancesaysitsmissionistomakesurethatpeople“beingleftout”ofthecreditsystem,eveniftheymayhave“badcredit,”areconsideredforloans.Tomakesuchloans,Zest“analyzesthousandsofpotentialcreditvariables—everythingfromfinancialinformationtotechnologyusage—tobetterassessfactorslikethepotentialforfraud,theriskofdefault,andtheviabilityofalong‐termcustomerrelationship….”80Theinfluxofnontraditionaldatamayhelpsecurecreditforconsumerswhodonothaveatraditionalcredithistory,butquestionsonthescopeandproprietyofthedatausedmustberaised.Forexample,

AvantCreditpromisestoprovide“immediacy”throughtheuseof“machinelearning”todeterminelendingrisk,ratherthanrelyingsolelyonacreditscore.Itsplatform“analyzesdozensofdatasourceswhilethecustomerisfillingoutanapplication,usinganalgorithmtofindacustomer’s‘true’creditworthiness.”81

CreditOptics“supplementalscoreintroducesanewdimensiontotheassessmentofcreditworthiness:Stability.”Thescore“gaugesriskbyexaminingthevelocityofaccountopeningsalongwithchangesintheconsumer’sphonenumbers,addressesandadditionalidentifiers—allinrealtime.”82

Moven’sCredScoreproductuses“acombinationoffinancialwellness,socialmediametrics,transactionalinsight,andfeedbackloopstoprovidecustomerswiththeabilitytounderstandtheirday‐to‐dayfinancialbehavior.”Consumersaregiventheirscore“inreal‐time....CREDisusedasatransparent‘relationship’score—soweshareyourscoreinreal‐time”tounderstand“howthataffectsyourmonthlyfees,otherprocessingcharges,interestratesonsavings,availabilitytocreditfacilities.”83

Takeaway:Theavailabilityofnewsourcesofdatausedforcreditreviewneedstobeanalyzedfortheirfairness,effectiveness,andrelationshiptoloanproducts.

10. The Role of Online Lead Generation E‐scoresplayaroleinanothergrowingpracticethatimpactsvulnerableconsumersespecially—onlineleadgeneration.“Leadgen,”asitiscalled,isthepracticeofcollectingandsellinginformationaboutanindividualasa“lead”whomaybeseekingaloan,creditcard,oraproductthatrequiresasignificantexpenditure.Onlineleadgenerationwasusedasatechniquetoidentifypotentialcustomersforsubprimeloansduringtheperiodthatledtothefinancialmeltdown.84Todayitisanearly$1.7billionbusinessintheU.S.85Leadgenerationisconductedasatypeofauction—consumersaresoldtothehighestbidder,meaningtheywon’tgetthebestdeals.Marketersemployanarrayofstealthtacticstocollectinformationfromconsumers,includingtheuseofthelatest“BigData”technologies.Forexample,consumerscanbeencouragedtofilloutanonlinerequestformoreinformation—or

offeredanonlinecalculatortodeterminethecostofaloan.Consumers’activitiescanalsobesurreptitiouslygatheredonline,astheiractionsareobservedonnumerouswebsites.Theirdata—whetherpersonalinformationsuchasnameandaddress(onaform),orcookiesplacedontheirWebbrowser(inthecaseofthecalculatororotheronlinetrackingtool)—areanalyzedandscoredtocreatewhattheindustrycalls“quality”or“hot”leads.Companiesanalyzetheinformationtodeterminetheidentityandvalueofthatprospect,whichisthensold—ofteninrealtime—inawelldevelopedleadmarketplace.86CompaniessuchasLendingTree,Quicken,andBankrateareleadingsellersofsuchonlineleads,whicharesoldtocompaniesorbrokersseekingtosellpayday,mortgage,andprivateschoolloansandsimilarproducts.87

SEARCHENGINEMARKETING:Financialservicesadvertisersarealsoheavilyinvolvedwithsearchenginemarketingtowinoverpotentialcustomersand,byencouragingthemtovisitawebsiteorfilloutaninformationrequest,tocollectdatathatcanbeusedforleadgeneration.88QuickenLoans,whichreliesontheInternetforitsmarketing,usesnearly47,000keywordsandspendsanywherefrom$120,000to$198,000perday.LendingTreespendsapproximately$73,000dailyforits41,000searchterms;Bankrate.comreliesonmorethan126,000terms,spendinganywherefrom$32,000to$48,000daily.Majorbrick‐and‐mortarfinancialcompaniesfocusonsearchmarketingaswell.BankofAmerica,forexample,usessome63,000searchterms,spending$11,000to$122,000aday.89GooglehaspaidcloseattentiontohowAfricanAmericansandHispanicsusesearchservicestomakebuyingdecisions.90Avery“sophisticatednetworkofhighqualitypaydayleadgenerationwebsites”thrivesonlinetoday,includingSpanish‐languagesites,thathelpstoselltheseoftenunaffordableloanproducts.91Leadgenerationcompaniesnowusethelateststate‐of‐the‐artdata‐driventechnologiestodiscoverindividualswhowillberesponsivetopaydayloanoffers—includingwhenconsumersareusingtheirmobilephonesoronFacebook.92Companiesofferingloansorleadscanfeeddataintosuperfastcomputersthatidentifyindividualsasprospectsbasedontheirbehaviors,actions,andothervariables.Theseconsumerscanbeservedanadinmillisecondsandcanbefollowedwherevertheygoonline.93

Consumersarealsounlikelytobeawarethatonlineleadgeneratorsconduct“testing”tohelpensurethattheirwebsitestriggertheresponsestheyseekfromlargelyunsuspectingconsumers.94Leadsforloansandotherfinancialproductsoftencomefromonlinecompaniesthatmostconsumersbelieveareinformationalsites,buttheymaketheirrevenuesfromcollectingdataandsellingleads.Amongonlinelead‐generationcompanyDatalot’sclientsareBankrate.com,Efinancial,HomeAdvisor,andeHealth,Datalotoperatesitsownlead‐exchangesystemcalled“lead.io,”whichenablesleadgenerationcustomers“toacquireand

processconsumersacrossmultiplechannelsatscale…[and]providesreal‐timeinsightintoleadvalueandtrafficquality….”Inanotherillustrationofhowtechnologyfusedwithdatapracticesenablesindividualstobeassessed,Datalotsaysit“statisticallydeterminesacustomer’svalue,anddeliversonlythemostactionable,high‐valueprospectstothesalesforcefromtheseaofwidelyvaryingconsumerinterest…[using]proprietarytechnologytoisolateanddeliveractionablecustomerprospects.95Itprovides“one‐stop”targetingforusersofFacebook,Google,Yahoo,Twitter,andMicrosoft’sBing,regardlessofwhethertheconsumerusesadesktopor

mobilephone.Facebook,whichopeneditsownadexchangelastyear,isalsoworkingwithonlineleadgenerationcompaniesandpayday‐stylelenders96Takeaway:Theroleoftheonlineleadgenerationindustry,anditsimpactontheunderbankedandunbanked,arenotwellunderstood.Theindustry’suseofsophisticateddata‐drivenonlinetechniquesenablespaydaylenderstoreachvulnerableconsumersregardlessoflocation.Publiceducationandsafeguardsarerequiredtoaddressthesepractices.97

11. Alternative Credit Data Scoring Lendersusecredit‐riskscorestodeterminethelikelihoodthatapotentialcustomer“willrepaytheirvariouscreditobligations.”98FICO,aleadingproviderofthesescores,notesthatthree‐quartersofallmortgageloansare“underwritten”withitsscores(andnearly“10billionFICOscores”areusedyearly).However,64millionAmericans“havelittleornotraditionalcredithistory,”accordingtoExperian,creatingaclassofconsumersconsiderednoteligibleforcreditorforcedtoacceptnon‐primeloanterms.99CFSInotesthat“millionsofAmericanscontinuetogowithoutaccesstoaffordable,high‐qualitycreditproducts,inpart,becausetheylackalongcredithistoryordonothaveacredithistoryatall.Thisquandarycouldbeatleastpartiallyresolvedbytheuseofalternativedata.”100PolicyorganizationsincludingCFSI,thePoliticalandEconomicResearchCouncil(PERC),andtheCorporationforEnterpriseDevelopment(CFED)haveallsupportedalternativedatacollection,includingtheuseofso‐calledfull‐fileutilityreporting.101Conversely,whileunderbankedandotherat‐riskconsumersmaybenefitfromtheseproducts,thedatatheyrelyonandhowthatinformationissubsequentlyused

needstobereviewed.Theuseofsomenon‐traditionaldatahasraisedconcernsfromsomefinancialconsumeradvocates,includingtheauthoritativeNationalConsumerLawCenter(NCLC),whichisconcernedovertheirreliabilityasmeaningfulpredictorsofcreditworthinessandtheappropriatenessoftheiruse.Forexample,NCLChaspointedoutthatforthelowestincomeat‐riskconsumerstoqualifyforwinterenergyreliefprogramssuchasLIHEAPinmanystates,theymustfirstbedelinquentinpayments.NCLChasalsopointedoutthatutilityreportingisextremelyinconsistentacrosssectorsandacrossstates.102Recognizingthatservingso‐called“thin‐file”consumerscanbeagoodbusiness,somecompanieshavedevelopedproductsthatusenon‐traditionaldatatoevaluateconsumerapplications.Equifaxoffersinsightintohowcreditcompaniesseetheunderbankedascriticallynewimportantmarkets,explainingthat“Retailbankingisundergoingchange…makingithardertoidentifyandcapturepotentiallyprofitablehouseholds.…[T]raditionalconsumerriskassessmenttoolsarelimitingmanyfinancialinstitutions’successatthepointofsale.Theyrelyheavilyonnegative

informationthatcanbedatedandunreliable.Asaresult,customersthatcouldpresentsignificantrevenueopportunityarewalkingoutyourdoorandcustomersthatmayultimatelycharge‐offarebeingapproved.”103Examplesofthedatausedbythesenewcredit‐scoringproducts(whichcanalsocontainamoretraditionalanalysis)includethefollowing: Equifax’s“InsightScoreforRetail

Banking,”which“leveragesitsdataon25millionso‐called‘unscorable’customerswithnotraditionalcredithistory,”usesmortgageandloanrepayments;income;wealthandassets;demographics;utility,pay‐TVandtelecommunicationsbillpayments.104

VantageScore(createdbycredit‐reportingcompaniesEquifax,Experian,andTransUnion),oneoftheleadingprovidersofsuchscoringservices,addsinformationonaconsumer’s“rental,utilityandcell”payments.105

FICO’s“ExpansionScore”uses“aggregateddata”(seesectionbelowonaggregatedproducts)fromsuchsourcesas“cellandlandlinetelephoneutilityinformation,membershipclubrecords,[and]judgments.”Madeforthe“credit‐underservedmarket,”thescoreisaimedat“recentimmigrants,youngadults,recentlywidowedordivorcedandmaturecash‐spender[s].”106

CoreLogic’sproductshelpto“identifypreviouslyhiddenrisksandnew

lendingopportunities.”Itexplainsthat“property,landlord/tenantcreditandpublicrecorddataelementsrepresentuniqueinsightintoborrowerdebtandassets.”Itsso‐called“FCRA‐compliant”datausedforthescoreincluderenterleaseapplications,collections,courtrecords(failuretopay,judgmentsforrent,evictionwritsorwarrants),propertytransactions(liens,propertytaxamount),alternativecreditinformation(onlineandstorefrontcash‐advancelending,installmentlending,rent‐to‐purchaseinquiries),andborrower‐specificpublicrecords(judgmentsformoney—childsupport,deficiencyjudgment,taxliens,bankruptcies).107

Today,then,thereisarobustdebateamonghowsuchdata,suchasutilitybills,shouldbeusedinapplicationstohelppredictcreditworthiness.108Loomingasakeyissueaswellisthegrowingavailabilityofsocialmediaandnewsourcesoffinanciallyrelateddigitaldata.Takeaway:Therangeofinformationthatcanbecollectedandanalyzedforconsumercreditdecision‐makingwillcontinuetogrow.Whilealternativecreditscoringcanbeaboonfortheunderbanked,thereneedtobestandardsandsafeguardstoensurethatanynewdataareusedappropriately.

12. Prescreening, Scoring, and the Fair Credit Reporting Act Banksandotherlendershaveaccesstoscoringproductsthatenablethemtoidentify,analyze,andthentargetaprospectiveconsumermoreprecisely.Totheextentthatsuchmodelingdataareusedto“prescreen”anindividualaspartofthe“firmofferofcredit”process,theFairCreditReportingAct(FCRA)regulatesthesepracticesandprovidesconsumerswith

strictconsumerprotections,includingtheexplicitrighttoopt‐outofhavingtheircreditfilesusedforprescreenmarketing.However,marketersclaimthatmuchofthefinancialandotherdatatheyusetomakedecisionsonwhomtotargetfalloutsideoftheFCRArules—sincesuchdataaretiedonlytoadvertisingtopromoteinterestina

brandorproduct,not,purportedly,tocreditdecisions.WhiletheFairCreditReportingActrestrictstheuseoffinancial(includingmodeofliving)dataincreditreportstocredit,insurance,ormarketingpurposesonly,thefirmsclaimthattheyarenotusingsuchdatatomakefinancialoffers,onlytobuildaudiences.Theyalsoclaimthatthefilesdevelopedarenotonindividualconsumers,butonclustersofconsumers.NotsubjecttoFCRAregulation,theyassert,arescoresandotherproductsthatidentifyconsumersonanaggregatebasis—whichforthemmeansinformationnarrowedtoasmallclusterofhouseholdsattheZIP+4level.109However,giventhecapabilitiesofthecontemporarydata‐drivenconsumerlandscape,anarrayofdetailedinformationcanbeusedtocreateaconsumerprofileandthendelivera“micro‐targeted”adormarketingmessagedesignedtoinitiateaprocessleadingtoatransaction(suchasthesaleofafinancialproduct).Asadsforcreditcardsandloanproductsaredelivereddirectlytoconsumersontheircomputersandmobilephones,andarebasedondatathathaveanalyzedaconsumer’sbehavior,history,andfinancialtransactions,shouldthesepracticesnotbeconsideredaprescreenedofferundertheFCRA?Whatcriteriaareusedtoperformtheprequalificationassessment,anddotheyorshouldtheytriggertheFCRA?Ontheonehand,datacompaniesarefairlycandidaboutthecapabilitiesofthemarketplacetoidentifyaconsumerforaspecificproduct.Experian,forexample,recommendstoclientsthattheyusean“onlineacquisitionsstrategy”involvingthe“prequalifying[of]consumersonlinetomanagerisksofprospectsbeingevaluatedforunderwriting.”Creditmarketers“whochoosetoexpandintotheonlinechannelshaveintegratedtoolsthatassessaprospect’sriskpriortotheapplicationprocess,”itexplains.110Financialservicescompaniesclaimthatsuch“aggregated”scoringproducts—whichtheysayaren’t

linkedtoaspecificindividual—arepermissibleundertheFCRA.Butanexaminationofthecompositionandintentofaggregatedproductsraisesquestionsabouttheroleofthesescores,andtheneedfornewsafeguards.Forexample,theseunregulatedproductsprovidefinancialcompaniesinformationon“capacitytopay,financialstress,financialactivity,”aswellaswhetherahouseholdina“micro‐neighborhood”will“fileforbankruptcy,”“belookingtopurchaseanewautomobileandlookingforfinancing,”orbeacreditborrowerthatithassomehowdeterminedis“likelytobecomealiabilityinthenearfuture.”111Amongthe390metricsavailableintheCreditStylesProproductofferedbyEquifaxisits“3.0NeighborhoodRiskScore,”whichidentifieswhetherthere’sa“likelihoodahouseholdinaparticularZIP+4willfileforbankruptcy.”112Therearealso“aggregated”FICOscoresfor“marketingapplications”thatareusedtopredict“thelikelihoodthatanexistingaccountorpotentialcreditcustomerwillbecomeaseriouscreditriskwithin24months.”Thescore“identifiesandprojectsthefullrangeofcreditrisks”forawiderangeoffinancialproducts,includingautoloans,bankcards,payingrentormortgageandmore.ThesedataprofilesarealsoconsideredoutsidethescopeoftheFCRA.113Theexplanationofhowaggregatedscorescanbeusedonlinealsosuggeststhattheirintendeduseissignificantlytofocuson—ifnotsingleout—anindividualconsumer.AsexplainedbyIXI(adivisionofEquifax),itcannow“differentiatevisitorsinreal‐time”to“reachmorevisitorswiththedesiredstandardprofileandpropensitiesforproductsandservices.”Itcan“servetherightofferwiththerightmessageandcreative[theadormarketingcontent]basedonvisitors’likelyfinancialpositionandpurchasetendencies.”114Onecandigitallytargetconsumersby“wealth,income,spendingandabilitytopay,byfinancialandeconomicbehaviors,”as

wellasbehaviorsrelatedtoproductssuchasmobilephones,cableTVsubscriptions,retailshopping,and“travel,leisureandentertainment.”115IXIprovidesthefollowingproductsthatitsaysfalloutsideoftheFCRA: Income360Digital:“apowerful

estimateofyourprospects’andcustomers’totalhouseholdincome”;

DS$Digital:“anestimateofahousehold’sspendingafteraccountingforfixedexpensesoflife—housing,utilities,publictransportation”;

AbilitytoPayDigital:“ranksonlineconsumersbasedontheirexpectedabilitytopaytheirfinancialobligations”;

FinancialCohortsDigital:“datainvolvingconsumerassets,income,spending,andlikelyavailabilityofcredit.”Companiescanprovide“premiumofferstovisitorslikelytohavesignificantfinancialpotentialandsavelowervalueoffersforothers.”116

Datatargetingthatenablestheincorporationofaconsumer’sofflineandonlineinformation—what’scalled“onboarding”—arealsoclaimedtobeFCRAcompliant.“Customersareleavingpiecesofinformationatnumeroustouchpointsthat

arelikebreadcrumbsandmarketersarestrugglingtomakesenseofthem,”theCEOofoneonboardingcompanyexplained.Thecompanytakesthese“breadcrumbs”andmergesthemwith“IPaddresses,emailaddressesandzipcodes,”whicharethen“matchedwithmorethan500datapointsfromapproximately250millionUSconsumers….”117Yetthispracticeenablesthemorepreciseidentificationofindividualsbyconnectingtheironlineandofflineidentityinformation.118Takeaway:Creditbureausandfinancialservicescompaniesarecompilingexpandingdatasetsonconsumerstomakedecisionsabouttheirfinancialprospects.Yetmuchofthisinformationtheyclaimisn’tpersonal,andthereforepurportedlyfallsoutsidecurrentfederalFCRArules.Areviewoftheroleofaggregatedscoringandotherservicespurportedtobe“FCRAcompliant”isurgentlyneededtoensurethateconomicallyvulnerableconsumersarenotbeingunfairlytreatedbythesepractices.

“Customers are leaving pieces of information at numerous touch points that are like bread crumbs and marketers are struggling to make sense of them,” the CEO of one onboarding company explained.

II. The Underbanked in the Emerging Mobile Financial Marketplace

1. Prepaid Cards, Mobile Payments, and Digital Wallets Thefinancialmarketplaceisinaperiodofacceleratedchange,asprepaidcardsaretiedtoonlineservices(suchasmobileapps);asthemobilepaymentbecomesaprimarywaytointeractforbankingandshopping;andasthemobilephone“morphs”intoacredit/debitcard(orpersonalbankerandshoppingassistantonthego).AstheFederalReserveBankofBostonstatedlastMay,the“rapidgrowthinuseofsmartphonesandmobileapps,”theroleof“non‐banks”(includingPayPalandGoogle)offeringfinancialproducts,andthe“convergenceofonline,mobileandPOS(pointofsale)channels”ishelpingdrivethegrowthofthemobilepaymentsmarketplace.119Theunderbankedandunbankedwillbedirectlyaffectedbythesedevelopments.Ontheonehand,ifcompaniesandgovernmentdevelopsafeguardsandfairservices,theycanbenewopportunitiestoconserveresourcesandspendwisely.Buttheycanalsoplacenewpressuresonvulnerableconsumersandfamilieswhowillbedelugedtospendmore,asthedataprofilingenabledbytheseservicescreateasteadystreamofsophisticatedandpersonalizedpitches.Today,prepaiddebitcards,whichenableaconsumerto“load”moneytopayforexpenses,areakeyfinancialinstrumentforunderbankedandunbankedconsumers.Prepaidcardsareagrowingpartofthefinancialservicesindustry,enablingconsumerstogainaccesstoformsofelectronicpaymentwithoutneedingtoqualifyforcredit.The2012FDICUnderbankedreportsaysthatoneintenhouseholdsusesthisservice.“Forthosewithlittleornonetworth,prepaidremainstheirprimaryandoftenonlychoice,”explainsapresentationbyAcxiom.Halfofprepaidconsumers“areunlikelytodealwithatraditionalbankorcreditunion,”and

“aremuchmorelikelytobeHispanicorAfricanAmerican,”itnotes.120Debitcardsenablegreatercontroloverspending,asoneknowsexactlyhowmuchonehasonthecard.Economicallyvulnerableconsumersprefertheirabilitytocontrolspendingthroughprepaidcards.121AsConsumersUnionnotes,todayavarietyofprepaidcardsare“mainstreamfinancialproducts,”regularlyusedby“[m]illionsofAmericans”with“theirwages,governmentbenefitspayments,taxrefundsandotherincomeregularlyloaded.”Lastyear,GeneralPurposeReloadable(GPR)andotherprepaidcards“wereusedin1.3billiontransactionstotaling$77billion,”andwereexpectedtogrowto$167billionin2014.”Prepaidcardsarealsoa“paymentsolution”that“meetstheneedsofthegeneralpopulation,”includingconsumerswhohavebankaccounts.122Thereisagrowingnumberofprepaidcardproviders,fromtraditionalinstitutionstorecententrants,suchasWalmartandPayPal.123However,astheNationalConsumerLawCenterhasnoted,GPRcardshaveweakerconsumerprotectionsthanpayrollorgovernmentbenefitcardsordebitcardslinkedtobankaccounts.124Thegreatestconcernofmostconsumeradvocatesisthatprepaidcardshaveservedasasafeharborforvulnerableconsumersfrombothhigh‐costpaydayloansandbankaccountoverdraftfees.However,cardsarebeginningtoemerge,withpaydayloanandoverdraftfeatures,thatimposenewfees,thuserodingthepotentialtobeapositivetool.AsprepaidcardsconnecttotheInternet,enablingreal‐timemarketingofadditionalservices,newfeesmaybeimposedaswell.125Ifprepaidcardsaretoserveasacost‐effectiveandfairfoundationforunderbankedandunbankedconsumers,theyneedtomaintainlowfeesandtransparentpracticesduringthistransitionperiod.

Takeaway:Theprepaidcardmarkethasbecomeacornerstonethatprovidesfinancialservicestotheunderbanked.Asadditionalfeaturesareaddedtoprepaidcards,newfeesandfeaturescouldbeimposedthatleadtounanticipatedexpensesforvulnerableconsumers.Inparticular,overdraftfeesorpaydayloan‐typefeaturescouldoverridethebenefitsofprepaidcardsforvulnerablepopulations.

2. Protecting Vulnerable Consumers in the Smartphone‐Connected Prepaid Card Market Theintegrationofprepaidcardswithmobilephonesandappsenablesunderbankedconsumerstoaccessfeaturesthatcanprovidemoreeffectivecontrolovertheirresources—suchasrecord‐keepingtools,remotecheckdeposit,andopportunitiesfordiscountsandrewards.126Forexample,whenoneis“linkedtoaPayPalaccount,andusesitsprepaidcard,itunlocksservicessuchasonlinepaybackrewards,anoptionalsavingsaccount,immediateaccountalerts,andonlinebudgetingtools.127ButincreasedonlineaccessalsoopensupadigitalPandora’sbox,filledwithdatacollection,newopportunitiesforuserfinancialprofiling,andcontinuous“callstoaction”tospendmoney.Financialandothermarketershaveconductednumerousresearchstudiestodeterminehowbesttousemobilephonestosellproducts.Onestrikingfindingisthatmostindividualsviewtheirmobiledeviceasapartofthemselves—notsomedistantdigitaltool.Googlerecentlycommissionedanthropologicalresearchonconsumerattitudestowardstheirphones,andfoundthatmostconsumerswouldgiveupchocolateorbeerbeforesurrenderingtheirmobilephone.128Newwaystogetfurtherindebt,however,mayalsobeoneofthehallmarksofthisnewmarketplace.Throughthecollectionofunderbankedconsumers’financial

information,includingwhattheyspendtheirresourcesonandwhere,Internet‐connectedprepaidcardoperatorscanmakehard‐to‐resistoffersthatappearpreciselyduringthedecision‐makingprocess.Real‐timecredit,withpaydayloan‐typeterms,willincreasinglybecomepartoftheunderbankedconsumer’sfinanciallandscape.Themergingofprepaidcardswithonlineaccesswillenableconsumerstoapplyforcreditpreciselyastheyconsider(throughonlineadsortheuseofdigitaldiscountcouponsinstores)buyingproductsorservices,evenwithcriticalexpensessuchasmedicalbills.129Forexample,thisholidayseason,PayPalwillofferinstantcreditaccessbyintegratingitsappwithits“BillMeLater”service.AsaPayPalofficialexplained,“Forthefirsttime,intheappthatlaunchedtoday,creditisbuiltdirectlyintotheapp.Youcanapplyforalineofcreditfromthemobileappanditisnotlikeathree‐dayprocess,wewillbasicallygiveyouadecisionandalineofcreditwhileyouarestillinthatappinamatterofaminutes.”130Themobilephone’sroleinpromotingandprocessingcreditalsoraisesconcerns.Themobiledevice’ssmallscreen,anditsconfigurationtoserveasaveryeffectivedigital“salesperson,”restrictshowmuchinformationcanbedeliveredtoaconsumer.Currently,therearenorulesinthe“wildwest”worldofwhat’scalledm‐commerce(mobilecommerce).Willalreadyvulnerableconsumersshoppingfortheirchildrenduringtheholidayshavethetimeorinclinationtoseehowmuchinterestwillbecharged,orthetermsofserviceconcerningdatacollection,byreviewingthedigitalfineprintdisplayedontheirmobilephone’ssmallscreen?Moreover,asdataprofilingdrivessuchpersonalizedcreditoffersinrealtime(awareoflocation,moreover),andasadvertisersdeliberatelyusemessagingthattriggersemotionsratherthanreason,willaconsumerbecapableofmakingthewisestdecision?

Takeaway:Theintroductionofnewcreditandloanservicesthatareintegratedintomobileapp‐connectedprepaidcardsrequiressafeguards,includingasetofbestpractices.Real‐timeloanoffers,especiallythosetiedtoaconsumer’sdataprofile,raisesnewfinancialrisksfortheunderbanked.Principlesoftransparency,disclosure,andfairnessshouldbeappliedtothisnewfeature,aswellastotheroleofmobiledevicesprovidingfinancial‐relatedservices.

3. Mobile Payments and Mobile Wallet Markets are Growing Rapidly TheabilitytopayforproductsthroughaswipeoruseofacardormobiledeviceatnumerousPointofSale(POS)locations,andtoengageinfinancialservicesnearlyanywhere,isatthecoreofthemobilepaymentsystem.POSopportunitieswillabound,atthegroceryshelf,inretailaisles,andforpublicservices.Consumerinteractionswithfinancialservicescompaniesandtheirnetworkswillbecomearoutinedailyfeature.Atthemomenttherearecompetingtechnologiesandcompaniesallworkingtobuildoutthemobilepaymentenvironment(withpolicymakersinvolvedaswell).Regardlessofwhatstandardorstandardsprevail,therewillbeanacceleratedtransitiontoPOSandmobilepaymentsthathelpsreconfigureconsumerfinancialservicesaswenowknowthem.Standaloneprepaidandbankcardswilleventuallymergewithsmartphones—enablingthatdevicetobecomethemuch‐discussedmobilewallet.Leadingcreditcard,phone,onlinemarketing,andothercompaniesareallworkingonmobilewalletinitiatives.Forexample,theGoogleWalletenablescustomers“tostoretheirdebitandcreditcards”ontoitsplatformanduseittopayfortransactionsatPOSterminals(whichuseitspreferredtechnology,callednearfieldcommunications,orNFC).131TheISISmobilewalletconsortium,formedbyAT&T,VerizonandT‐Mobile,isdevelopingitsown

technologicalstandardsforthemobilewallet.132Companiesareenthusiasticallyofferingvariousmobilewallets,astheypositionthemselvesbothtoleadinthisnewareaandalsoreapthefinancialbenefitsgainedbyofferinganintegratedsetofservices.MasterCard’sMasterPass,forexample,isdesignedto“unify”allofauser’stransactionsandprovidea“aconsistentexperiencewhetherthepurchaseismadeatthecashregisterwithaphoneorcreditcard,online,orthroughabrowseronthesmartphone.”133PreCashintroducedamobilewalletaimedatconsumerswithoutabankaccountorcreditcard“thatenablesinstantremotecheckdepositsandbillpayfromasmartphone.”Billscanbepaidto“utility,wireless,cable,Internet,autoloan”andothercreditors.PreCash’sdevicecanalsobeusedto“topoff”theamountofcreditonthephonesoftheirfamiliesorothercontactsabroad.134Varioustechnologicalandstandardsgroupsareworkingtoperfectthemobilepaymentsandmobilewalletssystem.TheMerchantCustomerExchange(MCX),createdbyWalmart,Target,7‐Eleven,andBestBuy,willenablethousandsofstorestoacceptmobilepaymentsintheU.S.135Theconvenienceofmobilepaymentsandusingone’sphoneaswellasacreditanddebitcardwillseeseriousadoptionbyconsumers.Butquestionsaboundaboutwhatthecostswillbe.Willaseriesofdailytransactionsresultinadditionalfees?Willconsumerdatabesharedbythevariouspartnersworkingtodevelopthesenewservices,creatingnewwaystoprofileandtargetvulnerableconsumers?Takeaway:Themobilephonewilleventuallybecomealeading—ifnotdominant—waywepaybills.Thismarketplacerequiresanalysisandtheestablishmentofsafeguardsonbehalfoftheunderbankedandunbanked.

4. Mobile Apps and Wallets Pose Privacy Threats that Could Lead To Adverse Behavioral Targeting Whilethegrowthofmobilepaymentservicesprovidesnewopportunitiesandthecapabilitiestocontrolone’sfinances,italsoopensupthepotentialforfurthercollectionanduseofconsumerdata.Aslegalscholarswrote,“Mobilepaymenttechnologiesoffertheabilitytocollectmoreinformationthanbefore,andshareitwithdifferentparticipantsintransactions,providinganattractiveserviceenhancementtobothmerchantsandpaymentproviders….”Theynotedthatmoremerchantswillbeableto“collectpersonallyidentifiable”information,andshareitwithfinancialservicescompanies(includingthecompaniesthathelpprocessthesetransactions).136Thesepotentialprivacyrisksareatoddswiththeoften‐voicedindustryclaimthatuserswillhavegreatercontrolovertheir

informationinthisnewera.Theimageof“empoweredconsumers”isofteninvokedbyindustry,despiteresearchindicatingthatfewconsumersreallyunderstandhowthedatacollectionprocessanditsvariousapplicationsactuallywork.137Whetherthegeneralpublic,especiallyeconomicallyvulnerableconsumers,willhaveanyprivacyorothernewconsumerrightsisanopenquestionatthemoment.Themobilepaymentlandscapeshouldbeencouragedtoreducefees,providegreaterservices,andensurebetterprotectionoftheinformationofallconsumers.Takeaway:Mobilephonesposeamajorprivacyconcernbecausephonescancollectbothtransactional(whatyoudoandwhereyougoonline)andlocationalinformation.Privacyandotheradvocatesneedtobeencouragedtofocusonwaystoprotecttheprivacyofeconomicallyvulnerableconsumers.

5. Loyalty Programs and Rewards Help Firms Collect Information Leadingfinancialcompaniesaredevelopingloyaltyprogramsthattakeadvantageofboththereal‐timeaccessibilityoftheindividualconsumerandalsotheinformationthatcanbegatheredandmonetized.138Underbankedconsumersmayfindsuchprogramsespeciallyattractive,believingthatthroughearning“points”andotherloyaltyrewardstheycanbuildupresourcesforneededpurchases.Buttheseservicescanposeriskstotheirfinancialwell‐being.Some400financialinstitutions,includingBankofAmerica,Regions,andPNC,workwithloyaltyprogramproviderCardlytics,includingwithdebit,credit,andpre‐paidcards.Thecompanymines“detailedpurchasedata”toidentify“anarrayofbuyingbehaviorsformillionsofconsumers,”explainingthatthey“knowwhatconsumersbuy—basedonactualtransactions.”Thisinformationismade“actionableformarketers”andplaced“in

theonlineandmobilebankingstatements”ofcustomers.139“Whenconsumerslogintotheirdigitalbankstatements,theyseeadvertisingforproductsandservices,chosenforthembasedontheirrecentpurchases.Theyclicktoaccepttheoffer,visitthestoreorwebsite,andthenusetheirdebitorcreditcardtoreceivecashbackfromtheirbank.”140Whiletheserewardsareattractivetoconsumers,fewarelikelytobeawareofthedatathatarecollectedandhowtheymaybeusedtomaketargetedfinancialoffers.Takeaway:Loyaltyprogramsarebeingembeddedintonewbankingservicesthattakeadvantageofconsumerdatatomakeongoingpersonalizedoffers.Thisraisesbothprivacyconcernsandthespecterofanotherpossiblewaytheunderbankedmaybeunfairlysingledouttoacceptnewformsofexpensiveloansandspendmoreoftheirlimitedresources.

III. Big Data and the Shopping Experience

1.SoLoMo and Other “Shopper Science” Technologies TherolethatBigDataandnewapproachestofinancialservicesplayinthelivesofvulnerableconsumersismorethanjustaccesstocreditandbankingorthetoolsusedtopayforproducts.Itisreshapingthedailybuyingandshoppingexperience,changingovertimewhatwemaypayforappliances,clothing,andevengroceries.141Muchoftheinnovationinmobilepayments,useofsmartphones,andonlinemarketingisbeingspurredbytheeconomicrewardsexpectedastechnologyfundamentallychangeshowweshopandpayforourpurchases.Retailandgrocerychains,onlineadvertisingpowerhouseslikeGoogle,creditcard,andphonecompaniesareallactivelyparticipatinginthistransition.Thefieldknownas“shoppersciences”isworkingquicklytobringtolocalstorestheabilitytousedataandmobilephonestodrivesales.Intensivelyresearchedtoadvancethegoalofaseamlessandcontinualshopping“experience,”theindustryhasdevelopedanumberofparadigmstodescribetheprocess—including“Path‐to‐Purchase,“ZeroMomentofTruth,”and“SoLoMo(combiningsocial,mobileandlocationdataandstrategies).”142Throughconsumers’dataprofiles,whichincludeonline,in‐storepurchase,andfinancialdata,“hyper‐local”andpersonalizedmobiletargetedadsande‐discountcouponswillbesentatthemosteffectivetimeofday.Thesecommunicationswillbevirallypromotedbybrands’socialmediamessagesonproducts,andpaymentorloyaltycardsmart“apps”thatknowwhenconsumersarenearorinsideastorewillurgethemtobuy.143Advancesindatacollectionandanalysishaveenabledretailerstolinkin‐storesaleswithtargeteddigitalmarketing,includingonmobilephones.144Theproliferationofmobilephoneswillenabledistinctmarketing—andinstantpayment—pitchestobesenttomultiple

individualsinafamily,includingchildren—alltoreinforceamessage.AsaMondelez(Kraft)executiverecentlyobserved,“Themobilephoneistheonedevicethatyouhavewithyoueverysecondoftheday….Mobileisdisruptingconsumers’path‐to‐purchaseaswellasin‐storeexperience,fromtheaisletotheregister.”145Takeaway:Shopperscienceissignificantlychanginghowwemakebuyingdecisionsandinteractwithstoresandservices.Itispartofthechangesconnectedtomobilepaymentsandonlinemarketingthatareusheringinthenewfinanciallandscape.Areviewofhowchangesingrocerystoreandotherretailshoppingfromthesetechnologieswillaffecteconomicallyvulnerableconsumersisrequired.

2. You Don’t Decide Anymore, They Decide for You Thesamepredictivemodelingandsegmentationinformationusedtoscoreconsumersforfinancialservicesisbeingappliedintheretailsector.Whencombinedwiththeabilitytoreachaconsumerinrealtimeandatanylocation,theresultscanbethatstorescreate“marketingofferssoprecise,sotargeted,thatcustomersthinktheyweredevelopedjustforthem,”accordingtoaKXEN‐sponsoredreport.Asonedatatechnologistexplained,“Withbehavioralprofiling,companiescandeterminehowmuchaconsumerwillpayforaproduct,anddelivercouponsselectivelysothateachcustomer’sdiscountreflectswhattheyarewillingtopay.”146Thekeydifferenceisthatinthepastcustomersdecidedwhetherornottolookfor,collect,anduseacoupon,whileinthenewmodelcompanieswilldeterminewhogetswhichcoupons.Morethan92millionAmericansusedamobilecouponlastyear;e‐couponsareexpectedtolargelyreplacepaperonesinthenearfuture.147

Offerswillalsobebasedonourgeography—wherewelive,thestreetswecross,andplaceswevisit.Geo‐fencesandotherlocation‐awaretechnologiesarecloselymappingandanalyzingtheindividualandcollectiveresourcesofever‐morediscretecommunities.148Hyper‐localtechnologiescanhelpcompaniesanalyze“existingcustomers”andalsoidentify“peopledisplayingsimilarbehaviorsandpreferences.”149Thisincludeshowweinteractonlineandofflineaswell.150Illustratingagainthecross‐industryusesofdataanalytictechnologies,credit‐scoringcompanyFICOisexaminingtheuseoflocationalinformation,explainingthattheabilitytoaccessGPSdata“providesawealthofhiddenpredictiveinformationaboutyourcustomers’activity.”Marketerscandetermine“theinteractionbetweenthepathtakenbythecustomer”andvariouscommunitylocations,providinga“powerfulmechanismtoinfluenceaperson’s”behavior.151Wedonotyetknow—butneedto—whatgeo‐relateddesignationsorinferencesarebeingattributedbothtoconsumerswhostruggleeconomicallyandtotheirphysicalenvironment.152The“one‐to‐onemarketing”modelofdeliveringthe“rightadtotherightpersonattherighttime,”whichisatthecoreoftoday’sadvertising‐drivene‐commercesystem,willalsobegintoinfluencethepricesaconsumermaypay.BigDatatechnologieshavehelpedcreate“analyticoffermanagers,”whichuse“sophisticatedtime‐to‐event(TTE)scorecardmodels”basedontheobservedbuyingbehaviorforspecifiedtimeframes,”andwhichprocessesthousandsofdecisionvariables….”Theresult,explainsFICO,isawayto“executetargetedoffersonamassivescale,inthecontextofreal‐timeinteractions.”153Thepotentialfornewformsofpricediscriminationexistsinthisnewdigitalmarketingenvironment,astoolsaremadeavailablethatidentifythe“rightorwrongpriceattherighttime”forasingleconsumer.

Howthedata‐drivenshoppingprocessultimatelyinfluencesconsumersisstillanopenquestion.Ontheonehand,theInternetmobilephoneallowsconsumerstocheckandcomparepricesmoreeasily—what’snowcalled“showrooming.”Armedwithmoreinformationorcompetitiveoffers,there’sagoodchancethatareasonablebuyingdecisionwillbemade.154Butthereisalsoaveryrealriskthatanindividual’sabilitytohavethetimeandabilitytomakereasonableconsumerdecisionswillbeinfluenced—ifnotoverwhelmed—bythepowerfulcombinationofmarketingforcesatwork.Financiallystrappedandsensitiveconsumerscouldbeharmedbythesedevelopments,iftheyareunfairlytargetedforproductstheymaynotrequireoratpricestheycannotafford.Thereareconsequencesbeyondbustingthefamilybudgetaswell,includingtotheirhealth,asquick‐servicerestaurants,foodandbeveragemarketers,andevendrugcompaniesembracethenewdigitalmodelformarketing.155Takeaway:Newformsofcommunityredliningandotherdiscriminatorypracticesmayemergeasmarketerstakeadvantageoftheirabilityto“micro‐target”individualsandtheircommunities.Anexaminationisrequiredonthegrowingcapabilitiesandinterestofmarketerstousepersonalizedpricingforconsumers,creatingpossiblenewformsofdiscrimination.

3. Financial Marketing on Social Media Anewfrontierfordata‐drivenfinancialmarketingisonsocialmedia,especiallyFacebookandTwitter.Already,Visa,MasterCard,AmericanExpress,Chase,andCitibankareamongthetop‐30advertisersonFacebook.156Facebookandothersocialmediasitesprovidenewopportunitiesforfinancialservicescompaniestoengageindatamining,targeting,andinfluencingconsumersandtheirnetworksoffriends.157Thesocialmediastructureisacomplex,evolving,andpurposelyopaquesystem.ButbecausecompaniessuchasFacebookrequireindividualstoprovidepersonalinformation,theamountofdatathatcanbegatheredandmadeactionableissignificant.Facebookitselfiscandidaboutitsinterestinworkingwithbanks,creditcardcompanies,andothers.AsonetradearticleonarecentABApresentationbyFacebook'sheadofglobalmarketingforfinancialservicesexplained,"Youdon’thavetotellFacebookwhatfinancialproductsthispoolofpeoplehasordoesn’thave—theydon’tcare.AllFacebookneedstoknowisthatyou’veidentifiedatypeofconsumeryou’dliketofocuson.Facebookusesyourlisttofindusersinitssystemattachedtotheemailaddressesandphonenumbersyou’vesupplied.Facebookcanthenbuildaprofileofotheruserswhomatchthe‘digitalaccountholder’segmentyou’vedefined.”Facebooksaysitdoesthiswith“astonishingprecision.”158Financialservicescompanies(likemostothers)areinvestinginwhatarecalledsocialcommercesolutions.159Throughtheseservices,whichhelporchestratecomplexsocialmediamarketingcampaigns,companiescanengagein“richdatacapture,”asMerkledescribesit,onindividualsandtheirfriends.OtherfinancialmarketersareusingFacebookfor“newleadsfortheirloanandrefinanceoffers,”involving“category,behavioralandemail”targeting.160

TAKEAWAY:Facebookandothersocialmediaarequicklybecomingthenew“publicsquare,”andwillgrowinimportanceasplacesofinfluenceandwheremarketingandsalesoccur.Theseservicesarealsosuccessfullymigratingtomobiledevicesaswell.Thereareopportunities,however,toproposeasetofbestpracticesfortheemergingsocialmediaindustryandfinancialservices,especiallyrelatedtopaydayloans,leadgenerationandotherproductsthatimpactunderbankedandunbankedconsumers.

4. Food, Beverage, Retail, or Bank Account: All Can Play Financial,retail,foodandbeverage,andothersarealsousingthesameadvanceddatatargetingstructuretotrackandreachindividualsonline.Aswithonlineleads,financialfirms,foodcompanies,andothermarketerscan“buy”therighttodeliveraverytargetedmessagetoanindividualconsumer.Through“adexchanges”anindividualwiththedesiredonlineprofileorrecord(suchasfinancialbehavior)issoldtothehighestbidderinmilliseconds.Thatmessageisthendeliveredtotheindividual’shomeorworkcomputer,mobilephone,and—verysoon—eventheirTVset.161Real‐timebidding,usingadexchangesandotherformsof“programmatic”buying,ispredictedtogenerate$3.34billionthisyear,comprisingafifthofonlineadbuying.Itisexpectedtogrowto$8.69billionby2017.162The“BraveNewWorld”ofadvertisingisnowbeingrunbywhatarecalled“MathMen”(andwomen),notjustcopywriters.Althoughstilllargelyoutofpublicview,marketingisbecomingmoreembeddedintooureverydaylives.Itwillbefurtherintegratedintoallofourexperiences,

packagedasappealingentertainment,freeservices,andeven“brandedcontent”disguisedasnews.Butthegoalofsuchadvertisingwillbetoobservesilentlywhatweandourfriendsdo—andusethatinformationforwhatwillbethelifelongprofilingofindividualsforcommercialpurposes.163Theintertwinedforcesofdatacollectionanddigitaldeviceadoptionenablea“360‐degree”targetingenvironment—“anytimeandanywhere”—accordingtotheindustryrefrain.Althoughtherewillbeafocusonservingthewell‐to‐doandmiddleclass,itislikelyeveryonewillbeatarget(since“influence”andpositivewordofmoutharedesirableoutcomesinadditiontobuyingproductsinthenewsocialcommerce‐orientedenvironment).Inotherwords,

economicallyvulnerableconsumers,especiallyfamiliesandyouth,willnotlikelyfindrespitefromtheincreasinglypersonalizedandpervasivepitchesthatwillcontinuallyrevealthemselveswhenweshop,transferfunds,sendmoney,orcheckourbalances.Takeaway:Technologicaladvancesthatcollect,analyze,andmakeactionableconsumerdataarenowatthecoreofcontemporarymarketing.Thepublicislargelyunawareofthesechangesandtherearefewsafeguardsinthisnewmarketplace.Economicallyvulnerableconsumers,andespeciallyyouth,willbecontinuallyurgedtospendtheirlimitedresources.

IV: Where Do We Go from Here? Recommendations for Next Steps

The Need for Public Education, Transparency, and Advocacy ThenextseveralyearsareacriticaltransitionperiodtoensurethatunbankedandunderbankedAmericansspecificallybenefitfromthedevelopmentsaddressedinthisreport.Webelievethatthenewfinancialmarketplacecanoperateinafairandequitablemanner,andhelpgeneratenewopportunitiestopromoteeconomicsecurityforindividualsandcommunities.Buttoaccomplishthis,weshoulddevelopaproactiveagendathatspecificallyidentifieshowtheshifttodigitalandmobilefinancialservicesshouldbeusedtoprotectandservetheinterestsofAmerica’seconomicallyvulnerableconsumers.Weshouldfurtherexaminetherolethatdataanalysisplaysintheunderbankedandunbankedfinancialmarketplaces.Workshouldbedonethatidentifiesasearlyaspossiblebestpractices,potentialharms,andareasrequiringindustrycodesofconduct,publicaccountability,andregulation.Achiefgoalwouldbetonurturethepositivepotentialofthedigitalfinancialsystemandreduceitsnegativeconsequencestoindividuals,families,andchildrenasmuchaspossible.Tohelpcreatethisagenda,aninitiativeshouldbecreatedthatreachesouttoNGOsandcoalitionsalreadyworkingonfinancialreformandeconomicinclusionandjustice.Workingwithexistingpartnershipsandformingnewalliancesasrequired,thereshouldbeoutreachtootherconsumer,health,educationandparentgroups,industry,philanthropy,academia,andgovernment.

A. Public Education Fewconsumers—norevenmanyNGOs—understandthedimensionsofthecontemporarydata‐drivendigitalmarketplace.Asresearchshows,consumersarelargelyunawareofhowtheirinformationiscollectedandused,aswellasprotectedbyregulatorysafeguards.164

Whilethereisextraordinaryconsumeracceptanceoftheroleofmobilephonesanddigitalmarketingintheirlives,despiteconcernsaboutprivacy,muchisnotwellpubliclyknownabouthowdatacollectionpracticesforthefinancialservicesindustryactuallyworks.Consumersneedabetterunderstandingoftheemerginglandscapeofdata‐drivenfinancialservices—howproductssuchasmobilepaymentsandappsoperate,andwhattherewardsandrisksultimatelyare.Clearlywrittenandpubliclyaccessiblematerialsshouldbeavailablethatprovideboththe“bigpicture”of“BigData”transformationaswellasinformationonspecifictechnologies,services,andissues(includingprivacy).Suchbilingualinformationshouldbedeliveredusingarangeofmedia,fromprintandonline(includingsocialmedia)tomobilecommunicationsandperhapsevengaming.Materialsshouldbeconceivedandthendistributedthroughallianceswithreligiousgroups,economicjusticeadvocates,civilrightsorganizations,andconsumerandfinancialreformadvocates.

B. Best Practices Thisisatumultuousperiodforthefinancialservicessector.Traditionalconsumerexpectationsandrelationshipsarechanging,ascompetitionfurthererodestheoverwhelmingdominanceofthemajorfinancialbrands.Companiesarealsosteppingupthepaceofinnovation,introducingnewproductsandservices(especiallyformobile).However,theforcesofconsolidationareatplayaswell,likelyleavingfewercompaniesinthelongtermthatrelyonincreasinglystandardizedpracticesformarketing,datapractices,etc.165A“windowofopportunity”isnowopentohelpsetstandardsforproductsservingtheunderbankedthathelp—notimpair—theirabilitytoconserveandgrow

theirassets.Anobjectiveassessmentneedstobeconductedonthedata‐gatheringandanalyticalproductsusedbyleadingfinancialcompanies,toidentifywheredisclosure,transparency,consumercontrol,andregulatorysafeguardsarewarranted(suchaswiththeuseofsocialmediadataforfinancialdecisionmakingandwhethernewformsofdigitally‐basedredliningareemerging).Consumergroups,advocatesfortheunderbanked,privacyorganizations,andotherexpertshavecriticalrolestoplayinthisarea.Foreachofthemajorcategoriesofproductsandservicesfocusedonorpotentiallyusefulforassetbuilding—suchasprepaidcards,mobilepayments,alternativescoring,datacollection,andtheroleofsocialmedia—weproposethecreationofsmallworkinggroups.Theseindividualsandorganizationswouldbetaskedwithengaginginanintensiveoverview,includinginterviewingindustryrepresentatives,scholars,andgovernmentofficials,anddevelopingasetof“bestpractices”andpotentialself‐regulatory(orpolicy‐based)guidelines.Forexample,itisimportantnowtoidentifyandaddressthelikelihoodandimpactofneworescalatingfeesimposedforservicesthataresupposedtobenefittheunderbankedeconomically.Throughdialoguewithindustryandallies(suchasCFSIandtheAssetFundersNetwork),aswellaswiththeFTC,CFPB,andothers,andalsothroughpublicoutreachviathemedia,thiseffortwouldhelpsettheparametersforwhatispreferred—andwhatisunacceptable—forproductsandservicesofferedtounderbankedAmericans.166

C. Coalition Building and Cross‐Fertilization of Ideas Themobilephoneisakeyinstrumentforfinancialinclusionandcommunication,andwilldelivermanyoftheimportantservices(throughapps,mobilewallets,wirelesspayments,forexample)Themobile

industryisprimarilydominatedbyahandfulofcompanies,includingthetelephoneindustry,Apple,andGoogle.Theyarehelpingsetthestandardsfortheindustryandalsodistributingmuchofitscontent.Anewcoalitionofconsumer,civilrights,andanti‐povertyorganizationsshouldbeformed—ordevelopedfromexistingalliances—thatisspecificallyfocusedontherolethatmobiledevicesplayservingtheunderbanked.Thisgroupwouldworktosupportbestpractices,extendmobileInternetaccesstomorelow‐incomeAmericans,andengagewithindustrystakeholders.ItwouldalsoworkwithothergroupsfocusedonissuesattheFCC,CFPB,andelsewhere.Forexample,theFCC,whichhasregulatoryoversightofthetelephonenetwork,shouldbeencouragedtoexaminetheimpactofnewformsofcreditthatwillbeplacedonaconsumer’stelephonebill(“Directcarrierbilling”).

D. Industry Standards‐building and Government Oversight Rulesforthenewfinancialmarketplaceareprincipallybeingdevelopedbyindustry.Anumberofforumsorconsortiumsareknowntobeworkingonbestpractices,technicalstandards,andotherissuesthatwillaffecttheunderserved.Forexample,inadditiontotheMerchantCustomerExchange(MCX)initiativediscussedearlier,thereisalsotheMobeyForumNorthAmerica,a“bank‐ledindustryassociationdrivingtheevolutionofasustainableandprosperousmobilefinancialservices(MFS)ecosystem.”167ItsmembersincludeAmericanExpress,BankofAmerica,CapitalOne,CIBC,MasterCard,TDBankGroup,USBank,andVisa,whichgathertogethertodeliversustainable,long‐termmobileservicestothemassmarket.168ThereisalsothenewSmartCardAlliancethatisworkingonnearfieldcommunicationsandwirelesspayments.169TheFederalReserveBankofBostonalsohasa“MobilePaymentsIndustryWorkgroup.”170

Industrytradeassociationsworkingonissuesrelatedtotheunderbanked,suchastheOnlineLendersAlliance,shouldalsobetracked.171Theconcernsofunderbankedconsumersshouldberepresentedintheseforumsonanongoingbasis,oratleastcloselyfollowedtoensuretheyplaythemostpositiverole.

E. Policy Whilepubliceducationandindustryengagementareessential,thereshouldalsobefederalandstatesafeguards.WorkingwithAmericansforFinancialReformandothers,theCFPBandFTCshouldbeencouragedtoreviewtheproductsandservicesthatcomprisethecontemporaryunderbankedfinancialmarketplace.Rulesgoverningdatacollection,profiling,andtargetingofvulnerableconsumersshouldbeimplemented.GroupsshouldproposeareviewoftheFCRAtoensureitaddressesthesecurrentpractices.Newsafeguardstoprotectconsumerprivacyshouldalsoberecommended,includingaddressingtheneedsofyouth.GroupsshouldalsodevelopastrategytoencouragetheFCCtouseitsauthoritytopromoteaffordableaccessto

mobiledevicesanddevelopconsumerprotectionstandards.

F. Conclusion Aswehaveexplained,theU.S.isnowintheinitialphaseofasignificanttransitionperiod,astechnology,financialproductsandservices,andconsumerbehaviorandexpectationsundergosignificantchange.WehavenodoubtthatthesechangeswillcreateontheirownbothnewopportunitiesandpitfallsforeconomicallychallengedAmericans.Butwebelievetheyhavethemosttogain—andlose—withthedigitallyconnectedanddata‐awaremarketplace.Eithertheywillhaveaccesstoanarrayofproductsthatoperatefairly,thathelpthemsaveandmakethebestdecisionspossible,ortheywillconfrontamarketplacethattakesadvantageofthemandmakestheirlivesharder.Weknowthatnotdoinganythingwillbringusnoclosertopromotingeconomicjusticeandequity.Butbytakingadvantageofthefundamentalchangethatisuponus,wecanhelpshapethisshifttopromotetheinterestsofthosewhohaveacriticalstakeintheoutcome.

APPENDIX: Walmart Positions Itself for the New Financial, E‐commerce, and Shopping Marketplace Walmartiskeenlyawareofthechangesdiscussedinthisreport,andhowtheyaffecttheircustomers,manyofwhomareintheunderbankedcategory.Theretailgiantissignificantlyinvestinginfinancialproductsandservices,bigdataanalytics,mobilephone,e‐commerce,andotherdigitalapplications.Lastyear,itintroduceditslow‐pricedBluebirddebitcardinpartnershipwithAmericanExpress,provingawiderangeofbankingandcreditservicestoitscustomers.172KnowingamajorityofWalmartshoppers(55percent)alreadycomeintothestorewithasmartphone,itintroducedamobileapp.Itsappusersaresomeoftheretailer’sbestcustomers—visitingthestoretwiceasoftenastheaverageshopper,andalsospendingsome40percentmoreintheprocess.Walmart’scompetitors—includingDollarGeneralandTarget—alsonowoffermobileapps.173Walmart’ssmartphone“appleveragesgeo‐locationtodetectwhenaconsumerisnearbytoastoreandautomaticallypromptstheusertofliptheappintostoremode—whichletsconsumersviewmapsofstoresandfindproductswithinaisles.”174Thereisa“shoppinglistfeaturethatletsconsumersscanin‐storebarcodesoraddproductstotheirshoppinglists.”175Localstorescanpromotespecialsorofferstotheirmobileappusers.Theapp’s“Scan&Go”featureallowscustomersto“clipcouponsbytappingtheirsmartphonesandhavingthesavingsautomaticallyapplied.”Insomestores,theappcanscantheproductsonshelvesandcounters,enablingafastercheckout.ArecentupdatetotheWalmartappenablesuserstoregistertheirphonenumberduringcheckoutinordertoreceiveautomaticelectronicreceiptsforfuturein‐storepurchases.176Beyondconvenience,Walmart’smovesintomobilearealsodesignedtohelpdeliver

revenues.Itsapp‐deliveredelectroniccouponscanbeusedtoincreasethe“basketsizefromexistingcustomers,”accordingtoAlexCampbell,chiefinnovationofficerofmobilemarketerVibes(“basket”referringtototalcheckoutexpenditures).Campbellbelievesthattheabilitytoaccessconsumersthroughmobilephones“willallowWalmarttodosomereallydynamicpricingbasedonindividualcustomersandbuyingbehavior.”177Walmart’smobileappisanexampleofhowthecompanyhasenteredtheBigDataande‐commercearmsrace,addingmillionsofdatapointsdailyforcustomerswhonolongerneedtobewithintheconfinesofaWalmartinordertobetouchedbytheretailgiant.Ithascreatedadata‐orientedresearchandproductdevelopmentfacilityinSiliconValley—WalmartLabs.ArecentjobpostingattheLabsmakesclearthedirectioninwhichthecompanyisheaded:“Wearebuildingsmartdatasystemsthatingest,modelandanalyzethemassiveflowofdatafromonline,social,mobileandofflinecommerce/useractivitytosetkeybusinessattributesformillionsofproductsinrealtime.”178

Illustratingthesameomnichanneldatacollection,analysis,andtargetingorientationusedbythefinancialsector,Walmartanalyzesabroadrangeofconsumerinformation.AsaWalmartLabsblogpostexplained,“Thetargetedteam…ingestsjustabouteveryclickableactiononWalmart.com:whatindividualsbuyonlineandin‐stores,trendsonTwitter,localweatherdeviations,andotherlocalexternalevents….Wecapturetheseeventsandintelligentlyteaseoutmeaningfulpatterns….Ourbigdatatoolshelpuspersonalizetheshoppingexperienceandourpsychologicalanalysishelpsustodissectevendeepermeaningbehindthepatternsinthedata.Weapplybehavioraleconomicstofindclaritybehindboththerationalandirrationalbehaviorshoppersexperience.”Throughits“targetingteamcomprisedofPhD’sincomputerscience,statistics,signalprocessingandbehavioralpsychologists,”Walmart“hasdevelopedmethodologies”thatcanidentify“whatcustomersmightbeseeking”aswellasotherproductstheymayhaveastrongappealforthem(throughananalysisoftheir“historicalbuyingpatterns,”forexample).179AmongtheproductsdevelopedattheLabswasitsownWalmartsearchenginethatis“sensitivetohowtheircustomersinteractonsocialnetworks,sotheproductsthatshowuparemuchmorelikelytoberelevantandtheyclaimsomethinglikea10‐15%higherconversionrateusingtheirown,in‐housesearch.”Foritse‐commerceonlinesite(with$10billioninsales),

Walmartenablesitscustomersto“shoponlineandpayin‐cash.”180ThetransformationofhowweshopwasonereasonwhyWalmartboughtInkirulastJune.Thatcompanydevelopeda“real‐timeanalyticssolution”that“allowsmerchantstoanalyzeandpredictcustomerbehaviors,improveactivecustomermarketing,optimizeforpersonalizedcustomerengagements,anddetectfraudduringalivetransaction,allpriortothetransactioncompletion.”181Throughitscombinationofpowerfuldataanalytics,mobileapplications,personalizedonlineandin‐storetargeting,andfinancialservices,WalmartisplayingakeyroleacceleratinghowtheBigDatatransformationwillaffectitsunderbankedhouseholdcustomerbase.

End Notes

1See,forexample,theshowcasingofnewfinancialproductsatFinovate,“PaymentInnovatorsImpressAtFinovateFall2013,”Pymnts.com,13Sept.2013,http://www.pymnts.com/briefing‐room/commerce‐3‐0/playmakers/2013/Payment‐Innovators‐Impress‐At‐FinovateFall‐2013/(viewed16Oct.2013).

2SashaAbramsky,TheAmericanWayofPoverty(NewYork:NationBooks,2013).

3Abramsky,TheAmericanWayofPoverty.

4RetailPaymentRisksForum,“TheU.S.RegulatoryLandscapeforMobilePayments,”FederalReserveBankofAtlanta,http://www.frbatlanta.org/rprf/highlight_120730_wp.cfm;BillSiwicki,“10%ofU.S.ConsumersAccesstheWebOnlybySmartphone,”InternetRetailer,5Sept.2013,http://www.internetretailer.com/2013/09/05/10‐us‐consumers‐access‐web‐only‐smartphone(bothviewed16Oct.2013).SeealsoKathrynZickuhrandAaronSmith,“HomeBroadband2013,”PewInternetandAmericanLifeProject,26Aug.2013,http://www.pewinternet.org/Reports/2013/Broadband/Findings.aspx;MarkHugoLopez,AnaGonzalez‐Barrera,andEileenPatten,“ClosingtheDigitalDivide:LatinosandTechnologyAdoption,”PewResearchHispanicTrendsProject,7Mar.2013,http://www.pewhispanic.org/2013/03/07/ii‐internet‐use‐3/(bothviewed16Oct.2013).

5BoardofGovernorsoftheFederalReserveSystem,“FederalReserveSurveyProvidesInformationonMobileFinancialServices,”27Mar.2013,http://www.federalreserve.gov/newsevents/press/other/20130327b.htm(viewed16Oct.2013).

6TomStandage,“LiveandUnplugged:In2013theInternetWillBecomeaMostlyMobileMedium.WhoWillBetheWinnersandLosers?”TheEconomist,21Nov.2012,http://www.economist.com/news/21566417‐2013‐internet‐will‐become‐mostly‐mobile‐medium‐who‐will‐be‐winners‐and‐losers‐live‐and;Google,“Mobile,”ThinkInsights,http://www.google.com/think/ad‐types/mobile.html(bothviewed27Oct.2013).

7See,forexample,acasestudyononlinedataprovidereXelate.Thecompany“processes60billiontransactionsamonthforover200publishersandmarketers….eXelateisinthebusinessofsupportingitsadvertisingcustomersbyreducingBigDatatoactionablesmartdata.Itingestshugeamountsofclickandotherdatafromwebsitesandothersources,buildsmodelsdescribingwhatthatdatameans,andusesthosemodelstopopulatedatabasesthatoptimizebiddingforadvertisingspaceinrealtime.”DavidFloyer,“Real‐timeBigData:eXelateCaseStudy,”Wikibon,17Oct.2013,http://wikibon.org/wiki/v/Real‐time_Big_Data:_eXelate_Case_Study(viewed22Oct.2013).

8FicoWorld,“TheEraofIntimateCustomerDecisioningPriceOptimizationComesofAge—DynamicandRealTime,”personalcopy.Experiandescribesitthisway:“Theemergenceoftoday‘snewhyperconnectedand‘always‐on’consumermeansbrandsmustdelivercoordinatedandconsistentcustomerexperiencesacrossallmarketingchannels.”“ExperianLaunchesIntuitiveCross‐channelMarketingPlatforminSoutheastAsia,”8Oct.2013,http://finance.yahoo.com/news/experian‐launches‐intuitive‐cross‐channel‐020000629.html(viewed16Oct.2013).

9MichaelHickins,“BanksUsingBigDatatoDiscover‘NewSilkRoads,’”CIOJournal,6Feb.2013,http://blogs.wsj.com/cio/2013/02/06/banks‐using‐big‐data‐to‐discover‐new‐silk‐roads/(viewed22Oct.2013).

10InteractiveAdvertisingBureau,“InternetAdRevenuesAgainHitRecord‐BreakingDouble‐DigitAnnualGrowth,ReachingNearly$37Billion,a15%IncreaseOver2011’sLandmarkNumbers,”16Apr.2013,http://www.iab.net/about_the_iab/recent_press_releases/press_release_archive/press_release/pr‐041613/.TheIABdefinesthiscategoryasincluding“commercialbanks,Stylesagencies,personalcreditinstitutions,consumerfinancecompanies,loancompanies,businesscreditinstitutions,andcreditcardagencies.Alsoincludescompaniesengagedintheunderwriting,purchase,sale,orbrokerageofsecurities

andotherfinancialcontracts.”eMarketer,“CustomerTransactionInfoIsLeadingBigDataElement,”11Oct.2013,http://www.emarketer.com/Article/Customer‐Transaction‐Info‐Leading‐Big‐Data‐Element/1010291(bothviewed16Oct.2013).

11“AnInterviewwithJimSperos,”eMarketer,27June2013,http://www.emarketer.com/corporate/clients/fidelity(viewed23Oct.2013).

12Abramsky,TheAmericanWayofPoverty.

13FederalDepositInsuranceCorporation,“FDICReleasesNationalSurveyofUnbankedandUnderbanked,”12Sept.2012,http://www.fdic.gov/news/news/press/2012/pr12105.html(viewed22Oct.2013).

14Thereportalsoidentifiedproductsthat“witnessedveryhighgrowthratesbetween2009and2010”andthat“internet‐basedpaydaylending”grewby35percent.CenterforFinancialServicesInnovation,“UnderbankedConsumerFinancialServicesMarketEstimatedat$78Billion,”1Nov.2012,http://www.cfsinnovation.com/content/underbanked‐consumer‐financial‐services‐market‐estimated‐78‐billion#sthash.yrLGx7Vj.dpuf(viewed16Oct.2013).

15eMarketer,“TheFinancialServicesIndustrySteadilyGrowsDigitalAdSpend,”2July2013,http://www.emarketer.com/Article/Financial‐Services‐Industry‐Steadily‐Grows‐Digital‐Ad‐Spend/1010016(viewed22Oct.2013).

16RobinSidel,“BanksMakeSmartphoneConnection,”WallStreetJournal,12Feb.2013,http://online.wsj.com/news/articles/SB10001424127887323511804578298192585478794(viewed22Oct.2013);VictoriaPetrock,“TheUSFinancialServicesIndustry2013:DigitalAdSpendingForecastAndKeyTrends,”eMarketer,June2013,personalcopy.

17Equifax,“CreditStylesPro,”http://www.equifax.com/pdfs/corp/CreditStyles_Pro_Product_Sheet.pdf(viewed21Oct.2013).

18Walmart,forexample,hasagoalofservingthe“unhappilybanked”throughits“Bluebird”prepaidcard(co‐brandedbyAmericanExpress).“AmExandWal‐MartPursuethe‘UnhappilyBanked‘withTheirNewBluebirdPrepaidCard,”DigitalTransactions,8Oct.2012,http://www.digitaltransactions.net/news/story/3713(viewed16Oct.2013).Thegrowingpopularityofthesedigitalserviceswithconsumers,including“Direct”banksthatoperateonline,isaffectingtheoperationoflocalbranches.Twenty‐twohundredbankbranchesclosedin2012,areflectionofcostcuttingandalso,perhaps,theshiftbyconsumerstoonline.Therearesignificantreductionsinthecostofservingconsumers:anin‐persontransactioncancost$4.25,versusonlineat19centseachandonly10centswhenusingamobiledevice.RobinSidel,“AfterYearsofGrowth,BanksArePruningTheirBranches,”WallStreetJournal,31Mar.2013,http://online.wsj.com/news/articles/SB10001424127887323699704578326894146325274(viewed30Oct.2013).

19Forexample,GreenDotprovidespersonalizedprepaidcardsconnectedtotheVisaandMasterCardnetworks.FeescanrangefromfreeATMwithdrawalsatWalmartandotherlocationstochargesofnearly$5toaddmoneytothecard.GreenDot,“AboutGreenDotandtheGreenDotCard,”https://www.greendot.com/greendot/help?from=landingpage#whohttps://www.greendot.com/greendot/help?from=landingpage.So‐called“peer”lendingservicesenableindividualsto“invest”andmakeloanstoborrowers.Suchservicescanimposehighfees.SeeLendingClub,“Rates&Fees,”https://www.lendingclub.com/public/borrower‐rates‐and‐fees.action;Prosper,“PersonalLoanRatesandFees,”http://www.prosper.com/loans/rates‐and‐fees/;“WhatYouNeedtoKnowAboutPrepaidCards,”ConsumerReports,”July2013,http://www.consumerreports.org/cro/2013/07/prepaid‐cards‐fees/index.htm(allviewed30Oct.2013).

20Anumberofcompaniesoffermoney‐managementtools,soconsumershavemoreinformationontheirspending.Movenwantsconsumersto“leveragethepowerofthesmartphoneastheprimarypaymentdevice,”andclaimsthatitsgoalisto“providefinancialwellness”foritscustomers.Itmonitorsa

consumer’s“transactionsmadebyMoven‐brandeddebitcardsinreal‐time,learninguserspendingtrendsandpatterns”andreportsbacktotheconsumer.JimMarcus,“Moven:FromMobileBankingtoMobileMoney,”NextBank,18Feb.2018,http://www.nextbank.org/mobile/moven‐from‐mobile‐banking‐to‐mobile‐money‐2/.SeealsoeMarketer,“DigitalBankingTrends,”Aug.2013,personalcopy.Simpleisanotherprepaiddebitcardthatincorporatestoolsandinformationsoconsumerscanhavegreatercontroloftheirfinances.Itnowhas40,000customersandprocessesmorethan$1billionayear.JoshuaReich,“OneYearwithOurCustomers,”SimpleBlog,15July2013,https://www.simple.com/blog/one‐year‐with‐simple/.Seealso,Simple,“FAQ,”https://www.simple.com/faq/.TheHouston‐basedpaymentsprocessorPreCashrecentlylaunchedamobile‐andWeb‐basedservicethatletsU.S.consumerspaybillswithoutneedingabankaccountordebitcard.PreCash,“ConsumerSolutions,”http://www.precash.com/consumer_financial_solutions.html.TheEvolveMoneyplatformofferstheabilitytopaybillsfromaround10,000billersusinganAndroidapportheEvolveMoneywebsite,whichisoptimizedformobiledevices.BillersthatacceptthesepaymentsincludecompaniessuchasPacificGas&Electric,FloridaPower&Light,StateFarm,LibertyMutual,TimeWarnerCable,andnumerousothers.EvolveMoney,http://www.evolvemoney.com/;Flip,http://www.myflipmoney.com/;“PreCashIntroducestheFirstPracticalMobileWalletforUnderbankedConsumers,”12Sept.2012,http://www.precash.com/flip_release_20120911.html.“Forinstantcheckdeposits,PreCashplanstocharge$1plus1%ofthedepositforapayrollorgovernmentcheckplus$1plus3%oftheamountforpersonalchecks.”DanielWolfe,“PreCashtoDebut'Flip,'aMobileWalletfortheUnderbanked,”PaymentsSource,10Sept.2012,http://www.paymentssource.com/news/precash‐to‐debut‐flip‐a‐mobile‐wallet‐for‐the‐underbanked‐3011817‐1.html(allviewed30Oct.2013).

21RebeccaGrant,“AvantCreditSecures$20MtoMakeFinancialLoansMoreAccessiblewithBigData,”VentureBeat,14Aug.2013,http://venturebeat.com/2013/08/14/avantcredit‐secures‐20m‐to‐make‐financial‐loans‐more‐accessible‐with‐big‐data/(viewed16Oct.2013).

22EMarketer,“Howtouselocationdatatotargetuniquemobileaudiences.13September2013.PersonalcopyonfilewithauthorJeffChester.

23Examplesofformsofdiscrimination,includingbyrace,havebeguntoemerge.SeeespeciallytheworkofProf.LatanyaSweeney,“DiscriminationinOnlineAdDelivery,”ACMQueue,1Mar.2013,http://queue.acm.org/detail.cfm?id=2460278.Foranexampleofacompanydecidingnottoservecertainconsumersbecausetheirprofilinginformationtellsthemtheydon’tgeneratesufficientprofitsasacustomer,seetheOrbitzexampleinAlUrbanski,“MakingDataBigandSmartwithDataIntelligence,”DirectMarketingNews,1Nov.2012,http://www.dmnews.com/making‐data‐big‐and‐smart‐with‐data‐intelligence/article/265534/(bothviewed17Oct.2013).

24“The[Zions]bankusesthemapstofindareastotarget,aswellastofigureoutwhichbranchesservediversemarkets.Insomelessaffluentneighborhoods,forexample,Zionsprovidesacheck‐cashingproductthatwasdevelopedbasedonGeoscapedata.‘Wewillofferourtraditionalbankingproducts—checking,savingsandtraditionalloans,’[Juancarlos]Judd,[seniorvicepresidentofZionsBank]notes.‘Butwherethere'sahigherneedforcheckcashingproducts,weofferthat.’Thesoftwarehashelpedthebankrealizethattexting,alertsandsmartphoneuseishighwithintheHispaniccommunity;they'relessapttouseonlinebanking.”PennyCrossman,“ZionsBankCombsBigDataforCustomerPreferenceClues,”AmericanBanker,1Oct.2013,http://www.americanbanker.com/issues/178_190/zions‐bank‐combs‐big‐data‐for‐customer‐preference‐clues‐1062531‐1.html;NBCUniversalIntegratedMedia,“PersonalGrid,”TheCurve,vol.2,2012,http://thecurvereport.com/category/trends/personal‐grid‐1/(allviewed16Oct.2013).

25MarkPrior,“‘WhereYou’veBeen’isWhereIt’sAt:RethinkingGeo‐targeting,”TheWall,4Oct.2013,http://wallblog.co.uk/2013/10/04/where‐youve‐been‐is‐where‐its‐at‐rethinking‐geo‐targeting/#ixzz2hKLElJqh.Seealso,GFK,“Geomarketing:TheAnswerstoYourLocationQuestions,”http://www.gfk.com/solutions/geo‐marketing/Pages/default.aspx;S2CustomerInsight,“CustomerEngagement,”http://www.s2customerinsight.com/customer‐engagement/#locationlocationlocation(allviewed16Oct.2013).

26S2CustomerInsight,“OurWork—CaseStudies:Coca‐ColaEnterprises,”http://www.s2customerinsight.com/casestudies/fmcg‐coke/(viewed27Oct.2013).

27Luminar,“LuminarInsightAPP:ADeeperDiveIntoUnderstandingtheHispanicConsumer,”http://luminarinsights.com/solutions/luminar‐insight‐app/(viewed17Oct.2013).SeealsoBriabe,“Advertising,”http://www.briabemobile.com/Services/Advertising/;Briabe,“CaseStudies:HispanicMobileBanking,”http://www.briabemobile.com/Case‐Studies/Case‐Studies/Hispanic‐Mobile‐Banking(bothviewed19Oct.2013).

28eMarketer,“AmongHispanics,Who‘sLeadingDigitalAdoptionTrends?”25Mar.2013,http://www.emarketer.com/Article/Among‐Hispanics‐Whos‐Leading‐Digital‐Adoption‐Trends/1009755.Foranoverviewoftheissue,seeCenterforDigitalDemocracy,“DigitalTargetMarketingtoAfricanAmericans,HispanicsandAsianAmericans:ANewReport,”18Feb.2013,http://www.democraticmedia.org/digital‐target‐marketing‐african‐americans‐hispanics‐and‐asian‐americans‐new‐report(bothviewed17Oct.2013).

29See,forexample,EpsilonTargeting,“HighPerformanceMarketingDataforFinancialServices,”http://www.epsilon.com/pdf/financial_datacard_092311.pdf(viewed17Oct.2013).

30MikeHudson,“USHispanicsandAutos:TheNextGenerationofGrowth,”eMarketer,Oct.2013,personalcopy.Anotherrecentstudysaidthat87percentofHispanicsusesmartphonesandthat60percentusetablets.eMarketer,“Smartphone,TabletUptakeStillClimbingintheUS,”14Oct.2013,http://www.emarketer.com/Article/Smartphone‐Tablet‐Uptake‐Still‐Climbing‐US/1010297;eMarketer,“HispanicsLeadasWebUsersWhoareTrulyMobile‐First,8Oct.2013,http://www.emarketer.com/Article/Hispanics‐Lead‐Web‐Users‐Who‐Truly‐Mobile‐First/1010280(bothviewed19Oct.2013).TheSeptember2013PewInternet&AmericanLifesurveynotedthatfor“non‐whites,amongthosewhousetheirphonetogoonline,sixintenHispanicsand43%ofAfricanAmericansarecell‐mostlyusers,comparedwith27%ofwhites.”Around45percentofthosewithahighschooldiplomaorlessusetheirphoneforaccess.DugganandSmith,“CellInternetUse2013.”

31CenterforDigitalDemocracy,“TargetingtheDigitalLatino:FTCNeedstoAddresshowDigitalMarketersareTrackingHispanicConsumers,inc.Youth,”28May2013,http://www.centerfordigitaldemocracy.org/targeting‐digital‐latino‐ftc‐needs‐address‐how‐digital‐marketers‐are‐tracking‐hispanic‐consumers‐inc(viewed17Oct.2013).

32Foranoverseeofthesedevelopments,especiallyrelatingtofoodmarketingtoyouth,seeCenterforDigitalDemocracy,“DigitalAds:ExposingHowMarketersTargetYouth,”http://www.digitalads.org/how‐youre‐targeted/publications(viewed21Oct.2013).

33DavidBurgos,andMillwardBrown,“MarketingtotheNewMajority:StrategiesforaDiverseWorld,”WPP,http://www.wpp.com/wpp/marketing/consumerinsights/marketing‐to‐the‐new‐majority/(viewed21Oct.2013).

34Scarborough,“MillennialInfluencersFavorMulticulturalMedia,”di@log,3Oct.2013,http://dialog.scarborough.com/index.php/millennial‐influencers‐favor‐multicultural‐media/(viewed19Oct.2013).

35Seeforexample,Viacom,“Insight,”http://north.viacom.com/company/research/(viewed21Oct.2013).

36KarenKramer,LizSchwarte,MariahLafleur,andJeromeWilliams,“TargetedMarketingOfJunkFoodtoEthnicMinorityYouth:FightingBackWithLegalAdvocacyAndCommunityEngagement,”ChangeLabSolutions,2012,http://changelabsolutions.org/sites/default/files/TargetedMarketingJunkFood_FINAL_20120912.pdf(viewed23Oct.2013).

37AlanJ.Riddle,“WhatTheyDidn‘tTellYouaboutMcDonald‘s’MobilePaymentsTrials,”Nation’sRestaurantNews,23Sept.2013,http://nrn.com/blog/what‐they‐didnt‐tell‐you‐about‐mcdonalds‐mobile‐payments‐trials(viewed21Oct.2013).

38“The‘Social’CreditScore:SeparatingtheDatafromtheNoise,”Knowledge@Wharton,5June2013,http://knowledge.wharton.upenn.edu/article/the‐social‐credit‐score‐separating‐the‐data‐from‐the‐noise/(viewed21Oct.2013).

39BigData“appliance”platformsusingHadoop,MapReduce,etc.areusedbythefinancialandmanyothersectors.See,forexample,Teradata,“FinancialServices,”http://www.teradata.com/industry‐expertise/financial‐services/;TeradataAster,“DeeperInsightsforFinancialServices,”http://www.asterdata.com/solutions/financial.php;MichaelHickins,“BanksUsingBigDatatoDiscover‘NewSilkRoads,’”CIOJournal,6Feb.2013,http://blogs.wsj.com/cio/2013/02/06/banks‐using‐big‐data‐to‐discover‐new‐silk‐roads/;Merkle,“MarketingImperativesforBankingandFinance,”29Apr.2013,http://www.merkleinc.com/sales‐collateral/marketing‐imperatives‐banking‐and‐finance;Merkle,“ConnectedRecognition,”http://www.merkleinc.com/what‐we‐do/database‐marketing‐services/connected‐recognition(allviewed17Oct.2013).

41Scoresareusedforthedecisionprocess,includingtheFICORevenueScore,FICOCreditCapacityIndex,andFICOBankruptcyScore.TimVanTassel,“BigData,”FairIsaacCorporation,2013,http://webcache.googleusercontent.com/search?q=cache:4FsWJHGu0BgJ:www.fico.com/en/FIResourcesLibrary/FICO_Forum_Customer_Engagement_BigData.pdf+&cd=1&hl=en&ct=clnk&gl=us&client=firefox‐a;FICO,“BigDataAnalytics,”http://www.fico.com/en/Communities/Pages/BigData.aspx(bothviewed30Oct.2013).

43TSYSdiscussesamodeltodrive“cardholderresponse”with“callstoactions”forincreasedspending.TSYS,“HowCardIssuersCanLeverageBigDatatoImproveCardholderRetentionEfforts,”http://www.tsys.com/BigDataWhitePaper/index.cfm(viewed17Oct.2013).

44Thesamebankalso“analyzeduseof‘companiondevices’todiscoverwhichTVshowscustomersarewatchingwhentheyinteractwithmobilebanking.”AndyHirst,“InnovatingWithBigData—LeadingTheSoLoMoCycle,”Business2Community,17Aug.2013,http://www.business2community.com/big‐data/innovating‐with‐big‐data‐leading‐the‐solomo‐cycle‐0585217#FrUfaXM2geIsueEU.99(viewed17Oct.2013).

45TSYS,“HowCardIssuersCanLeverageBigDatatoImproveCardholderRetentionEfforts”;“The‘Social’CreditScore:SeparatingtheDatafromtheNoise.”Thetransformationofthefinancialmarketplaceisalsooccurring,ofcourse,onagloballevel.MasterCard,whichrecentlyestablishedanIndia‐based“AdvancedAnalyticsCenterofExcellence,”saysthe“bigdataanalyticsmarketisrapidlygrowingascompaniesseekreal‐timeinsightthatallowsthemtobetterconnectwiththeirconsumers.”PeteRizzo,“MasterCard’sSecrettoBigDataMonetizationMightSurpriseYou,”Pymnts.com,30Aug.2013,http://www.pymnts.com/briefing‐room/issuers/playmakers/2013/MasterCard‐s‐Secret‐to‐Big‐Data‐Monetization‐Might‐Surprise‐You/(viewed17Oct.2013).

46See,forexample,Merkle,“MerkleAcquiresBrilig,aLeadingDataExchangeforOnlineAdvertising,”10Sept.2012,http://www.merkleinc.com/news‐and‐events/press‐releases/2012/merkle‐acquires‐brilig‐leading‐data‐exchange‐online‐advertising;“DatalogixAcquiresConnectionEngine,”BusinessWire,5Sept.2012,http://www.businesswire.com/news/home/20120905006666/en/Datalogix‐Acquires‐Connection‐Engine(bothviewed17Oct.2013).

47Acxiom,http://www.acxiomdigital.com/;EquifaxIXIServices,“PoweringDigitalMarketingwithFinancialInsights,”http://www.ixicorp.com/ixi‐digital/;Experian,“Hitwise—DigitalMarketingIntelligence,”http://www.experian.com/hitwise/.Transunionisengagedindigitalmarketingaswell.“TransUnionTransformsDigitalMarketingwithAutonomy,anHPCompany,”27Sept.2012,http://www8.hp.com/us/en/hp‐news/press‐release.html?id=1300935#.UlrM8CSE5bJ(allviewed17Oct.2013).

48LiveRamp,“60+IntegrationsAtYourFingertips,”http://liveramp.com/partners/(viewed17Oct.2013).

49Acxiomexplainsthatittakesbankdataandcombinesthemwithinformationitanddatabrokerpartnersprovideaboutaconsumer’s“behaviors,”“emailopens,”socialmedia,“search,”and“offline”activity.Detailedinformationregardingtheindividualcanbescoredandsegmentedusing“BigData”techniques,saysAcxiom(includingknowingthatanindividualisa“femalewithsmallchildren,searchedonsitefortravelrewards,”andalsowas“served…acardad.”Allthisonlineandofflinedatacanbeusedfor“targetingandpersonalization,”involvingmoredatabrokersandonlinetargetingcompanies.Acxiom’s“AbilitecDigital”product“linkstraditionalnameandaddressinformationtoyourdigitalcontactinformation.It“recognizesyourcustomersacrossthedigitaldivide.”AcxiomFactSheet,personalcopy.

50Oracle,“OracleSocialMarketingCloudService,”http://www.oracle.com/us/products/social‐marketing‐cloud‐service‐1842850.pdfhttp://www.oracle.com/us/products/social‐marketing‐cloud‐service‐1842850.pdf(viewed21Oct.2013).

51OracleEloqua,“DataSheets:LeadScoringandProfiling,”http://www.eloqua.com/resources/data‐sheets.html;Oracle,“OracleSocialMarketingCloudService,”http://www.oracle.com/us/solutions/social/social‐marketing‐cloud‐service/overview/index.html;OracleEloqua,“LedScoring,”http://www.eloqua.com/resources/best‐practices/lead‐scoring.html(allviewed17Oct.2013).

52“AcxiomandFacebookImproveOnlineAdvertisingExperiencewithPartnerCategories,”MarketWatch,10Apr.2013,http://www.marketwatch.com/story/acxiom‐and‐facebook‐improve‐online‐advertising‐experience‐with‐partner‐categories‐2013‐04‐10(viewed27Oct.2013).

53NatashaSinger,“WaystoMakeYourOnlineTracksHardertoFollow,”Bits,19June2013,http://bits.blogs.nytimes.com/2013/06/19/ways‐to‐make‐your‐online‐tracks‐harder‐to‐follow‐2/(viewed17Oct.2013).

54DavidKaplan,“MindshareDataChiefIvinsWantsToTearDownWallsAroundFirstPartyAnalytics,”AdExchanger,16Sept.2013,http://www.adexchanger.com/data‐exchanges/mindshare‐data‐chief‐ivins‐wants‐to‐tear‐down‐walls‐around‐first‐party‐analytics/#more‐82083(viewed17Oct.2013).SeealsoWPP’sdatatargetingsubsidiary,Xaxis,“WeAreXaxis,”http://www.xaxis.com/about;and“TheDataAllianceandFourthWallMediaAnnounceDataPartnershipAgreement,”BusinessWire,2Oct.2013,http://www.cnbc.com/id/101081208(bothviewed19Oct.2013).

55Nielsen,“2013P$YCLESegmentationSystem:43PaydayProspects,”http://www.claritas.com/MyBestSegments/Default.jsp?ID=37&id1=2000&id2=43;Nielsen,“2013P$YCLESegmentationSystem:58Bottom‐LineBlues,”http://www.claritas.com/MyBestSegments/Default.jsp?ID=37&id1=2000&id2=58.Amongtheotherexamplesreflectingvulnerableeconomicconstraintsis“SocialInsecurity:Themostdownscaleofthematuresegments,SocialInsecurityisfilledwithethnicallydiversewidowsandwidowerswhorelyonSocialSecurityandMedicare/Medicaidforsurvival.Withdownscaleincomesandlowincome‐producingassets,theseelderlysinglesbarelyregisterforowningstocks,mutualfunds,andrealestateinvestments.Norcantheymusterthefundstobuyinsuranceproductsotherthansomemedicalandwholelifepoliciesacquiredearlierintheirworkinglives.Financiallystrapped,mostSocialInsecurityresidentsleadquietlifestylesintheiroldercityapartments:there‘slittlemoneyfortravel,nightlife,ordiningout.Instead,thissegmentisthetop‐rankedaudiencefordaytimetelevision,particularlygameshows,Spanish‐

languageshows,andsoaps.”“GettingByBlues”isanothercategoryofat‐riskconsumers.Anethnicallydiversesegmentof45‐to64‐year‐olds,membersofthissegmenttypicallyrentolderapartmentsinurbanandsecond‐cityneighborhoods.Withlowincomesandfewassets—abouttwo‐thirdsareunemployed—theseconsumersranknearthebottomformostbankingandinsuranceproducts.Buttheydoexhibitabove‐averageratesforowningrenter‘sandwholelifeinsurance….”Nielsen,“2013P$YCLESegmentationSystem:53SocialInsecurity,”http://www.claritas.com/MyBestSegments/Default.jsp?ID=37&id1=2000&id2=53.SeeproductinformationonNielsenPrizmDigital,includingmobiledevices,http://www.claritas.com/MyBestSegments/Default.jsp?ID=0&menuOption=home&pageName=Home(allviewed17Oct.2013).AsNielsonexplains“previouslyanonymouswebsitevisitorsnowbecomeidentifiableAudiencesforbrandAdvertising.”Its“PrizmDigitalSegmentspredictthelikelihoodofanyhouseholdandpurchasebehaviors….”Thedatainclude“whataconsumerislikelytopurchase,”includingfinancialservices,whethertheycan“affordaspecificproduct,”andthe“websitesthataconsumerislikelytovisit.”Thistargetingcanalsobedoneonmobiledevicesaswell:“previousanonymousmobilewenandappvisitorsnowbecomeidentifiable….”Nielsen,“ReachYourBestCustomersandProspectsOnlinewithNielsenPrizmDigital,”2013,http://www.slideshare.net/vivastream/nielsen‐prizm‐digital‐2013(viewed30Oct.2013).

56Datalogix,“DLXFinance,”http://www.datalogix.com/dlx‐collateral‐library/.Datalogixsaysthatitsconvertsacustomer’sdatafile“intoananonymousonlineaudience”thatisa“1:1”match.Datalogix,“DLXOnRamp,”http://www.datalogix.com/audiences/online/syndicated‐segments/.Inanillustrationoftherangeofdataavailabletodayforfinancialservicescompanies,Datalogixsaysitcanbuilda“custom”listoftargets.Thisdatacaninclude“thousandsofdatapoints:specificSKUsofretailpurchases,brandlevelCPGpurchases,andgranulardemographicandfinancedata.Thisfine‐pointdatacanbeidentifiedandcombinedintoaninfinitenumberofcustomsegments….”DatalogixsaysitsdatacomesfromtheU.S.Census,summarizedcreditsourcesandpublicrecords.Ithaspartnershipwithmanydatasources.Datalogix,“Online”SyndicatedSegments,”http://www.datalogix.com/audiences/online/syndicated‐segments/;Datalogix,“DLXFinance,”http://www.datalogix.com/industries/finance/(allviewed17Oct.2013).

57BlueKai,“AudienceDataMarketplace,“http://www.bluekai.com/audience‐data‐marketplace.php(viewed17Oct.2013).

58Alliant,“AlliantInfoCenter,”http://www.alliantdata.com/news‐resources/alliant‐info‐center‐2/.CreditbureauExperianhasinvestedinitsabilitytodevelopproductsforonline.Theseventh‐largestFacebookadvertiserin2012,its“Alchemy”divisiontargetsFacebookusersbyincorporatingpreciseinformation.Itusesdatatohelpmarketerstargetconsumersonline,includingthoseonFacebookandusingmobilephones.Its“AudienceIQ”serviceis“adigitaladvertisingplatformthatallowsmarketerstoutilizeconsumerdatawithindisplayadvertisingformorerelevantmessaging.”Clientscanbringtheirowndatabaseor“prospectlist”andExperianwillhelpidentifya“Directmatch”inorderto“tailoroffersforcross‐sell,up‐sellorprospecting.”Itwillhelpdevelopcustomtargetingto“matchthehighest‐valuesegmentswithoffers.”Experian,“TargetedDisplayAdvertising,”http://www.experian.com/marketing‐services/online‐display‐advertising.html;Experian,“AudienceTargetingforFinancialServices,”http://www.experian.com/marketing‐services/audience‐targeting‐for‐financial‐services‐industry.html;Experian,“WhatWeDo,”http://www.experian.com/social‐marketing/what‐we‐do.html;JimEdwards,“MeetThe30BiggestAdvertisersOnFacebook,”BusinessInsider,24Sept.2012,http://www.businessinsider.com/the‐30‐biggest‐advertisers‐on‐facebook‐2012‐9?op=1;MarkWalsh,“ExperianUnitUnveilsFacebook‐BasedResearchTool,”OnlineMediaDaily,5Apr.2011,http://www.mediapost.com/publications/article/147980/experian‐unit‐unveils‐facebook‐based‐research‐tool.html#axzz2gDaFwAVe(viewed17Oct.2013).

59AOSiscomprisedofthreekeylayersthatenableone‐to‐onemarketingatscale:

TheDataLayer:allowingmarketerstoingestandunifyvirtuallyanytypeofdata—structured,unstructured,first‐partyCRM,third‐partydatasource,andAcxiom‘sconsumerdata—makingitaccessibleinoneplaceviaaclick.

TheAudienceOperationsLayer:enablingthatdatatobecleansed,matched,andcontextualizedtoprovideactionableinsightsaboutrealpeoplethatcanthenbeactivatedacrosschannelsandmediabuys.

TheApplicationsLayer:activatingagrowingrosteroftrusteddevelopmentpartnerstocreateAOS‐approvedappscustomizedtomeetanymarketingneed.

“AcxiomReleasesAudienceOperatingSystem,”DestinationCRM.com,30Sept.2013,http://www.destinationcrm.com/Articles/CRM‐News/Daily‐News/Acxiom‐Releases‐Audience‐Operating‐System‐92294.aspx.Epsilonhasalsoexpandeditsdatacollectionforonlinetargeting.SeealsoDavidKaplan,“WithGetOnboard,LiveRampBlurstheLinesBetweenCRMandAdvertising,”AdExchanger,29Aug.2013,http://www.adexchanger.com/data‐exchanges/with‐getonboard‐liveramp‐blurs‐the‐lines‐between‐crm‐and‐advertising/(bothviewed17Oct.2013).

604INFO,“AdhavenBullseye,”http://www.4info.com/solutions/adhaven‐bullseye.Thereareagrowingnumberofmobiledatatargetingcompanies.See,forexample,“CatalinaLaunchesPersonalizedMobileAdvertisingforCPGBrands,”11Mar.2013,http://www.catalinamarketing.com/news‐events/press‐releases/details.php?id=328(bothviewed19Oct.2013).

61TruSignal,“DiscoverYourFormula,”http://www.tru‐signal.com/how‐it‐works/discover‐your‐formula;TruSignal,“Audiences,”http://www.tru‐signal.com/audiences/truaudience‐custom‐segments(bothviewed19Oct.2013).

62Theabilitytousingsophisticatedtestingtofurthermicrosegmentandanalyzeconsumersisanotherissuethatrequiresconsumerandregulatoryscrutiny.FICOnotesthat“businessescanfurthercompresstest‐andlearncycles‐‐‐byusingexperimentaldesign…withwhichlargenumbersofdecisionstrategiesaretestedsimultaneouslyonsmallerpopulationsubsets.”FICOLabs,“GettingMaximumValueOutofAnalytics,”FICOLabsBlog,18Sept.2013,http://ficolabsblog.fico.com/2013/09/getting‐the‐value‐out‐of‐analytics‐.html(viewed18Oct.2013).

63“Hundredsofpropensitymodels(oneforeachaction)canbedeployed:…thesemodelsalloweachpotentialactiontobeconsideredbasedonitsprobabilityofacceptance.”JamesTaylor,“ManagingtheNextBestActivityDecision,”DecisionManagementSolutions,2012,personalcopy.Scoresalsocanbeusedbyfinancialservicescompanies,retailers,andotherstogauge“thelikelihoodthataparticularcustomerisaretentionrisk,”andhelpdeterminewhatoffersorincentivesafinancialinstitutionmaypresenttoaparticularcustomer.Zafin,“Products,”http://zafin.com/about‐us/products/;PennyCrossman,“BankoftheWest'sCIOIsonaQuestforReal‐TimeAnalytics,”AmericanBanker,30Sept.2013,http://www.americanbanker.com/issues/178_189/bank‐of‐the‐wests‐cio‐is‐on‐a‐quest‐for‐real‐time‐analytics‐1062492‐1.html(bothviewed18Oct.2013).

64KXEN,“Scorer,”http://www.kxen.com/Products/Scorer.KXENsaysits“patentedInfiniteInsight®Modelerautomatesthebuildingofsophisticatedpredictivemodelsforeverydataminingfunctionunderthesun….”KXEN,“Modeler,”http://www.kxen.com/Products/Modeler(bothviewed18Oct.2013).

65AcxiomexplainsthatAudiencePropensities“incorporateconsumerbehavior,3rdpartytransactional,responseandothertypesofdatatomodelpurchasepropensities,brandaffinities,in‐marketingtimingandshoppingchannelpreference.Advancedanalyticalalgorithmsareapplied,creatingamodelscorethatratestheprobabilityofaspecifiedactionand/oraffinity.Modelscorespredictthelikelihoodofconsumerstorespondtoparticularmessagesandoffersordeterminethelikelihoodofacustomertospendacertainamountoverthecourseoftheirrelationshipwithabrand.”Amongthepropensitiesaddressedarespending,assets,attitude,andbehavior.Acxiom,“AcxiomAudiencePropensities,”https://marketing.acxiom.com/AcxiomAudiencePropensities.html?CMP=701C0000000UvQ5&ls=Other&status=Downloaded(registrationrequired).

66Acxiom,“AudiencePropensities,”http://acxiom.com/resources/audience‐propensities/(viewed29Oct.2013).

67ThesearecalledbyFICO“BehaviorSortedLists.”Theseanalyticalcapabilities—“real‐timemappingofactualcustomerbehavior”—arealsousedtoidentifycommonalities(“archetypes”)inotherconsumers.Suchanalysisnowenablesfinancialmarketersandotherstogobeyondidentifyingthebehaviorofasingleuser,andtocreate“collaborativeprofiles”usingdataderivedfromothersthat“mapsactualcustomerstomultiplearchetypes.”FICO,“ExtractingValuefromUnstructuredData,”FICOInsights,Oct.2013,http://www.fico.com/en/Communities/Pages/Insights.aspx(viewed18Oct.2013).

68FICO,“WhichRetailAnalyticsDoYouNeed?”Insights,n.49,Mar.2011.Theabilitytousesophisticatedtestingtofurthermicrosegmentandanalyzeconsumersisanotherissuethatrequiresconsumerandregulatoryscrutiny.FICOnotesthat“businessescanfurthercompresstest‐andlearncycles—byusingexperimentaldesign…withwhichlargenumbersofdecisionstrategiesaretestedsimultaneouslyonsmallerpopulationsubsets.”FICOLabs,“GettingMaximumValueOutofAnalytics,”FICOLabsBlog,18Sept.2013,http://ficolabsblog.fico.com/2013/09/getting‐the‐value‐out‐of‐analytics‐.html(viewed18Oct.2013).

69KXENexplainsthatitsInfiniteInsightSocialproduct“automaticallysegmentsyoursocialnetworksintocommunitiesofindividualswithsimilarintereststogiveyouawholenewlevelofcustomerinsight.”KXEN,“FindYourInfluencers,”http://www.kxen.com/Products/Social+Network+Analysis.SeealsoKXEN,“InfiniteInsighttoYourClients,”http://www.kxen.com/Industries/Financial+Services;KXEN,“DeployYourScores,”http://www.kxen.com/Products/Scorer(allviewed19Oct.2013).SeealsoAcxiom’snewpartnershipwithsocialmediamarketingcompanyAditive:LaurieSullivan,“SocialMaturesToSupportAdTargeting,”MediaPost,2Oct.2013,http://www.mediapost.com/publications/article/210409/social‐matures‐to‐support‐ad‐targeting.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+data‐and‐targeting‐insider+%28MediaPost+|+Data+and+Targeting+Insider%29#axzz2iHXorJBs(viewed20Oct.2013).

70Companiesusesuchscoringtobetterdeterminerisk,butitsroleinpotentiallyblacklistingconsumersrequiresfurtherinvestigation.Alliant,“ProfitSelect,”http://www.alliantdata.com/wp‐content/themes/alliant/pdf/Alliant_ProfitSelect_10‐05‐10.pdf(viewed19Oct.2013).

71Netmining,“OurTechnology:HowtheScoringEngineWorks,”http://www.netmining.com/marketing‐technology/;Netmining,“OurClients:AcrossIndustries,AcrossTheWorld,”http://www.netmining.com/clients/;Netmining,“MeetOurPartners,”http://www.netmining.com/company/partners/(allviewed19Oct.2013).

72TellApart,“PersonalizingtheCustomerExperience,”http://www.tellapart.com/about/#platform;Tellpart,“MarketingSolutionsforOmnichannelCommerce,”http://www.tellapart.com/about/#solutions(bothviewed19Oct.2013).

73AdroitDigital,“DataCo‐Op,”http://www.adroitdigital.com/solutions/co‐op/.Thereisalsoa“BuyerScore”usedtorankacompany’semailsubscribersbasedontheirabilitytobuy.“ConnectionEngineLaunchesBuyerScoretoProvideInstantPredictionsofEmailSubscriberValueSegmentCustomersbyROIPotentialandIdentifyHighValueCustomers,”PRNewswire,17Feb.2012,http://www.prnewswire.com/news‐releases/connection‐engine‐launches‐buyer‐score‐to‐provide‐instant‐predictions‐of‐email‐subscriber‐value‐segment‐customers‐by‐roi‐potential‐and‐identify‐high‐value‐customers‐139560728.html(bothviewed19Oct.2013).

74Alliant,“AlliantProfitSelect,”http://www.alliantdata.com/solutions/lead‐management/alliant‐profitselect/;Alliant,“ProfitSelect,”http://www.alliantdata.com/wp‐content/themes/alliant/pdf/Alliant_ProfitSelect_10‐05‐10.pdf..TheGeoPerformancescoresare“availableforonlinetargeting.”Alliant,“GeoPerformanceScores,”http://www.alliantdata.com/wp‐content/themes/alliant/pdf/Alliant_GeoPerformance_Scores_10‐05‐10.pdf;Alliant,“Alliant

GeoPerformanceScores,”http://www.alliantdata.com/solutions/customer‐file‐enhancements/geographic‐targeting/(allviewed19Oct.2013).

75Dstillery,“NeighborhoodSocialTargeting,”http://www.everyscreenmedia.com/products/everyscreen‐data‐products/neighborhood‐social‐targeting/.MobilepaymentprocesserTSYSexplainsthatcompaniescanuse“Facebook“likes”orFoursquarecheck‐ins“tofine‐tunecustomertargeting…[eventuallylookingto]harvestdatafrom…socialmedia,callcentrenotes,onlinechats,geo‐locationlogsandemail….”RobHudson,“HowCardIssuersCanLeverageBigDatatoImproveCardholderRetentionEfforts,”TSYS,2013(registrationrequired).

76“Socialnetworkplatformshaveopenedupnewopportunitiesforidentifyingsocialinfluencers,”FICOexplains.“Therearealgorithmssuchasgraphtheorytomeasurenodecentralityandnoderelevanceinanetwork.Theycanbeappliedonsocialnetworkswithcontextspecificinfluencemetricstoidentifythenodes(individuals)thataremostcentralorrelevant….Withtheadventofsocialmedia,analyticscientistshavegottenapowerfulplaygroundtounderstandpeerinfluenceandidentifysocialinfluencers.ThisismadeeasybytherecentinnovationsinBigData,whichallowprocessingandanalyzingofextremelylargevolumesofstructuredandunstructureddatageneratedbysocialmediaplatforms.”ShafiRahman,“InwiththeInCrowd:TargetingSocialInfluencers,”FICOLabsBlog,26Sept.2013,http://ficolabsblog.fico.com/2013/09/being‐in‐with‐the‐in‐crowd‐targeting‐social‐influencers.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+FicoLabsBlog+%28FICO+Labs+Blog%29.SeealsoFICO,“GraphicalDecisionModels,”http://www.fico.com/en/Communities/Analytic‐Technologies/Pages/GraphicalDecisionModels.aspx.Theroleofsocialmediaasaformofconsumerscoringisanissuethatrequiresfurtheranalysis.AccordingtoWired,RachelBotsman,authorofWhat‘sMineisYours:TheRiseofCollaborativeConsumption,“paintedavisionofakindofutopiawhereouractions,andthewayinwhichweleadourlivesandtreatotherpeople,becomemoreimportanttotheeconomythanourcreditrating.‘Personalreputationisbeingtransformedandit‘sgoingtobecomeacurrencyandcornerstoneofoursocietyinthenextdecade,’saidBotsman.Withpeer‐to‐peermarketplacestakingovereverypocketofindustry,sotoo,willreputationcapitalbecomethedrivingforcebehindit.Itsoundsgoodforthosestrugglingtogetamortgage,aloanorevenajob,thatouractionsspeaklouderthantheboxeswetickonabankmanager‘sform.”LiatClark,“ForgetOnlinePorn,aTeen‘sBiggestProblemisReputationManagement,”Wired,22July2013,http://www.wired.co.uk/news/archive/2013‐07/22/kids‐privacy(allviewed19Oct.2013).

77JeanetteFitzgerald,seniorvicepresidentandgeneralcounsel,EpsilonDataManagement,letterinresponsetoCongressionalinquiry,14Aug.2012,http://www.epsilon.com/pdf/Epsilon_Congressional_Response_8_14_2012.pdf;Epsilon,“FinancialServices&Insurance,”http://www.epsilon.com/solutions/industry‐solutions/financial‐insurance#sthash.ijI4xkFf.dpuf.FacebookmarketerscanuseEpsilondata,forexample,to“targetpeoplewhocurrentlyhaveanautoloan.”AdEspresso,“AQuickGuidetoEachofFacebook’sPartnerCategories,”AdEspressoInsight,9May2013,http://blog.adespresso.com/facebook‐partner‐categories‐guide/(viewed29Oct.2013).

78KXEN,“ManagingtheNextBestActivityDecisionwithPredictiveAnalytics,”http://www.kxen.com/News+and+Events/Webinars/Next+Best+Activity+%28James+Taylor%29(viewed19Oct.2013).Accordingtooneindustryreportdiscussingtheuseofscoresbybanksandotherfinancialservicescompanies,generatingprofitsfromaconsumerrequirestheiradoptionoffourtosixormoreproducts.Onequestionthatneedstoneansweredistheroleofe‐scoreshelpingidentifyasetoffinancialproductstargetedtoatriskconsumersthatdonotadvancetheireconomicinterests.

79Giventhecapabilitytomonitorandanalyzeaconsumer’sactionsmoreclosely,Experianexplainsthat“thecombinationofscoresanddataattributes(bothpoint‐in‐timeandtrended)allowformicro‐targetingwithinsegmentsofthenear‐primepopulation.”Experian,“FinancialServicesAlternativesforaThinFile,”http://www.experian.com/consumer‐information/thin‐file.html;“ExperianAnnouncesitsExtendedViewScore,”13June2012,http://press.experian.com/United‐States/Press‐Release/experian‐

announces‐its‐extended‐view‐score.aspx(bothviewed21Oct.2013).Experianalsourgesusingwhatareknownas“hotlists.”

80Witha“teamofsomeoftheworld’sbestdatascientistsfromGoogleandlendingexpertsfromCapitalOne,”Zestsaysituses“thousandsofdatapointsandmachine‐basedalgorithmstobetterassesscreditrisk”(versuswhatitclaimsarethe“10‐15piecesofdata”usedbytraditionallenders).ZestFinance,“HowWeDoIt,”http://www.zestfinance.com/how‐we‐do‐it.html;ZestFinance,“WhatWeDo,”http://www.zestfinance.com/what‐we‐do.html;“ZestFinanceCEO:‘WeNeedDataArtiststoSaveZombieBorrowers,’”Wired,1July2013,http://www.wired.co.uk/news/archive/2013‐07/01/zestfinance‐douglas‐merrill(allviewed21Oct.2013).

81Itcanapproveandfundaloanofupto$10,000innearreal‐time….”InVirginia,AvantCreditchargesupto95%APR.AvantCredit,https://www.avantcredit.com;AvantCredit,“RatesandTerms,”https://www.avantcredit.com/rates_terms.html;RebeccaGrant,“AvantCreditSecures$20MtoMakeFinancialLoansMoreAccessiblewithBigData,”VentureBeat,14Aug.2013,http://venturebeat.com/2013/08/14/avantcredit‐secures‐20m‐to‐make‐financial‐loans‐more‐accessible‐with‐big‐data/(allviewed21Oct.2013).

82Thisscoreisusedwiththecompany’screditreportthatincludes“Informationcompiledfrompaydayloans,installmentloans,non‐primecreditcardsandothersourcesofnon‐traditionalcreditinformation…Detailedtransactionbasedpaymenthistory…Dataintelligence,suchasbankruptcydataandloaninformationorstatus…Real‐timereportingforacompletepictureofeachconsumer.”Thecompany’sidentificationverificationtechnologiescananalyze“disparitiesbetweenIPaddresses,timezonesandgeolocation….”DataX,“DataXUnveilsNewAdvancedSolutionsforMitigatingRiskandLeadFraud,”22Apr.2013,http://www.dataxltd.com/2013/04/22/datax‐unveils‐new‐advanced‐solutions‐for‐mitigating‐risk‐and‐lead‐fraud/;DataX,“DataXCreditReport,”http://www.dataxltd.com/consumer‐credit‐reports/credit‐reporting/;DataX,“CreditOptics,”http://www.dataxltd.com/consumer‐performance‐reports/credit‐optics/(allviewed21Oct.2013).

83JimMarous,“Moven:FromMobileBankingtoMobileMoney,”NextBank,18Feb.2013,http://www.nextbank.org/mobile/moven‐from‐mobile‐banking‐to‐mobile‐money‐2/;“IsTheWorldReadyForSocialMediaCreditScores?”TheFinancialBrand,14Aug.2012,http://thefinancialbrand.com/24733/social‐media‐credit‐score/;Movenbank,“You‘vegotCRED,”YouTube,9Aug.2012,http://www.youtube.com/watch?v=vQ30_k6zalI(allviewed21Oct.2013).eMarketer,“DigitalBankingTrends:WithConsumerPreferencesinFlux,IsOmnichanneltheAnswer?”Aug.2013,personalcopy.

84RichardWaters,“InternetGroupsBraceforSubprimeFallout,”FT.com,27Aug.2007,http://www.ft.com/intl/cms/s/0/e2a8cf92‐54c6‐11dc‐890c‐0000779fd2ac.html?siteedition=intl#axzz2fjzTJIeT(subscriptionrequired).SeealsoLarryDignan,“MortgageUpheavalCouldDingOnlineAdvertising,”ZDNet,16Aug.2007,http://www.zdnet.com/blog/btl/mortgage‐upheaval‐could‐ding‐online‐advertising/5966(viewed20Oct.2013).

85TheInteractiveAdvertisingBureau,atradegroupthatreleasesanannualreportonInternetrevenues,describesleadgenerationas“Feespaidbyadvertiserstoonlinecompaniesthatreferqualifiedpotentialcustomers(e.g.,autodealerswhichpayafeeinexchangeforreceivingaqualifiedpurchaseinquiryonline)orprovideconsumerinformation(demographic,contact,behavioral)wheretheconsumeroptsintobeingcontactedbyamarketer(email,postal,telephone,fax).Theseprocessesarepricedonaperformancebasis(e.g.,cost‐per‐action,‐leador‐inquiry),andcanincludeuserapplications(e.g.,foracreditcard),surveys,contests(e.g.,sweepstakes)orregistrations.”InteractiveAdvertisingBureau,“IABInternetAdvertisingRevenueReport:2013FirstSixMonths’Results,”Oct.2013,http://www.iab.net/media/file/IABInternetAdvertisingRevenueReportHY2013FINALdoc.pdf(viewed29Oct.2013).

86eBureau,“ConsumerLeadQualityManagement,”http://www.ebureau.com/lead‐quality‐management(viewed20Oct.2013).

87“DoublePositive,Leadscon,&Performance‐BasedOnlineMarketing—AUnifiedField/FunnelTheory,”DevsBuild.It,5July2012,http://devsbuild.it/resources/type/article/doublepositive‐leadscon‐performance‐based‐online‐marketing‐unified(viewed19Oct.2013).

88AccordingtoTheFinancialBrandwebsite,itcosts$9.34perclickfortheterm“checkingaccount.”Mortgageratesdelivera$5.18cpc(costperclick);debitcardsdeliver$2.55;andpersonalloansa$3.14cpc.Theratescompaniespaytoacquirekeywordsconnectedtoaspecificgeographicmarketalsodriveupthecosts.So“autoloanChicago”cancost$9.11whileasearchfor“autoloanAtlanta”is$7.61.“GoogleAdWordsCostsForBanksAndCreditUnions,”TheFinancialBrand,30Apr.2013,http://thefinancialbrand.com/29376/google‐adwords‐costs‐for‐banks‐credit‐unions/(viewed18Oct.2013).

89“2013StateofBank&CreditUnionMarketing,”TheFinancialBrand,12Feb.2013,http://thefinancialbrand.com/27511/2013‐state‐of‐bank‐credit‐union‐marketing/(viewed18Oct.2013);“GoogleAdWordsCostsForBanksAndCreditUnions.”Illustratinghowmuchmarketingisdoneonline,thefinancialservicesindustriesdelivered433billiononlineadimpressionsin2012.

90Google,“FourTruthsAboutUSHispanicConsumers,”ThinkInsights,Oct.2010,http://www.google.com/think/research‐studies/four‐truths‐about‐us‐hispanic‐consumers.html;Google,“FiveTruthsoftheDigitalAfricanAmericanConsumer,”ThinkInsights,June2011,http://www.google.com/think/research‐studies/five‐truths‐of‐the‐digital‐african‐american‐consumer.html.Googlealsofocusesonthedigitalmarketingoffinancialservices.Google,“FinancialServices,”ThinkInsights,http://www.google.com/think/industries/financial‐services.html(allviewed18Oct.2013).

91“LeadFlashSeesHugeSuccesswithCallCenterandHotTransferProduct,”8Feb.2013,http://www.ereleases.com/pr/leadflash‐sees‐huge‐success‐call‐center‐hot‐transfer‐product‐99932(viewed20Oct.2013).SeetheSpanish‐languageversionofthispaydaylender,forexample:LendUp,https://www.lendup.com/(viewed22Oct.2013).

92MarketView,“Advantage,http://mktview.com/solutions/advantage/;LeadFlash,“AboutLeadFlash,https://www.leadflash.com/aboutus.aspx(bothviewed19Oct.2013).

93LendUp,whichlendssmallamountstoconsumer,advertisesonFacebookandusesthereal‐timeservicesofadexchangecompanyAppNexus.AppNexus’sdatapartnerscollectadiverserangeoffinancialinformationonconsumers.

94Forexample,Optimoperformsthefollowingtypesoftestsonlandingpagestoinsurethataffiliatesgetbestpossibleconversionrates:

A/B(split)testing

Multivariatetesting(FullFactorial,FractionalFactorial,AdaptiveMultivariateTestingMethods)

Multi‐pagetesting

Usabilitytesting

Templatevariationtesting

Total‐experiencetesting

“Optimohasbuiltinexperimentsthatuseanalysisofvariance,Chi‐squaredtest,correlationandfactoranalysis,meansquareweighteddeviation,linearregressionandtimeseriesanalysis,maximumlikelihoodestimation,Stochasticcalculus,Black–Scholesmodeltoautomaticallycomeupwithhighestrevenuegeneratingfunnels.Inadditiontodatamininganddemographicanalysiswehirebehavioralpsychologiststohelpusimproveourfunnelsbyunderstandingconsumerbehavior.”LeadsMarket,“Our

Technology,”http://www.6ivi9.com/optimo.aspx?AspxAutoDetectCookieSupport=1(viewed29Oct.2013).Seealso“PersonalLoanAffiliateProgramLeadsMarket.comReleasesNewCompliancePackageforPublishers,”PRWeb,14May2013,http://www.prweb.com/releases/2013/5/prweb107(viewed19Oct.2013).Companiescanalsouseeye‐trackingtechnologytomakesureconsumersseldomstrayfromthe“call‐to‐action”orsomeotherlureusedtogatherthedesireddata..Tobii,“AdvertisingResearchandEyeTracking,”http://www.tobii.com/eye‐tracking‐research/global/research/advertising‐research/(viewed21Oct.2013).

95Datalot,“BusinessAnalyticsCoordinatoratDatalotinBrooklyn,NY,”http://www.jobscore.com/jobs/datalot/business‐analytics‐coordinator/axzi2Yd1Or462HiGakhP3Q&ref=rss.DatalotdescribesLead.Ioasthe“firstenterprise‐classRTBplatformforleadgen.Dynamicpredictivebidding….”Customerscanuseitto“[b]uildyourownleadexchange.”Datalot,http://www.datalot.com/.SeealsoFounderCollective,“Datalot,”http://foundercollective.com/companies‐Datalot;VantageMedia“OurApproach,”http://www.vantagemedia.com/approach.php(allviewed19Oct.2013).

96AsoneleadgeneratorusingFacebookexplained,it"cantakeofflinedata,suchasemailaddressesorphonenumbers,fromanadvertiser’sCRMorothersources,andfindthoseusersonFacebook…targetingtouserswehistoricallywereunabletoidentifyonline…."GinaMaranto,“ProgrammaticBuying:EnsuringYourAdsAreViewed,”DoublePositive,6Aug.2013,http://www.doublepositive.com/index.php?cID=651.SeealsoDoublePositive,“OnlineAdvertisers…GetTheirCustomers,Here,”http://www.doublepositive.com/your‐needs/online‐advertisers/;DoublePositive,“OurSolutions,”http://www.doublepositive.com/our‐solutions/;DoublePositive,“Who’sWorkingwithUs:Clients,”http://www.doublepositive.com/whos‐working‐us/clients/;DoublePositive,“OurBlog,”http://doublepositiveblogs.com/blog/page/3/.Mainstreamfinancialinstitutionsalsouseleadsandscorestoidentifyandtargetconsumers,andtoidentifyhowtotreatcurrentandpotentialcustomers.Forexample,U.S.Bank’sprogramenhancestheleadsitcapturesbyincorporatingcustomerprofileinformationthatisthen“prioritizedviaascoringmodel.Thebanksayscriteriaforitsscoringmodelsinvolve“thequalityandtemperatureofthelead”aswellasthe“customervaluetothebank.AdobesaysthatallthedataitcompilesandthatareusedforclientslikeU.S.Bankreflectrequiredprivacypractices.SeeAdobe’sU.S.Bank,http://apps.enterprise.adobe.com/go/701a0000000lBHCAA2,andSunTrust,http://apps.enterprise.adobe.com/go/701a0000000ltEhAAI,casestudies.SeealsoAdobe,“FinancialServices,”http://www.adobe.com/solutions/financial‐services.html(allviewed20Oct.2013).

97InteractiveAdvertisingBureau,“LeadGenerationCommittee,”http://www.iab.net/member_center/committees/working_groups/lead_generation_committee;OnlineLendersAlliance,http://www.onlinelendersalliance.org/;LeadsCon,http://leadscon.com/(allviewed21Oct.2013).

98FredericHuynh,“WhoGetsAFICOScore?”FICOBankingAnalyticsBlog,“29Aug.2013,http://bankinganalyticsblog.fico.com/2013/08/who‐gets‐a‐fico‐score.html/(viewed24Oct.2013).

99KristineSnyder,“HowExperianisHelpingCustomerswithLittletoNoCreditHistory,”14June2012,http://www.experian.com/blogs/news/2012/06/14/extended‐view‐score/.SeealsoExperian,“CreditServicefortheUnderserved,UnbankedandUnderbankedPopulations,”http://www.experian.com/consumer‐information/unbanked.html?intcmp=CIS_sptmod_learn_underserved_080912;Experian,“FinancialServicesAlternativesforaThinFile,”http://www.experian.com/consumer‐information/thin‐file.html?WT.srch=PR_CIS_ExtendedView_061112_ExtendedView(allviewed19Oct.2013).

100RachelSchneiderandRobLevy,“AlternativeDataCanHelpEliminateCredit‘sCatch‐22,”AmericanBanker,7Nov.2012,http://www.americanbanker.com/bankthink/alternative‐data‐can‐help‐eliminate‐credits‐catch‐1054167‐1.html(viewed19Oct.2013).

101PERC,“AlternativeDataistheAchievableSolution:AlternativeDataCanbeUsedtoEndCreditInvisibilityandDriveFinancialInclusion,”http://www.perc.net/approach/#drive;KatherineLucas

McKay,“PolicyUpdate:FullFileCreditReporting,”CFED,13July2011,http://cfed.org/blog/inclusiveeconomy/policy_update_full‐file_credit_reporting/(bothviewed23Oct.2013).

102NationalConsumerLawCenter,“FullUtilityCreditReporting:RiskstoLow‐IncomeConsumers,“July2012,http://www.nclc.org/images/pdf/energy_utility_telecom/consumer_protection_and_regulatory_issues/ib_risks_of_full_utility_credit_reporting_july2012.pdf(viewed23Oct.2013).

103Equifax,“InsightScoreforRetailBanking,”http://www.equifaxddasolutions.com/insight.html;PhilipRyan,“OpportunitywiththeUnderbankedforFIs,”BankInnovation,12Oct.2012,http://bankinnovation.net/2012/10/opportunity‐with‐the‐underbanked‐for‐fis/(bothviewed19Oct.2013).

104Equifax,“InsightScoreforRetailBanking.”

105In2012Experianlauncheditsownrisk‐scoringproductfortheunbanked,called“ExtendedView.”Experianexplainedthatits“FairCreditReportingAct‐compliantcreditscore”provideslenders“withamorerobustunderwritingarsenal…abletofundfinancialproductsforthisunderpenetratedmarket.”ExtendedViewispromotedto“banks,creditunions,autolenders,telecommunicationscompaniesandutilityproviders.OfnoteisExperian’sanalysisthatshowsthat“homevaluesofthetypicallyunscorablemirrorthemedianU.S.homevalue.ThemedianUSHomevalueis$154,000.Consumersat“superprime/prime”homevalueis$147,300,whilethoseatneatprimeis$110,700.BarrettBurns,“Expand&Grow:HowtoReachandEducateMoreMembersUsingaNewBreedofCreditScores,”VantageScore,2013,http://www.vantagescore.com/images/resources/NAFCU%20Conference%202013.pdf(viewed29Oct.2013).

106FICO,“FICO8Score,”http://www.fico.com/en/FIResourcesLibrary/FICO_8_Score_2456PS.pdf;FICO,“FICOExpansionScore,”http://www.fico.com/en/Products/Scoring/Pages/FICO‐Expansion‐Score.aspx.FICO’s“NextGenRiskScores”areaimedatthe“subprimepopulation—creditfileswithpreviousseriousdelinquenciesorcharge‐offs.”Whilehelpingmoreconsumersgetapproval(6‐10percentcomparedtootherscores),italso“identified23%morefuturebadplayers.”Itclassifiesconsumersintomoresegments,usingsome“18separatescoringmodels”withdifferent“riskprofiles.FICO,“FICONextGenRiskScores,”http://www.fico.com/en/firesourceslibrary/fico_nextgen_scores_1462ps.pdf.FICO’s“PreScore”service“combinesscores,consultingandanalyticstoempowercreditgrantorstoachievemoreprofitableprescreeningcampaigns.”Potentialcustomersaresolicitedusinga“FICOriskandrevenuescorematrix”thathelpsdeterminewhatproducttooffer(“minimumline,standardline/LowAPR,minimumline/MediumAPR,PremiumLine,VeryLowAPRNoFee,”etc.).FICO,“FICOPreScoreService,”http://www.fico.com/en/FIResourcesLibrary/PreScore_Service_1453PS.pdf(allviewed20Oct.2013).Byusingalternativedatasuchasutilitypaymenthistoryandproperty/assetdata,FICOsaysthatitsmodelshaveshownthat“60‐75%oftraditionallyunscorableconsumerscanbeassignedastatisticallymeaningfulcreditscore….”FICOiscompetinginthis“thinfile”market.ItsFICO8Score,which“boostspredictivestrengthbymorethandouble,”addressesconsumerswiththese“thinfiles,”including“nonprime”borrowers.Itisalsousingnontraditionaldatato“assessthecreditriskofconsumerswithlittleornocredithistoryatthethreemajorcreditreportingagencies.”Theyshouldalso“supplementtraditionalcreditdatawithalternativedatathatmeetregulatoryrequirements,”explainsFICO.FICO,“ToScoreorNottoScore?”

107CoreLogic’sTeletrackisanothernon‐traditionalcreditscore,whichusesathree‐digitscoreforlendingdecisionsbasedonanevaluationofPaymentdefaultrisk.CoreLogic,“CoreScoreforLenders,”http://www.corelogic.com/landing‐pages/corescore‐for‐lenders.aspx.SeealsoCoreLogicCredco,“CoreScoreSolution,”http://www.corelogic.com/downloadable‐docs/corescore‐lender‐brochure.pdf.CoreScoreisofferedincoordinationwithFICO.“FICOandCoreLogictoDevelopNewCreditRiskScoringSolutions,”10Oct.2011,http://www.corelogic.com/about‐us/news/fico‐and‐corelogic‐to‐develop‐new‐credit‐risk‐scoring‐solutions.aspx(allviewed21Oct.2013).

108FICOsaysthattoserve“unscorableconsumers”companiesneedto“augmentthelimitedtraditionalcreditinformationwithalternativedatathataddspredictivevalue.”FICO,“ToScoreorNottoScore?”Insights,n.70,Sept.2013,http://www.fico.com/en/FIResourcesLibrary/70_Insights_To_Score_or_Not_To_Score_3009WP.pdf(viewed20Oct.2013).

109“IXIServicesenablesitsclientstodifferentiateandtargetconsumerhouseholdsandtargetmarketsbasedonproprietarymeasuresofwealth,income,spendingcapacity,credit,share‐of‐wallet,andshare‐of‐market.”EquifaxIXIServices,“AboutUs,”http://www.ixicorp.com/about/company‐overview/(viewed21Oct.2013).

110Experiansaysthatthisreducesthevolumeofprospectswhogothroughthefullapplicationprocess,resultinginbetterapprovalratesandROIs”forconsumersfoundonline.”Experian,“ExpandingtheMarketableUniverse,”2011,http://www.experian.com/assets/consumer‐information/white‐papers/universe‐expansion‐white‐paper.pdf(viewed21Oct.2013).

111Equifax,“CreditStylesPro,”http://www.equifax.com/pdfs/corp/CreditStyles_Pro_Product_Sheet.pdf(viewed21Oct.2013).

112Equifax“CreditStylesPro”;360i,“EquifaxNames360iItsLeadAgency,”360iBlog,22May2013,http://blog.360i.com/360i‐news/equifax‐names‐360i‐its‐lead‐agency.Equifaxrecentlyhiredadigitalmarketingcompanytohelpit“developandexecuteadata‐drivenacquisitionstrategyforitsPersonalSolutionsunit,helpingdevelopaDMP.”Thiswillincludebringingtogetherthecompany’sonlineandofflinedata.Equifax,“PersonalSolutions,”http://www.equifax.com/home/en_us;IdentityProtection.com,http://www.identityprotection.com/home(allviewed21Oct.2013).

113Equifax“CreditStylesPro.”“Predictivetriggers”areanothersetofaggregatedservicesthatareusedtotarget“householdswithinamicro‐neighborhood,”Equifaxexplains.Therearepredictivetriggersfor“automotivefinance,homefinancingandrefinancing,bankcards,retailpurchases,studentloans,andpersonalloans.”Theseproductsenablethetargetingofconsumerswhohavea“specificprofiledneed,”eveniftheyhavenotyetappliedforcreditoranotherfinancialproduct.PredictiveTriggershelpmarketerstargetauniverseofconsumerswithaspecificprofiledneed,eventhoughsimilarconsumersmaynotyethavetakenanactionthatwouldonlybecapturedbyanevent‐basedtrigger.Equifax,“CreditStylesPro.”

114IXIsaysthatfinancialmarketerscan“TailorOnlineMessaging:Differentiatesitevisitorsonthefly,anddevelopcreativeandmessagingthatwillresonatewithyourtargetaudiencebasedonabetterunderstandingoftheirfinancialprofiles.”EquifaxIXIServices,“FinancialCohorts,”http://www.ixicorp.com/products‐and‐services/customer‐segmentation/financial‐cohorts/.IXIalsorecentlyintroducedadigital“audienceintelligencetooltobetterevaluatewhoisactuallyviewingandrespondingtotheirads.”Itallowsmarketersto“evaluatecampaignsinrealtimeandmakeinstantadjustments.EquifaxIXIServices,“AudienceIntel,”http://www.ixicorp.com/ixi‐digital/solutions‐for‐advertisers‐and‐agencies/audienceintel/(bothviewed21Oct.2013).

115EquifaxIXIServices,“IXIDigitalTargetingOptions,”http://www.ixicorp.com/ixi‐digital/ixi‐digital‐targeting‐options/(viewed22Oct.2013).

116EquifaxIXIServices,“FinancialCohorts.”One“leadingbank”isquotedonEquifax’sIXIsitereportingthatbyusingFinancialCohorts“profileinformation,”itwasableto“narrowitstargetaudience”foranofferby90percent.Whileagreatrevenuesuccessforthebank,consumersnotdeemedqualifiedweresimplyeliminatedfromlearningabouttheproduct.EquifaxIXIServices,“FinancialCohorts.”SeealsoEquifaxIXIServices,“IXIDigitalTargetingOptions”;EquifaxIXIServices,“AudienceIntel.”

117Semcastingexplains:“Onlyaggregatedandaveragedvaluesforpublicallyavailabledemographics,andonlyZip+4levelSmartZonelocationsareusedtomakeanonboardingmatch.Thereisnoabilitytoreverseengineeronboardingtoanindividualorhouseholdlevel,andnocookies,trackingoranyother

formoftaggingisused.”Semcasting,“Onboarding,”SemcastingMarketingAppliance,http://semcastingmx.com/smartzones‐website/features.html(viewed21Oct.2013).

118Semcastingexplains:“Onlyaggregatedandaveragedvaluesforpublicallyavailabledemographics,andonlyZip+4levelSmartZonelocationsareusedtomakeanonboardingmatch.Thereisnoabilitytoreverseengineeronboardingtoanindividualorhouseholdlevel,andnocookies,trackingoranyotherformoftaggingisused.”Semcasting,“Onboarding,”SemcastingMarketingAppliance,http://semcastingmx.com/smartzones‐website/features.html(viewed21Oct.2013).

119The“mobilepaymentsisamultibillion‐dollaropportunitythatcouldeasilyexpandstoamultitrillion‐dollaropportunityassmartphonepenetrationincreases,”explainedeMarketer.BryanYeager,“MobilePayments:AnUpdatedForecast,EarlySuccessesandVisionsfortheFuture,”eMarketer,July2013,personalcopy.

120Drivingthegrowthofprepaidcardsistheunderservedcommunity(globally,notjustintheU.S.),accordingtoarecentreportcommissionedbyMasterCard.“…[U]nbankedandunderbankedconsumersrepresentasignificantopportunitytofinancialinstitutions,astheyaremostlikelytoaccesstheInternetusingamobilephone.Customerswhouseprepaidcardswantfullcontroloftheirmoney—anytime,anywhere.FISallowsfinancialinstitutionstoservetheneedsofalloftheirprepaidcardholderswithanintuitive,easy‐to‐usemobileprepaidsolution.”FIS,“MobilePrepaid,”http://www.fisglobal.com/products‐mobilefinancialservices#prepaid(viewed21Oct.2013).

121Formsofprepaidcardsareproliferating,withbothSocialSecurityandSSIavailableas“DirectExpressCards”inadditiontodirectdeposit.

122Theprojectedannualrateofgrowthforprepaidcardsis22percentthrough2017.MasterCard’sreportidentifiesthat“governmentsaroundtheworldareincreasinglydrivingfinancialinclusion,”withtheprepaidcardviewedasanimportantwaytoaccomplishthattask.MasterCard,“2012GlobalPrepaidSizingStudy,”July2012,https://www.partnersinprepaid.com/pdf/a‐look‐at‐the‐potential‐for‐global‐prepaid‐growth‐by‐2017.pdf?maincategory=TOPICSsubcategory=RESEARCH(viewed21Oct.2013).

123WalmartMoneyCard,“AboutOurProducts,”https://www.walmartmoneycard.com/walmart/about‐our‐products#cardtop;PayPal,“PayPalPrepaidMasterCard,”https://www.paypal‐prepaid.com/.GreenDot,MasterCard,Visa,andothersalsoofferprepaidcards.GreenDot,“ReloadablePrepaidCards,https://www.greendot.com/greendot;Visa,“VisaPrepaidCard,”http://usa.visa.com/personal/cards/prepaid/prepaid‐card.html(allviewed27Oct.2013).

124TheU.S.PIRGEducationFundhasrecommendedbestpracticesfordebitcardsusedtodistributefinancialaidoncampus,ordebitcardslinkedtostudentIDs.

125ConsumerFederationofAmericaandtheNationalConsumerLawCenter,“AdvocatesUrgeCFPBtoBanOverdraftFeesandPaydayLoansonPrepaidCards,”25July2012,http://www.consumerfed.org/news/562(viewed23Oct.2013).

126SarahPerez,“AmericanExpressServeGoesAfterThe“Under‐Banked”WithPrepaidCardsYouLoadWithCashInStores,”TechCrunch,8Oct.2013,http://techcrunch.com/2013/10/08/american‐express‐serve‐goes‐after‐the‐under‐banked‐with‐prepaid‐cards‐you‐load‐with‐cash‐in‐stores/(viewed23Oct.2013).

127Withmorethan50millionusersintheU.S.,consumerscanusetheirPayPalaccounttopayforproductsat“millionsofmerchantlocations,”includingviaitsmobilephoneappandprepaidcard.Discover,“PayPalandDiscoverToBringPayPalToMillionsOfIn‐StoreLocations,”22Aug.2012,http://www.investorrelations.discoverfinancial.com/phoenix.zhtml?c=204177&p=irol‐newsArticle_print&ID=1727640&highlight=;PayPal,“Apps,”https://www.paypal.com/webapps/mpp/mobile‐apps;PayPal,“PayPalPrepaidMasterCard,”https://www.paypal.com/webapps/mpp/paypal‐prepaid‐mastercard;DavidHeun,“PayPal'sNewPrepaidCardUpsellstotheUnderbanked,”AmericanBanker,14Feb.2012,http://www.americanbanker.com/issues/177_31/paypal‐prepaid‐unbanked‐underbanked‐1046670‐

1.html(allviewed21Oct.2013).InSeptember,PayPalunveileditslatestnewproduct—calledBeacon.WhenPayPalusersenterastore,andiftheyhavedownloadedandturnedonamobileapp,theyare“checked‐in.The“merchantcanthenserveupanynumberofconvenientcommerceofferstiedtoahands‐free,swipe‐lesspaymentexperience.”Offerscanbe“targetedtowhereconsumershappentobeinthestore—$2.00offmascarainthebeautyaisle,50percentoffflipflopsinthefun‐in‐the‐sunsection,forinstance..KarenWebster,“PayPalPutsAnotherNailInNFCWithBeaconLaunch,”Pymnts,10Sept.2013,http://www.pymnts.com/briefing‐room/mobile/playmakers/2013/PayPal‐Puts‐Another‐Nail‐In‐NFC‐With‐Beacon‐Launch/(viewed21Oct.2013).

128JesseHaines,“Mobileand...Anthropology?”GoogleMobileAddsBlog,2Oct.2012,http://googlemobileads.blogspot.com/2012/10/mobile‐andanthropology.html(viewed22Oct.2013).AsdigitalmarketresearcherMillwardBrownwroteinits2012report,“Mobiledevicesareindispensableandincreasinglycentraltoourlives.”MillwardBrown,“AdReaction2012:MobilePresentsMarketersGloballywithanUnprecedentedOpportunitytoEngagewithConsumers,”ChangingChannels70|20|10,http://www.millwardbrown.com/Sites/Changing_Channels/AdReaction.aspx(viewed18Oct.2013).

129DavidPenn,“CorduroandLendUpPartnertoProvideLoansforMedicalExpenses,”Finovate,1July2013,http://finovate.com/2013/07/corduro‐and‐lendup‐partner‐to‐provide‐loans‐for‐medical‐expenses.html(viewed27Oct.2013).

130PayPal,“PayingWithYourPhonehasNeverBeenSoEasy—OrLookedSoGood,”https://www.paypal‐forward.com/mobile/paying‐with‐your‐phone‐has‐never‐been‐so‐easy‐or‐looked‐so‐good/;PayPal,“SpecialFinancingOptions,”https://www.billmelater.com/cm/paypal/landers/13ppbmlACQappfin.html;ChantalTode,“PayPalCourtsShopperswithOffers,InstantCreditinRevampedApp,”MobileCommerceDaily,6Sept.2013,http://www.mobilecommercedaily.com/paypal‐courts‐shoppers‐with‐offers‐instant‐credit‐in‐revamped‐app;“PayPal,”iTunesPreview,https://itunes.apple.com/us/app/paypal/id283646709?mt=8(allviewed21Oct.2013);TheCFPBrecentlylaunchedaninvestigationintoPayPal’sBillMeLaterproduct.CarterDougherty,“EBayProbedbyRegulatorOverLoansPioneeredbyPaydayLenders,”Businessweek,22Oct.2013,http://www.businessweek.com/news/2013‐10‐22/ebay‐probed‐by‐regulator‐over‐loans‐pioneered‐by‐payday‐lenders(viewed27Oct.2013).

131SarahPerez,“GoogleWalletForGmailInvitesStartRollingOutToMoreUsers,”TechCrunch,25July2013,http://techcrunch.com/2013/07/25/google‐wallet‐for‐gmail‐invites‐start‐rolling‐out‐to‐more‐users/(viewed21Oct.2013).

132“AnewgroupofpaymentterminalproviderswilladdIsis’specificationsforpaymentsandloyaltyprograms,enablingthetelecom‐drivenmobilewallettoreachapproximately90%oftheaddressablemarketforpointofsalehardwareintheU.S.IDTech,OnTrackInnovationsGlobal,PAXTechnology,UniformIndustrialCorp.andXACAutomationCorp.haveagreedtointegrateIsis’SmartTap—aproprietarymobilecommercesoftwarespecificationthatleveragesNFCtoenableuserstopay,presentloyaltycardsandredeemoffersaspartofthesametransaction.”JohnAdams,“AsNationwideLaunchLooms,IsisBroadensTerminalMarketReach,”PaymentsSource,4Sept.2013,http://www.paymentssource.com/news/as‐nationwide‐launch‐looms‐isis‐broadens‐terminal‐market‐reach‐3015326‐1.html(viewed21Oct.2013).SeealsoMasterCard,“MasterCardPayPass,”http://www.mastercard.us/paypass.html(viewed27Oct.2013).

133RogerCheng,“HowMasterCardPlanstoTransformMobilePurchases,”C|Net,24Feb.2013,http://reviews.cnet.com/8301‐13970_7‐57570783‐78/how‐mastercard‐plans‐to‐transform‐mobile‐purchases/(viewed21Oct.2013).

.134PreCash,“ConsumerSolutions,”http://www.precash.com/consumer_financial_solutions.html;EvolveMoney,http://www.evolvemoney.com/;Flip,http://www.myflipmoney.com/;PreCash,“PreCashIntroducestheFirstPracticalMobileWalletforUnderbankedConsumers,”12Sept.2012,http://www.precash.com/flip_release_20120911.html.“Forinstantcheckdeposits,PreCashplanstocharge$1plus1%ifthedepositforapayrollorgovernmentcheckplus$1plus3%oftheamountfor

personalchecks.”DanielWolfe,“PreCashtoDebut'Flip,'aMobileWalletfortheUnderbanked,”http://www.paymentssource.com/news/precash‐to‐debut‐flip‐a‐mobile‐wallet‐for‐the‐underbanked‐3011817‐1.html(allviewed21Oct.2013)

135And,asafactsheetnotes:“creating“bettershoppingandpayingexperiencesforcustomersandmerchantsalike.”See“CXTapsFIStoPowerItsNewMobileCommercePaymentsNetwork,”BusinessWire,11July2013,http://www.businesswire.com/news/home/20130711005313/en/MCX‐Taps‐FIS‐Power‐Mobile‐Commerce‐Payments;“FISMobileWallet,”http://bcove.me/3o4cqjak(bothviewed21Oct.2013).

136ChrisJayHoofnagle,JenniferM.Urban,andSuLi,“MobilePayments:ConsumerBenefits&NewPrivacyConcerns,”SocialScienceresearchNetwork,24Apr.2012,http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2045580(viewed21Oct.2013).

137ChandanSharma,“BankingonTechnology:EmbracingaNewEraofTransparency,”2012,http://www.verizonenterprise.com/resources/articles/banking‐on‐technology_en_xg.pdf(viewed21Oct.2013).

138Financialinstitutionsarealsousingneuromarketing—theinfluencingofanindividualatasubconsciousandemotionallevel—aspartoftheiroutreachcampaignsSee,forexample,“ResultsofNeurologicalTestingofAdvertisingEffectiveness,”donefor“oneoftheworld’stopfinancialservicescompanies,”Neurofocus,personalcopy.

139Cardlytics,“CardlyticsReleases2011Transaction‐DrivenMarketingResultsatNRFBigShow,”16Jan.2012,http://cardlytics.com/press/cardlytics‐releases‐2011‐transaction‐driven‐marketingtm‐results‐at‐nrf‐big‐show/;Cardlytics,“CardlyticsWinsJudges’ChoiceAwardinFifthAnnualPaybeforeAwards,”8Mar.2011,http://cardlytics.com/press/cardlytics‐wins‐judges‐choice‐award‐in‐fifth‐annual‐paybefore‐awards/;Cardlytics,“AdvertisersFAQ,”http://cardlytics.com/advertisers‐2/advertisers‐faq/(allviewed30Oct.2013).

140Cardlyticsexplainsthat:“Whenconsumerslogintotheirdigitalbankstatements,theyseeadvertisingforproductsandservices,chosenforthembasedontheirrecentpurchases.Theyclicktoaccepttheoffer,visitthestoreorwebsite,andthenusetheirdebitorcreditcardtoreceivecashbackfromtheirbank.Nocouponsorcodes,noregistrations,nothingtoslowdownthecheckoutprocess—easy.”Cardlytics,“AdvertisersFAQ”;Cardlytics,“HowItWorks,”http://cardlytics.com/advertisers‐2/how‐it‐works/;Cardlytics,“FinancialInstitutions,”http://cardlytics.com/financial‐institutions‐2/.SeealsoFirstData,“SummitResourceMaterials,”http://www.firstdata.com/summit/insights.html.Oneleadingacademictechnologistexplainedthat“Intheextreme,couponswillbeavailableforallpurchases,andsmartshoppingsoftwareonourphonesorbrowserswillautomaticallysearch,aggregate,manage,andredeemthesecoupons,showingcoupon‐adjustedpriceswhenbrowsingforproducts....Couponswillprobablyalsomergewith‘rewards,’‘points,’discounts,andvariousotherincentives.”ArvindNarayanan,“PersonalizedCouponsasaVehicleforPerfectPriceDiscrimination,”33BitsofEntropy,25June2013,http://33bits.org/2013/06/25/personalized‐coupons‐price‐discrimination/(allviewed22Oct.2013).

141NestorBailly,“TheSophisticationofShopperTracking,”iQ,20Mar.2013,http://iq.intel.com/iq/29562682/the‐sophistication‐of‐shopper‐tracking(viewed22Oct.2013).

142PathtoPurchaseInstitute,http://p2pi.org/;ZMOT:WinningtheZeroMomentofTruth,http://www.zeromomentoftruth.com/;SOLOMOTechnology,http://solomotechnology.com/(allviewed22Oct.2013).

143Sparkfly,“Solution,”http://www.sparkfly.com/solution(viewed22Oct.2013).

144NielsenCatalinaSolutions,forexample,“utilizesthebuyinghistoryofmillionsofU.S.householdstotargetmobileadvertisingtoabrand’smostvaluableconsumersbyrelyingonshopper‐purchasedatamatchedtoanonymizedhouseholds….”“CatalinaLaunchesPersonalizedMobileAdvertisingforCPGBrands,”11Mar.2013,http://www.catalinamarketing.com/news‐events/press‐releases/details.php?id=328(viewed22Oct.2013).

145JenniferMarlo,“HowStartupsareShapingtheFutureofMobile,”iMediaConnection,18Oct.2013,http://www.imediaconnection.com/content/35053.asp#sHJYAAo1kfzkCLM2.99(viewed22Oct.2013).

146Narayanan,“PersonalizedCouponsasaVehicleforPerfectPriceDiscrimination.”

147MarkHuffman,“AreDigitalCouponstheNewWaytoShopforDiscounts?”ConsumerAffairs,30Sept.2013,http://www.consumeraffairs.com/news/are‐digital‐coupons‐the‐new‐way‐to‐shop‐for‐discounts‐093013.html.Couponsareappearingonphonesasyouenterastore.See,forexample,MarkWalsh,“MLBTestsiBeaconAppFeatureToSendMobileCoupons,”OnlineMediaDaily,26Sept.2013,http://www.mediapost.com/publications/article/210096/mlb‐tests‐ibeacon‐app‐feature‐to‐send‐mobile‐coupo.html#axzz2iAQPfc9r(bothviewed22Oct.2013).Customerswhogetregularbillsorstatementscangetcross‐promotionaloffersdeliveredthatusetheirdatatomakethemtargetedoffers.

148Forexample,AcquireWebsaysthatitshaslinked“over120millionexistingcookiestogeographic‘micro‐zones’(groupsofzip9s).Thisallowsustoleveragetraditionalofflineconsumerdatatotargetonlinedisplayadvertisingcampaigns.…AdvertisingattheZIP+4orneighborhoodlevelto+120millionuniqueconsumerdevicestaggedwithactionablecookies….”AcquireWeb,“ProspectDisplayTargetsviacookieTargeting,”http://www.acquireweb.com/prospect‐data‐services/prospect‐display‐targets‐via‐cookie‐targeting/.Itcombineswhatitcalls“geo‐basedtargetinformationwithconsumerbehavior…useregistrationdata,IPlocationdata,censusdata,yourcustomerdata.”Italsoengagesinanincreasinglyusedpracticethatidentifiesonlineandofflineinformationonaconsumer,called“dataappend.”“ReverseAppendtakesadvantageofthefactthatformanyonlinemarketers,theemailaddressistheonlyidentifierwithintheironlinedatabase.Tofindpostaladdresses,ReverseAppendmatchesyouremail‐onlyfilewiththeAcquireWebdatabaseofover750millionrecordsthatincludeemailaddressesaswellasnameandpostaladdress.Whereanemailaddressmatches,ReverseAppendwillreturnafilecontainingthenameanddeliverablepostaladdressoftheindividualatthegivenemailaddress.”AcquireWeb,“ReverseAppend,”http://www.acquireweb.com/customer‐data‐services/reverse‐append/(bothviewed22Oct.2013).

149Placed,“PlacedTargeting,”http://www.placed.com/targeting(viewed22Oct.2013).

150Advancesingeo‐mappingandtherapidadoptionofmobiledeviceusearealsocreatinganew“fourthdimension”—ourpersonal“grid”wherewecanbeinfluencedforproductsandservicesaswe“simultaneouslyliveinadjacentonlineandofflinerealities.”Asonemarketerdescribesit,“thisfourthdimensionactsasacustomzipcode….[The]personalgridusesdatatohoneinonindividualpreference.”NBCUniversalIntegratedMedia,“PersonalGrid,”TheCurveReport,vol.2,2012,http://thecurvereport.com/category/trends/personal‐grid‐1/(registrationrequired).

151FICOgivesthisasanexample:“Forinstance,ifthereisaPizzaHutonthewayfromaperson’sofficetohome,sheismorelikelytoredeemaPizzaHutofferthanapersonwhodoesnotpassbyPizzaHut.”ShafiRahmanandAmitSowani,“Location‐BasedMarketingUsingGPSData,”FICOLabsBlog,5Feb.2013,http://ficolabsblog.fico.com/2013/02/location‐based‐marketing‐using‐gps‐data.html(viewed22Oct.2013).

152Marketersaretakingadvantageof“digitaltagging”andso‐called“check‐ins”sotheycanbeapartofouronlineandphysicalenvironments.Theypredictthat“inthefuture,digitalstorefronts…willseamlesslysyncupwith…physicalenvironmentsand…morenaturallyintersect”ourlives.NBCUniversalIntegratedMedia,“PersonalGrid.”

153FICO,“FICOAnalyticOfferManager,”July2012,personalcopy.SeealsoFICOLabs,“ChoosingtheRightAnalytics:UpliftModels,”FICOLabsBlog,13Sept.2013,http://ficolabsblog.fico.com/2013/09/choosing‐the‐right‐analytics‐uplift‐models.html;FICO,“WhichRetailAnalyticsDoYouNeed?”http://www.ngrsummit.com/media/whitepapers/2012/Fico.pdf.Thesametechnologicalfoundationforfinancialmarketing,withmanyofthesamedatacompaniesinvolved,arealsohelpingprovidethetoolsforretailersandothers.Chainsandothers,forexample,cantakeadvantageofMerkle’s“DigitalDataIntegrationEngine”tomergetheirlistswithonlinedata.Merkle,“Solutions,”http://www.merkleinc.com/industry‐solutions/retail‐consumer‐goods/solutions.Merkleexplainsthat

“Utilizingsegmentationandmodelscorestoinformtargetingstrategyhasthusescapedtheconfinesoftraditionalofflinemarketingandcannowbeleverageddigitally.”Throughsuchpractices,companiesnowmore“aboutwhoweareservingadvertisingto,”butcan“alsopredictwhoamongdigitalprospectsismorelikely”toact.AndyFisher,“DigitalCRM:AugmentingDMwithTargetedDisplay,”MerkleBlog,17June2013,emphasisintheoriginal,http://www.merkleinc.com/blog/advanced‐analytics/digital‐crm‐augmenting‐dm‐targeted‐display(allviewed22Oct.2013).

154AlexCampbell,“Top5EmergingTrendsinMobileCommerce,”TheFutureofCommerce,1July2013,http://www.the‐future‐of‐commerce.com/2013/07/01/emerging‐mobile‐trends/;KyleStock,“MaybeShowroomingIsn‘tKillingRetailersAfterAll,”Businessweek,12Sept.2013,http://www.businessweek.com/articles/2013‐09‐12/maybe‐showrooming‐isnt‐killing‐retailers‐after‐all(bothviewed22Oct.2013).

155Forexample,QuickServicerestaurantssuchasMcDonald’sareinvestinginmobilepaymentsandlocationmarketing.Drugstorechainshavedevelopedmobileappstohelpsellproductsin‐store.See,forexample,Riddle,“WhatTheyDidn‘tTellYouaboutMcDonald‘s’MobilePaymentsTrials”;ChantalTode,“WalgreensTestsClosed‐loopMobileCouponsDeliveredviaPRIMPApp,”MobileCommerceDaily,29July2013,http://www.mobilecommercedaily.com/walgreens‐tests‐closed‐loop‐mobile‐coupons‐delivered‐via‐primp‐app(viewed22Oct.2013).QSR’sarepredictedtospend$616milliondollarsforlocalonlineadvertisingby2017,upfrom$434millionin2012.eMarketer,“USQuick‐Service/FastFoodRestaurantLocalOnlineAdSpending,byFormat,2012&2017,”2013,personalcopy.

156JimEdwards,“MeetThe30BiggestAdvertisersOnFacebook,”BusinessInsider,24Sept.2012,http://www.businessinsider.com/the‐30‐biggest‐advertisers‐on‐facebook‐2012‐9?op=1(viewed16Oct.2013);eMarketer,“TheU.S.FinancialServicesIndustry2013,June2013,personalcopy.

157RecentlytheNavyFederalCreditUnionsold$200millioninbankingservicesusingFacebook.Runninganintegrated“membershipappreciation”campaignonFacebookthatfeaturedacontest,thecreditunionpromotedautoloansandthesalesofcertificatesofdeposit.Theygenerated60,000newmembersandsold$90millioninCDsand5,400autoloansworth$96million.Itwentfrom520,000to829,000“Likes”asaresult.“NavyFCUSells$200MillioninBankingServicesonFacebook,”TheFinancialBrand,17Sept.2013,http://thefinancialbrand.com/33631/using‐social‐media‐to‐sell‐banking‐products/;NavyFederalCreditUnion,“SuccessStories:CelebratingMemberstoAttractNewOnes,”Facebook,https://www.facebook.com/facebookforbusiness/success/navy‐federal‐credit‐union(allviewed22Oct.2013).

158“‘Facebookadsare90%accuratewithournativetargetingproducts—usinggeo,demo,interest,smartphone,etc.,asvariables.Wecanlayerthistargetingwiththebank’sdatatogainevenmoreefficiency,’Hiltzexplains.‘The“matchrates”betweenthebankdatatablesandFacebookaudiencetablesarecontingentuponthequalityofthebank’sdataset….Wecanalsoworkwithtrustedthird‐partydataproviders.WehaveexistingrelationshipswithAcxiom,Epsilon,andDataLogix,andaresigningupevenmoredataprovidersgoingforward.”“FacebookAdvertisingandtheFutureofFinancialMarketing,”TheFinancialBrand,2Oct.2013,http://thefinancialbrand.com/33967/facebook‐advertising‐in‐banking/.ForFacebookappsthatfacilitatethetransferofmoney,see“YourFacebookAccountCanBeFriendsWithYourBankAccount,”TheFinancialBrand,30Sept.2013,http://thefinancialbrand.com/33918/icici‐bank‐facebook‐banking‐app/.Seealso“TwoWaysFinancialMarketersCanFuelSalesinSocialChannels,”TheFinancialBrand,25Sept.2013,http://thefinancialbrand.com/33740/generating‐social‐media‐revenue‐roi/(allviewed22Oct.2013).

159TheDiscoverCardisaclientofSocialAmp,ownedbyMerkle.SocialAmp,“Clients,”http://www.socialamp.com/#clients.MerkleexplainsthatmarketerscantakeadvantageofFacebook’s“OpenGraph”andintegratesocialcommercestrategies.OpenGraphis“aprotocolthatallowswebsitestointegratepagesandproductsoutsideofFacebookintothesocialgraph—themapofrelationshipsbetweenpeopleandthethingstheycareaboutwithinFacebook.WebsitesthatuseOpenGraphtagsgainaccesstoinformationaboutindividualusersavailablethroughthesocialgraph.Withthisinformation,brandshavetheopportunitytoengagewithusersinahighlytargetedway.”SocialAmp,“OpenGraph,”

http://www.socialamp.com/site/opengraph/.SeealsoOptimal,“Socially‐enablingFinancialServicesCustomers,”https://s3.amazonaws.com/optimalmarketing/Facebook+PMD+Center/Optimal_FS_CustomAudiences+(1).pdf(allviewed22Oct.2013).

160InoneexampleforMasterCard,acompanyusedcustomers’emailaddresses,phonenumbers,andFacebookdatatotargetthem.Ampush,“CaseStudy:FinancialServices,”http://ampush.com/wp‐content/uploads/2013/07/Financial‐Services‐Client‐1.pdf?__hstc=137463663.29a942d23f8e93dea122cb62b5d06c1a.1382465115028.1382465115028.1382500680412.2&__hssc=137463663.1.1382500680412&__hsfp=2950800491(viewed22Oct.2013).

161FourthWallMedia,“MassiveData,”http://www.fourthwallmedia.tv/MassiveData/(viewed22Oct.2013)

162MarcTrudeauandStephenDrees,“Next‐GenCardMarketing:MeetingTheExpectationsOfNewAcxiom,2013,http://www.paymentssource.com/media/pdfs/CFE13‐Acxiom.pdfConsumers…AndYourExistingOnes,”http://www.paymentssource.com/media/pdfs/CFE13‐Acxiom.pdf.Theprocessisdescribedthisway:“Youdon‘tuseprogrammaticjusttobuyanadonPCWorld,forexample.Ithastodowithwhomeverjustarrivedatthatsite,thedataandprofiletheyfitin,theirIPaddress,pluswhattheircookiesaysaboutthem,and,forexample,ifthey‘vealsobeentoCisco.com,Intel.comandIBM.com.”ChristopherHosford,“ProgrammaticAdBuyingGainsMomentum:MarketersEnticedbyCost‐EffectivenessofTargetingAudiences,”B2B,16Sept.2013,http://www.btobonline.com/apps/pbcs.dll/article?AID=/20130916/ADVERTISING/309169997/0/PEOPLE0302(bothviewed22Oct.2013).

163FederalTradeCommission,“FTCNativeAdvertisingWorkshoponDecember4,2013WillExploretheBlurringofDigitalAdsWithDigitalContent,”16Sept.2013,http://www.ftc.gov/opa/2013/09/nativeads.shtm.Foranoverviewofadexchanges,see,generally,AdExchanger,http://www.adexchanger.com/(bothviewed27Oct.2013).

164See,generally,“BerkeleyConsumerPrivacySurvey,”http://www.law.berkeley.edu/privacysurvey.htm(viewed22Oct.2013).Thereisalsomisinformationabouttheroleoftraditionalfinancialproducts,suchascreditscoring.Accordingtooneindustryandconsumergroupsurvey,40percentofconsumersareunawarethat“acreditscoreisusedindecisionsaboutcreditavailabilityandpricingofcreditcards.”Burns,“Expand&Grow:HowtoReachandEducateMoreMembersUsingaNewBreedofCreditScores.”.

165eMarketer,“ConsolidationofMobilePaymentsLandscapeWillDriveUptake,”25July2013,http://www.emarketer.com/Article/Consolidation‐of‐Mobile‐Payments‐Landscape‐Will‐Drive‐Uptake/1010074(viewed22Oct.2013).

166Groupswouldbeencouragedtoengagewiththemediawhenimportantnewsordevelopmentoccurs,suchaswiththependingnewconsumerstudyconductedbyNORCattheUniversityofChicagofundedbytheFederalReservethatwilladdressunderbankedissues.NORCattheUniversityofChicago,“2013SurveyofConsumerFinances,”http://scf.norc.org/(viewed29Oct.2013).

167MCX,“MerchantCustomerExchange,”http://www.mcx.com/(viewed22Oct.2013).

168MobeyForum,“MobeyForumLaunchesNorthAmericanChaptertoAdvanceMobileFinancialServicesEcosystem,”16July2012,http://www.mobeyforum.org/mobey‐forum‐launches‐north‐american‐chapter‐to‐advance‐mobile‐financial‐services‐ecosystem/(viewed22Oct.2013).

169SmartCardAlliance,“MobileandNFCCouncil,”http://www.smartcardalliance.org/pages/activities‐councils‐mobile‐and‐nfc‐council(viewed22Oct.2013),whichincludesadownloadablepresentationentitled“ThePowerPointStandardsfortheNFCEcosystem.”

170FederalReserveBankofBoston,“MobilePaymentsIndustryWorkgroup,”http://www.bostonfed.org/bankinfo/payment‐strategies/mpiw/(viewed22Oct.2013).LastAugust,in

apresentationforstatelegislators,theagencynotedthatamongthechallengesfacingtheindustrywere“ownershipofcustomerdata,lackofregulatorydirection,fragmentationwithdiversenonbankbusinesses,lackofinteroperabilityandstandards,andmultiplestakeholders.”MarianneCrowe,“U.S.MobilePaymentsLandscape,”NCSLLegislativeSummit2013,13Aug.2013,http://www.ncsl.org/documents/standcomm/sccomfc/MarianneCrowe_PowerPoint.pdf(viewed29Oct.2013).

171OnlineLendersAlliance,http://www.onlinelendersalliance.org/(viewed22Oct.2013).

172MartinneGellerandDavidHenry,“Wal‐Mart,AmexTakeonBankswithLow‐pricedDebitCard,”Reuters,8Oct.2012,http://www.reuters.com/article/2012/10/08/us‐walmart‐amex‐idUSBRE8970H520121008(viewed30Oct.2013).

173“DollarGeneral,”GooglePlay,10July2013,https://play.google.com/store/apps/details?id=com.dollargeneral.android&hl=en;Target,“Mobile,”http://www.target.com/spot/mobile/landing(bothviewed30Oct.2013).

174LaurenJohnson,“WalmartAppUsersSpend40pcMorethanAverageShopper,”MobileCommerceDaily,26Sept.2013, http://www.mobilecommercedaily.com/Walmart‐app‐users‐spend‐40‐percent‐more‐than‐average‐shopper (viewed15Oct.2013).

175Johnson,“WalmartAppUsersSpend40pcMorethanAverageShopper.”

176LaurenJohnson,“TargetTightensFocusonMobileasIn‐storeShoppingTool,”MobileCommerceDaily,30Aug.2013,http://www.mobilecommercedaily.com/target‐enhances‐in‐store‐mobile‐experience‐with‐weekly‐ads‐beta‐shopping‐list(viewed16Oct.2013).

177“Walmartcontinuestorampupitsmobilein‐storeScan&Goprogrambygivinguserstheabilitytoclipcouponsbytappingtheirsmartphonesandhavingthesavingsautomaticallyappliedwhentheycheckout.Scan&Go,afeatureontheWalmartapplication,enablesuserstoscanmerchandiseincertainstoresandpayataself‐checkoutcounter.”ChantalTode,“WalmartBoostsScan&GoSelf‐checkoutwithMobileCoupons,”MobileCommerceDaily,2Aug.2013,http://www.mobilecommercedaily.com/Walmart‐boosts‐scan‐go‐self‐checkout‐with‐mobile‐coupons(viewed16Oct.2013).

178“PrincipalSoftwareEngWalmartLabs,”WalmarteCommerce,http://jobs.walmart.com/brisbane/ecommerce/jobid3859437‐personalization‐systems‐engineer‐jobs(viewed15Oct.2013).

179PatrickHarrington,“Targeting@WalmartLabs,”TheOfficial@WalmartLabsBlog,26Nov.2012,http://walmartlabs.blogspot.com/2012/11/targeting‐walmartlabs.html.SeealsoArunPrasath,“The@WalmartLabsSocialMediaAnalyticsProject,”TheOfficial@WalmartLabsBlog,11Jan.2013,http://walmartlabs.blogspot.com/2013/01/the‐walmartlabs‐social‐media‐analytics.html;NanditaChakravarti“UserResearch:WalmartandAmexProduct—Bluebird,”Behance,http://www.behance.net/gallery/User‐Research‐Walmart‐and‐Amex‐product‐Bluebird/7408619(allviewed16Oct.2013).

180KellyLiyakasa,“The@WalmartLabsWay:WhyTheOnlinePure‐PlayNeedsBrickandMortar(AndViceVersa),”AdExchanger,4Sept.2013,emphasisadded,http://www.adexchanger.com/ecommerce‐2/the‐Walmartlabs‐way‐why‐the‐online‐pure‐play‐needs‐brick‐and‐mortar‐and‐vice‐versa/#more‐81643(viewed15Oct.2013).

181JamesTaylor,“UsingPredictiveAnalyticsandDecisionManagementinRetail,”http://www.inkiru.com/wp‐content/uploads/2012/11/Predictive%20Analytics%20White%20Paper.pdf(viewed16Oct.2013).DylanTweney,“WalmartScoopsupInkirutoBolsterits‘BigData’CapabilitiesOnline,”VentureBeat,10June2013,http://venturebeat.com/2013/06/10/walmart‐scoops‐up‐inkiru‐to‐bolster‐its‐big‐data‐capabilities‐online/(viewed15Oct.2013).AstheInkiruwebsiteexplained,

Predictiveanalyticsprovidesanenhancedviewofcustomersandmakespredictionsabouttheir

currentandfuturetransactionbehavior.Thistechniquecanbeappliedtoavarietyofchallengessuchascustomersegmentation,merchandiseoptimization,informationsecurity,supplychainoptimization,marketplacetrustandsafety,andfraud.TheInkiruPredictiveIntelligenceplatformoffersworld‐classanalyticsanddecisioningasaservice,customizedtoyourbusinessneeds.Itsframeworkallowsbusinessestorapidlydevelop,deploy,monitorandmanagethealgorithmsandresultingrecommendationswithoutasignificantup‐frontinvestment.

Features

TheInkiruPredictiveIntelligencePlatformincludes:

• Predictivealgorithms,customizedtoaddressyourspecificbusinesschallenges.Thepredictiveanalysiscanbeimplementedtoaddressmanychallengesonareassuchasrevenueenhancement,customersatisfaction,inventory,andlossmanagement.

• Mappingofinformationanditsinterrelationshipstobetterunderstandeachcustomerinteraction.

• Scoringofcustomersandtheirinformationthroughouteachtransaction,enablingprogressiveanalysisofeachtransaction.

• Just‐in‐timerecommendationsprovidedbythesystemandcustomizedthroughtheDecisionLogicengine.Theserecommendationshelpdrivebehaviorwithinyourorganizationonhowtoworkwitheachcustomerwhiletheyinteractonyoursite.

• DecisionLogicenginetoenablecustomizationoftheactionstakenasaresultoftheplatform’srecommendations.

• OnlineandOfflineChampion/Challengertestingtoallowbusinessestotestnewpredictivealgorithmsagainstactualtransactioninformationwithagraduationcycletoimplementthealgorithmsinaproductionenvironment.

• Machinelearningtechniquesthatautomaticallyrenewalgorithms,keepingtheanalysisup‐to‐dateandminimizingmaintenanceandrefreshes.

• Integrationwithdatafromavarietyofexternalsourcestoaugmentyourtransactionalinformation,providingamuchgreaterdegreeofinsightabouteachcustomerinteractionasithappens.

• CustomerPortalprovidinginnovativedashboardsthatexposethedecisionlogic,theanalysis,andtheresultsofthepredictivealgorithms,enablinganalystsandbusinessownerstoseetheirresultsinrealtime.

Inkiru,“PredictiveAnalytics,”http://www.inkiru.com/predictive‐analytics(viewed5Oct.2013).

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the global livestock agenda: opportunities and challenges