How banks can innovate using Apple's iBeacon

Ben Howden /

We’ve already spent a considerable amount of time brainstorming possible applications for Bluetooth Low Energy (BLE) and Apple’s iBeacon technology, and we look forward to extending our own iBeacon CMS platform to cater to a broad range of different applications and industries. However, one industry that we may have overlooked in our research thus far is the banking and financial services industry.

If you spend some time researching banking and innovation you’ll quickly discover that the conversation is primarily centered around online, mobile and social media innovations. While there’s no doubting that the shift to online and mobile banking is gaining momentum, it’s important to remember that branches still play a leading role in the delivery of financial and banking services. Recent research in the US market by The MSR Group reveals that 90% of those that have used a branch in the past two weeks still prefer branches as their preferred delivery channel.

With the importance of brach innovation in mind, lets explore how iBeacon and BLE beacons can play a role in enhancing the customer experience. There are a couple of critical attributes that an organisation needs to have in place to launch a successful iBeacon strategy. The first is a physical presence. Be that branches, be it ATM’s or other venues in which a bank delivers services, iBeacon is all about the delivery of content and experiences based on an individual’s location. So without a physical presence, the application of iBeacon and similar BLE technology are somewhat limited. The second is a smartphone application, which acts as the Bluetooth receiver and the delivery platform for an enhanced or augmented customer experience.

When we consider these critical attributes, it becomes quickly apparent that the majority of major banks are in a great position to take advantage of iBeacon technology. First, most leading banks have a vast network of branches or venues in which they can install BLE beacons. Second, you’d be hard presses to find a leading bank that doesn’t offer a native smartphone application for their customers. The icing on the cake is that banking apps delivery customer utility, and therefore have strong penetration and retention rates.

This leads us to the possible iBeacon applications for banking and financial services:

1. Personalised service and customer recognition

The delivery of personalised service and customer recognition is already being used effectively across a number of different industries. For example, most airlines do a great job of recognising customers as individuals and delivering enhanced service based on loyalty. The use of iBeacon technology will give banks the ability to deliver a more personalised service to customers who enter a branch. When a customer walks into a brach, the staff will instantly know who they are and be able to deliver personalised service based on their customer profile. That type of enhanced recognition and service can become a key differentiating factor for banks.

2. Branch analytics

This is one of the applications that we’re most excited about. It’s common place for banks to take advantage of advanced analytics to optimise their online experience, but what about the branch experience. Simply by installing beacons in branches and making some simple updates to a smartphone app, banks will be able to understand which customers are using branches, what are the busiest days and times, how long on average are customers spending in branches and what type of transactions are customers completing. Think of it as Google Analytics for your branches. It’s another data source that can be used to derive insights and make key business decisions around optimising the branch experience for customers.

3. Automatic payments and transactions

Banks aren’t the only ones excited about the potential to deliver automatic payments and transactions using BLE beacons. Paypal has been quick to jump on the beacon bandwagon and has already launched a product called  Paypal Beacon which gives retail customers the ability to order and pay for products hands-free, open a tab and get special offers — all without lifting a finger. There’s no doubting that banking institutions will be exploring similar hands free payment partnerships with retailers to drive B2B revenue and improve the customer experience. It’s early days in the beacon payment space but we expect to see this type of application to evolve over the next couple of years.

4. Beacon enabled ATM’s

Beacons and ATM’s are a pretty exciting combination. Locating a nearby ATM becomes a simple task, ATM advertisements and offers could be pushed directly to the smartphone, security could be increased by managing pin numbers via the app instead of the ATM, and the app could replace the need to carry a debit or credit card all together.

5. Location based offers and discounts

It’s clear that marketers are excited about the opportunity to target customers as they walk past a store or venue. however it remains to be seen how consumers will react to the growing number of smartphone apps that track their location and push out offers. Privacy experts have already raised concerns about the use of iBeacon to deliver advertisements, and until privacy laws and guidelines are updated to account for advances in technology like iBeacon, the onus will be on the advertiser to implement clear opt-in processes and focus on delivering value to customers – not simply bombarding them with ads.

So which banks are already exploring iBeacon applications? Westpac New Zealand appears to be leading the charge at this early stage as it sets its sights on becoming the best digital bank in the world. Not only is Westpac’s Chief Digital Officer Simon Pomeroy exploring the use of iBeacon in branches, he is also getting set to experiment with dedicated banking apps for Google Glass and smart watches. Whilst the investment vs. return equation may not be that attractive at this point in time, it’s fairly likely that Westpac New Zealand will be well positioned to reap the rewards once some of these technologies become mainstream.