Bank to trial letting companies target ads at customers based on their payment history
Dutch ING bank will soon pilot a service allowing companies to push targeted advertising to its customers based on their payment history.
According to ING's director of private banking Hans Hagenaars, the plans are a logical step towards the future of targeted advertising and the bank has put together a special team to analyse its customers' payments.
"ING is responsible for handling the most payment traffic in the Netherlands. Not only do we know what people spend their money on, we also know where they do it," he wrote on the company's website.
ING says that the information-sharing will eventually benefit its customers. "Let's say someone spends a couple of hundred euros at garden centre A every year. If garden centre B knows this, they can make the customer an extremely competitive offer, so that in the future, the customer will come to them," Hagenaars said. The bank has yet to reveal where the adverts will be placed, however.
ING's business model for the service has parallels with that of Google's webmail business Gmail, which selects and displays ads to Gmail users based on the contents of their email conversations. In ING's case, the advertiser will defines its target audience and create an ad, which ING will then make sure is displayed to the right demographic.
The pilot, which will run later this year with several thousand customers, has sparked an avalanche of privacy concerns.
The Dutch consumer organisation Consumentenbond has questioned whether the trial is permissible under Dutch Law. "Data about your finances is extremely privacy-sensitive and — even more important — it's your personal property. Your relationship with your bank is built on trust. A bank sharing customer data with other commercial parties goes against all of that. We believe that there is no law permitting the sale of any data that is yours," Bart Combée, director of Consumentenbond, said.
Opt-in system
ING says the new service will not violate any privacy regulations and the bank will abide by the law: "The use of Big Data has many advantages but, as with a lot of these things, not everything that's possible is also desirable. At ING, protection of the personal information of its customers always has the highest priority, simply because we are aware of the fact that privacy is extremely valuable. ING will never forward individually traceable information to third parties and customers can rely on the fact that ING only uses their data when we are permitted to do so."
ING also says that the program will be opt-in, and customers will have to give their express consent before their information will be used.
Not reassured
Consumentenbond isn't reassured by ING's promises, however: "If you give a party permission to use your data by means of opt-in, it must be crystal clear what it is you're giving permission for exactly, and how a company will prevent this data from being abused. ING may claim that they will never forward individually traceable customer data to third parties, however, if these plans are actually realised, we will closely monitor how the customers receive their offers."
In addition to the consumer organisation, there is also disquiet among the country's politicians. Political party PvdA quickly responded to ING's plans after they were first announced: "The PvdA strongly opposes ING's plans to use customers' payment data for commercial purposes. The privacy of customers should always come first; it's their data, the bank doesn't own it."
The pilot will be launched in the third quarter of 2014, assuming privacy concerns don't derail it first.