In early June, Michael Braun of the MIT Sloan School of Management and I did a webinar entitled, "Big Data For the Rest of Us" to try and cut through the hype surrounding big data. There are many different views on what big data is:
- "Digital breadcrumbs" - Adam Frank on NPR
- "Data sets so large and complex that it becomes difficult to process" – Wikipedia
- "Every day, we create 2.5 quintillion bytes of data. 90% of the data in the world today has been created in the last two years alone." - IBM
And most folks are familiar with the New York Times story on how Target's algorithms knew about a teen pregnancy before the parents of the teen knew:
“As Pole’s computers crawled through the data, he was able to identify about 25 products that, when analyzed together, allowed him to assign each shopper a “pregnancy prediction” score. More important, he could also estimate her due date to within a small window, so Target could send coupons timed to very specific stages of her pregnancy.”
New York Times 2.19.12
After the presentation, I started thinking about our own work in modeling mortgage buying propensity and remembered that one of the independent variables that most predicted mortgage buying prosperity was spending at Toys-R-Us. Presumably, the addition of a lot of new toys portends an expansion in living quarters. Before toys, however, there is a birth — which we now know is predictable based on SKU-level personal products data.
Without much imagination, I think it's pretty certain that transaction data will one day lead to pregnant women being offered assistance in financing a larger home or safer car to house or transport that precious new cargo.
If you think this is creepy or intrusive, get over it -- marketing isn't going to get dumber so we are all going to have to accept that the scenario I've painted here is inevitable.
Bankers are also consumers and sensitive to the creep factor, if not for personal reasons — then to minimize regulatory and reputation risk.
The real question is who wins and who loses in this future? Banks who couple data science with good digital customer engagement and customer advocacy win; banks who don't, will lose.
Someday, a banker might even send her expectant customer a care package of black olives on Sara Lee cheesecake to satisfy a craving. And that banker will likely get the loan.