What does your bank know about you?
Your phone pings as you walk past the bank branch, alerting you to a special deal.
As you walk inside, the teller already knows who you are and what you have come for.
Earlier in the week the bank emailed to congratulate you on your pay rise, and offered to upgrade you to a gold credit card with a higher limit.
Today they note you have recently bought tickets to Spain and ask if you need to arrange travel insurance or buy some Euros.
Finally, in exchange for knocking a few points off your mortgage rate, they arrange to sell some of your recent spending information on to advertisers.
This is not some dystopian vision of a surveillance society. All of this is starting to happen right now.
For years, banks recorded your most intimate financial details. Now, leaps and bounds in big data processing power mean they are getting much better at analysing and exploiting it.
If you are feeling uneasy, don't be too quick to write it off as paranoia.
This month, Dutch bank ING sparked a storm of controversy when it announced trial plans to sell its customers' information on to advertisers.
Consumer groups, politicians and the public roundly savaged the idea, despite the fact that customers would have to give explicit permission to be involved.
With even Dutch central bank president Klaas Knot weighing in against the scheme, ING has been forced to back down.
In New Zealand, the Office of the Privacy Commissioner has been keeping a beady eye on big data developments.
Public affairs manager Annabel Fordham says the fast-growing capacity to collect and store personal information increases the risk it could be either accidentally leaked or used to harm people.
But she says the underlying privacy principles remain the same, and banks in particular have a "pretty good" track record.
In large part that is because they have a specific duty of confidentiality under common law; and because privacy breaches are obviously bad for business.
There are few scenarios where banks can release customer information without consent, but it is possible they could disclose non-identifying information, Fordham says:
"Many people are uneasy about this and a decision by a bank to do this would come with some risk to consumer trust."
Tracking, Targeting and Capturing
Wellington-bred tech guru Geraldine McBride is trying to help companies navigate the big data minefield without blowing that all-important trust to smithereens.
The high-flying former SAP and Dell executive graduated as a zoology major, and she is still fond of wildlife metaphors:
"People and customers are not animals, they're individuals," she says.
"As technologies become more pervasive and people leave more of a digital footprint, they're not going to want to be 'tracked', and 'targeted', and 'captured'."
As McBride points out, these words are all hunting-related terms which effectively put the customer between the crosshairs.
Her software firm, MyWave, aims to harness the advances in technology to give consumers ownership over their personal information, and who uses it.
Empowering customers means they will voluntarily share more about themselves, McBride says.
In her vision, a typical approach from a company would look something like this: "Here's all the information you've shared with us. In order for us to serve you better, we'd like to know a little bit more in these areas."
It's win-win, she says. Many businesses don't want to own customer data alone, because it is costly to maintain and goes out of date the moment it's stored.
McBride says people are surprisingly receptive to company advances, but only if they go about it tactfully.
"Again, it's etiquette. You don't stalk a girl, you ask her for a date."
Otherwise there is an undeniable creep factor. McBride gives the example of the emerging field of beacon technology, which allows retailers to send messages to nearby customers' smartphones.
"It would be very intrusive if I walked into a supermarket, or even a bank, and someone said, 'Hello, I know exactly what you want'," says McBride. "It's very presumptuous."
Westpac is the first local lender to start introducing Apple's iBeacon to its branches, but crucially, it is opt-in only.
The bank is something of a market leader, scooping numerous gongs at the recent direct marketing awards, including Best Data Strategy, and has dramatically changed its modus operandi in recent years.
In 2012, Westpac proactively spoke to 40 per cent of its customers.
"In 2013, we spoke to 76 per cent, and increased the frequency of conversation from three times to 11 times," says head of retail Ian Blair.
That change has driven customer satisfaction scores higher, Blair says.
People feel like they are being listened to, rather than having product shoved down their throats.
Westpac now uses "predictive behavioural modelling" as a starting point for what it hopes will be relevant conversations with customers.
Blair says that leads to a much higher success rate than the old days, when it used to pick a tag-on product and offer it to every customer who came in that day:
"It looks and sounds to me like product push, and therefore it's likely to be irrelevant to the customer."
Blair claims there have no more than a handful of negative reactions to date. However, he is still acutely aware how important it is to avoid creepy behaviour.
He says Westpac actually tests for the "weirdness" factor, and even put one idea on hold recently because it did not feel right.
For Westpac, it is so far, so good. But crunching customer data in-house is only the first step in the journey:
"Where big data gets both interesting and scary, is where organisations start sharing information," says Blair.
Quid Pro Quo
That is more or less what MyWave proposes to do, although placing the control in the hands of the individual.
Other than consent, McBride says there has to be mutual value between the two parties.
She found that as long as there is something in it for the customer like a sharper deal or better tailored offers people are often agreeable.
New Zealand Bankers' Association chief executive Kirk Hope points to a recent United States survey on the subject, which found 80 per cent of respondents were happy to provide personal information.
That was conditional on full transparency about how it was used, and that they got something out of it in return.
Hope says crunching customer information could help banks stay ahead of the curve in terms of keeping up with changing needs, but big data is not just about clever marketing.
It also has a role to play in detecting and preventing financial crime, he says:
"For example, if you're making credit card purchases at your local supermarket and suddenly something is charged to your card in another country, this will raise a flag which your bank will investigate."
Hope says margin pressure and increasing competition makes meeting customers' needs more important than ever.
However, banks still need to carefully assess the costs and benefits of investing in big data systems.
Adapt or Die
Again, McBride's scientific roots are probably responsible for her comparisons of the business environment to evolution.
Some companies are right at the front of the big data curve, some need a nudge, and some are doomed to extinction:
"My prediction is they'll be out of business a decade from now".
There's a similar mix of progress across the banks, McBride says.
As a director of National Australia Bank, which owns Bank of New Zealand, she does not want to name names. But it is fair to say that some risk being left behind.
McBride is not just pushing her own barrow, either. Global consultancy firm PWC came to the exact same conclusion in a report released earlier this month.
Titled "Retail Banking 2020: Evolution or Revolution?", it found that the banks of today did not actually know their customers very well.
By 2020, PWC expects banks will view each customer as a segment of one; "recognising their uniqueness, and tailoring their offerings so that customers view banks as meeting their needs, not pushing products".
The authors concluded that few, if any, banks had attempted the massive transformation that would be necessary to lead the market in 2020.
But as Westpac's Ian Blair notes, it's something that really can't be rushed.
"You've got to walk carefully on this journey. You could easily spook people," he says.
"But as long as you focus on the relevance of the discussion towards the customer...if you keep them at the forefront of your mind, I think the whole big data piece will be used for good."
What might your bank know about you?
-Income and occupation
-Assets, investments or retirement savings
-Family and relationship status
-Home address, birth date and contact details
Can banks disclose information?
-When compelled to by law; for example, to courts, police, liquidators, the IRD, or the Ministry of Social Development
-When they have a "public duty", which applies where there is a danger to the state, or the wider public needs protection against crime
-To protect the bank's own interests; for example, when taking or defending legal action against a customer
-When a customer gives explicit permission to do so
Source: Banking Ombudsman
- Fairfax Media