The digital era has seen an evolution in the industry. The industry is attempting to find the correct modus operandi to stabilise and regain the undisputed power it used to enjoy just a few years ago. With the eruption of mobile technologies, contemporary banking systems have been turned upside-down: today, banks are the ones searching for clients, while users rarely visit traditional branches anymore. Modern clients are demanding a more personalised approach and individualisation, causing banks to adjust accordingly and find their customers.

Recent studies have revealed that almost 50% of customers react positively to location-based offers, which means that they want faster and more customised service. Location based offers use technology to pinpoint clients’ positions, providing them with the right offers through mobile devices at any given location or time. Just like Maria Marinina reminded us at the Iflexion blog, location-based marketing simply means delivering the right message to the right person at the right time.

Why Location-Based Offers?

The more the banks find out about their customers, the better their offers will be. LBO technologies determine a mobile user’s position, which allows banks to react instantly and send him/her the most relevant offer. Since mobile devices are almost everywhere these days, it is not strange that location-based methodologies are developing. At the same time, users appreciate the fact that they can obtain valuable banking information anywhere, anytime.

However, this leads to one more trend – bank clients are not as loyal anymore. With so many banks, and also some alternative bank competitors, customers are now in a position to require more! They seek better products or more personalised offers, but also feel free to change the bank if such service is not provided. Therefore, banks are competing to provide customers with more advanced options, which can lead to big market shifts in some circumstances. Additionally, clients want unique products. It is not only about loans and credit cards anymore – it is about customised bids, suitable for a specific client. Banks are not allowed to create generic products, so they turn to location-based technology to discover the needs of their clients.

The Usual Suspects Of LB Technology

Although location-based technology is constantly evolving, there are a few devices out there that can already be found all around us:      

  • Sensors: They are basically everywhere, as we can find them in cars, stores, and our homes.
  • Radio-Frequency Identification: RFID is a low-budget device that has a bar code function.
  • Facial Recognition Cameras: This tool recognises objects and faces. Though mostly considered a security measure, it is also used for video analytics of customer sentiment.

However, by far the most popular location-based technologies are these two:

  • Geofencing: This method is based on GPS positioning, where a virtual fence is placed around any given location. Once the customer enters this territory, they receive a notification or an SMS about special offers, promotions or discounts. It is extremely popular in short-term campaigns, but can also be significant within a longer period of time in places such as airports, where it will serve its purpose continuously. The geofencing market is growing, as surveys show that 41% of participants indicate they would share more information with companies via mobile in exchange for relevant coupons or offers.
  • Beacons: Beacon technology is used to send push notifications to users as they wander around. Beacons could enable banks to behave more proactively towards their clients. For instance, banks can use this technology to recognise a customer the moment they walk into the branch, and immediately come up with the necessary data to make the most suitable offer. Furthermore, beacons can strengthen consumer loyalty by suggesting special offers in shopping malls (or elsewhere) for credit card owners who install their bank app on a mobile device. Predictions are that by 2018, the beacon installed base will consist of 4.5 million active beacons overall, with 3.5 million of these in use by retailers.

Benefits Of Location Technologies In Banking

Banks can gain huge benefits from the omnipresence of location technologies. For example, LBO can automatically suggest the increase of credit limits in case one cannot cover a purchase, which directly provides benefits to the consumers, while at the same time raising customer loyalty. Also, LBO allows flexible scheduling, as customers can arrange a meeting at a branch in real time – they simply check if there are any bank agents free at the moment. One more emerging trend is to set up a digital media display in the branch, where special offers could be displayed for the majority of bank customers, based on their profiles.

Challenges Of Location Technology In Banking

As we can see, location technologies are here to stay, and even grow in the years to come. By 2020, the digital universe – the data we create and copy annually – will reach 44 zettabytes, which is 44 trillion gigabytes! Obviously, data analysis could become way too complex to process, and to produce results in real time, which is an imperative in this kind of market race. Additionally, many users are worried about privacy, since location detectors are positioned almost everywhere. This “Big Brother” atmosphere raises concerns that financial and private information could be misused. That’s why it is crucial for banking systems to provide clients with the most efficient security programs.


Contemporary bank clients are well aware of the world around them – they will use every opportunity to get better products in the versatile environment of the banking business. This leads to a lack of loyalty and bigger demands, which eventually causes major changes in the banking industry. Banks are seeking vital IT support to improve offers and create customised products, which puts great emphasis on location-based technologies. Estimations are that the location-based services market is expected to grow from $15.04 billion in 2016 to $77.84 billion by 2021. With the majority of clients who use smartphones, tons of data available for analysis, and location detectors all around, the banking industry has all the important preconditions to evolve and grow revenues. But will it act quickly enough? Only time will tell.