Grocery shopping data is a potential goldmine for banks and insurers, allowing them to extend credit to customers who were previously “credit invisible.”
The data is used in privacy-preserving data collaboration (PPDC), which allows grocers to share and overlap their consumer data with that of financial institutions in a secure, privacy-compliant manner that eliminates the need to exchange data or share any personally identifiable information.
This allows financial institutions to gain unprecedented insights into consumer behaviour that can predict financial stability, affordability, health risks and overall risk profiles, writes Jon Jacobson, CEO and co-founder of Omnisient, privacy-preserving data collaboration platform provider.
For instance, regular purchases of healthy foods can indicate lower health risks, prompting insurers to offer policy discounts or cash back rewards to reward and further incentivise this behaviour. Buying healthy items – as opposed to junk food or cigarettes – can be an indicator of financial responsibility and can lead to good credit scores for consumers with no credit history.
And a change in spending patterns – such as switching from premium brands to store brands or a shrinking basket size – can indicate financial stress, enabling insurers to proactively offer policyholders a financial solution that keeps them from cancelling their policy.
Advanced cryptography ensures data remains anonymised and protected, while a secure and neutral collaboration environment acts as an escrow-like environment, where no party is ever in control of the other’s sensitive data. The combination of the two effectively eliminates the risk of data breach, loss of IP, or non-compliance of privacy regulations for data owners.
Grocers can exponentially grow their data monetisation revenue beyond retail media by partnering with banks, insurers and other financial institutions in these data collaborations. Instead of relying solely on traditional partnerships with CPG companies, new use cases for a grocer’s valuable first party data that are made possible by PPDC can lead to new revenue from the financial services sector.
From our experience with retail clients collaborating with financial services partners, there are four ways grocers can generate new revenue through PPDC:
1. Monthly subscription for investigative insight and experimentation
Retailers can offer financial institutions a subscription service that grants access to aggregated, anonymised shopping data. Banks and insurers can use this data to analyse data and build and test predictive models on their overlapped datasets. This allows them to refine risk assessments and product offerings while generating a consistent revenue stream for grocers.
2. Subscription for individual use cases
Grocers can monetise their data further by offering it for specific, high-value use cases. For example, an insurer might subscribe to access data that helps identify customers with healthier lifestyles. This allows the insurer to develop targeted wellness programs or risk models, while the grocer benefits from a tailored subscription service.
3. API call charges as a bureau decision service
Grocers can also charge financial institutions on a per-use basis through API calls. For instance, when a bank needs additional information to assess a loan application, it can query the grocer’s data, with the consumer’s consent. This service is particularly valuable for assessing individuals with limited credit histories, providing banks with alternative data to make informed decisions on consumers who would have otherwise been declined.
4. Standard retail media charges for targeting credit-worthy customers
Financial institutions can leverage the retailer’s established retail media networks to target specific customer segments. For example, banks might pay to advertise to customers who have been identified as credit-worthy based on their shopping behaviour – or use lookalike audiences to target new customers within the grocer’s customer base.
This targeted advertising is made possible through the insights provided by the grocer’s data, creating an additional revenue stream from new retail media partners.
By analysing shopper data such as basket size, make-up, and behaviour, insurers and banks can build more accurate risk models, leading to better decision-making in lending and insurance underwriting, and opening new markets previously considered too risky.
PPDC enables first party data to be used ethically and securely, providing value to both consumers and financial institutions while unlocking significant new revenue streams from a new sector for grocers. As the demand for alternative data grows, grocers that use privacy-preserving data collaboration to embrace these opportunities will find themselves at the forefront of profitability in the data economy.
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