ERN is launching a product that attempts to meld issuer and retailer spending details to produce real-time offers at the point of sale.  It faces plenty of competition in its efforts to bring granularity to marketing. 

ERN, a data management company led by former Royal Bank of Scotland IT exec Dan Brassington, early this week plans to launch a new data platform called Looop, designed to provide banks and merchants a detailed and real-time view of purchases.

"There is a lot of interest by banks and retailers in being able to report what a customer has purchased in very specific details," says Philip Philliou, a payments consultant.

For example, while it's valuable for both a bank and retailer to know that a consumer made a $100 purchase at Staples, it's much better to know that a consumer used a MasterCard credit card to buy 100 laser gloss reams of paper at 10 a.m. on Monday.

"It's that kind of detail that people want, because it allows manufacturers, retailers and banks to create different types of promotions and modify customer behavior and spending habits. Nobody has made it easy to do, by the way," Philliou says.

Looop will marry card payment data with merchant data in real time in an attempt to forge more personalized rewards programs. The company says banks will be able to access a broader set of transactions quickly, enabling an understanding of how people use credit cards to purchase goods —which can in turn inform marketing.

"You have to very carefully target the consumer by making the offer timely and relevant to that consumer," says Andrew Rush, head of global sales for ERN.

Merchants can also use this information to build loyalty and rewards strategies that are more focused on individuals than on demographic groups. After purchases, consumers receive electronic receipts and customized coupons via mobile phones, where they can also view transactions and monitor spending.

Brassington's a 20-year bank IT veteran, who most recently was head of IT client services management for RBS. Quintin Gomez, former group CTO for the transaction-monitoring company ITRS, and Derek Tullett, founder of the bond and derivatives trading house Tullett, are also part of executive team at ERN, which received $2 million in private funding from investors in 2012. 

The company plans to demo the product at the FinnovateEurope Conference in London on Feb 12 and 13. ERN, which would not name its clients, is initially working on a proof of concept for clients in the United Kingdom and Singapore in advance pilot testing. It also plans to target North America. The platform was developed internally, as was the analytics used to deliver marketing, electronic receipts and mobile coupons.  

ERN is entering a competitive market of providers claiming they can help card issuers and retailers figure out how to use "big data," or the harnessing of large amounts of data aggregated from a broad range of traditional internal transaction sources, as well as newer external sources such as social networks. In the case of Looop, the effort is to improve use of loyalty programs, which are often underused by consumers.

"We found that in the payment data that banks have access to, and the separate data that retailers [do], are not being truly used to its full extent," Rush says.

To pull off the marriage between retailer and issuer, the data from the merchant has to be combined with the acquirer's data.

"It's tough to get to that today, the payment ecosystem is fairly complicated. Where does the data reside within the merchant's information structure?," Philliou says.

ERN did not reveal specifically how its proprietary engine performs this, but contends Looop can process up to 100,000 transactions per second and can run alongside an existing payments infrastructure. "The real power of the data comes from bridging the gap between the two sets," Rush says.

The company is also working to ensure its programs are compliant with privacy and consumer opt-in laws in its target jurisdictions, Rush says, and is PCI and ISO 27001 compliant.

Other companies attempting to improve loyalty program use include Loylogic, which offers PointsPay, a product that allows loyalty points and miles to be instantly redeemed at the point of sale. Another effort is American Express' My Offers, which recommends and ranks merchant offers based on spending history and location, and Edo Interactive's Prewards, or virtual coupons redeemable via cards when used at the point of sale. Edo, whose clients include Fifth Third Bank and Ally Bank, also has a geolocation product that provides offers associated with nearby merchants. American Express is also plying bar-code technology to delivery rewards.

The amount of data being generated has vastly increased. The McKinsey Global Institute, for example, says that 15 out of 17 business sectors have more data stored per company than the U.S. Library of Congress, and IBM estimates that 90 percent of all data created in history has been generated in the past two years, which has ramifications for everything from marketing to security to compliance.  ERP's system aggregates data such as purchase trends, coupons claimed, behavioral trending, favorite brands and financial management tendencies to inform marketing and other customer-facing decisioning.   

While a $2 million investment is not huge, relatively speaking in the tech startup world, it can go a lot further today given reduced development costs, suggesting a number of other players will make the same play as ERN, Philliou says.

"There's been talk about these kinds of capabilities for years, but there is a reason why there's wind in the sail with this now. It's become fairly inexpensive in today's terms to pilot these types of initiatives. There's a lot of infrastructure to rent, such as the cloud…you can do this today and it doesn't cost as much money [as it would of in years past]" Philliou says.

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