Financial companies such as credit card issuers, banks, and payment service providers possess vast amounts of customer data. Increasingly, they are looking for ways to monetize this sensitive information. Corporations like PayPal, Chase US, and Revolut are increasingly collaborating with advertising partners to offer so-called "transaction-based" marketing campaigns.

By leveraging financial data obtained from purchases, payment habits, and financial transactions of their customers, companies can place targeted advertising tailored to the individual needs and interests of consumers. This form of marketing is intended not only to increase the efficiency of advertising campaigns but also to lead to new revenue streams for financial institutions. For example, PayPal plans to display personalized recommendations within its network based on purchase history, while Revolut is already piloting initial campaigns in collaboration with advertising partners.

However, the increasing use of customer data for marketing purposes is met with growing skepticism from consumers. According to a recent study by the market research company Kantar, 64 percent of the surveyed bank customers in Europe express concerns about the use of their personal information by financial companies. At the same time, more and more consumers are willing to exercise their rights and educate themselves about data usage.

In the UK, for example, customers have the option to request information from their banks about the use and storage of their data under the Data Protection Act. This is leading to an increase in so-called "Subject Access Requests" - inquiries in which customers request copies of their stored data and seek information about its use. These inquiries provide consumers with a tool to review the activities of financial institutions and take action if unauthorized use of their data is detected.

The willingness of companies to expand their advertising activities based on financial data could further erode customer trust. "Many consumers view financial institutions as particularly trustworthy players when it comes to handling sensitive information. This expectation could be disappointed by the increased use of personalized advertising," explains Jennifer Harris, an expert in data protection law at PwC.

Against this backdrop, the industry faces a difficult balancing act: On one hand, institutions are trying to unlock the potential of data to generate additional revenue in the face of increasing competition from tech companies. On the other hand, they risk damaging customer relationships and violating regulatory requirements if they do not meet consumer expectations regarding data privacy.

The use of transaction-based marketing is particularly sensitive because customer data can reveal very detailed information about personal preferences and financial circumstances. Companies like Chase US and PayPal have therefore already taken initial measures to increase transparency and give consumers more control over their data, such as through special opt-out options.

The topic is also being increasingly scrutinized by regulatory authorities. The UK's Financial Conduct Authority (FCA) and the European Data Protection Board (EDPB) are currently examining whether existing data protection regulations are sufficient to protect consumer interests and adequately regulate the use of data by financial institutions. The pressure on the industry is growing.