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merchants such as Airbnb Inc. to deliver them an
ofer. In return, Cardlytics charges the advertiser
a fee—usually about 4 percent of all sales the ofer
generates—and the company passes a part of that
money along to the bank. From its inception a
decade ago through last year, the company paid
about $175 million to its bank partners. The bigger
draw for banks is customers’ increased use of their
cards; the boost is about 9 percent, Cardlytics says.
Bank of America Corp.’s partnership with
Cardlytics helped it develop BankAmeriDeals, which
gives the bank’s credit and debit card holders cash-
back ofers at retailers. These so-called card-linked
ofers have become increasingly popular among con-
sumers and could soon capture half of the global
digital advertising market, according to a survey by
CardLinx. “This is a good example of how, based on
what we know about our customers, we can person-
alize the experience,” says Brent Reston, who leads
digital sales at Bank of America.
Grimes, who’s the CEO of Cardlytics, says con-
sumers see the ofers as a way to get more out of
their cards: “Customers, in many ways, expect the
banks to use their data to provide more value.”
Still, he says, banks are sometimes hesitant to let
purchase data escape their walls.
Historically, banks have mostly used what-
ever purchase data they have to improvetheir
fraud controls. Then startups began using
troves of information handed over by customers
themselves—for example, a money management
app might scrape users’ bank account data to help
them budget or move unspent money into high-
yield savings accounts. That’s left banks feeling
the need to catch up. “Financial institutions are
sitting on this gold mine of data,” says Bradley
Leimer, co-founder of inancial consulting com-
pany Unconventional Ventures. “But the challenge
has been that banks haven’t really thought about
how their business model has evolved beyond
inancial services.”
Grimes says he’s seeing a change in attitude.
Cardlytics has recently signed deals with JPMorgan
Chase & Co. and Wells Fargo & Co., and the com-
pany is expected to generate $150 million a year
in revenue this year. Since Cardlytics went pub-
lic in February, its stock has jumped more than
50 percent. “We were thrown out of an awful lot
of banks who were like, ‘Are you crazy? We would
never let another brand in our channel,’ ” he says.
“The good news is many of those are our custom-
ers today.”—Jenny SuraneTHE BOTTOM LINE Banks work with Cardlytics in hopes that
targeted special ofers will get their customers to spend more
on their cards.○ Laube○ GrimesFew people can get inside your head—or at
least the part of your brain that makes spend-
ing decisions—quite like Scott Grimes and Lynne
Laube. The co-founders of Cardlytics Inc. deal in
some of the most valuable and revealing personal
data on the planet: how people use their debit and
credit cards. They’re quietly helping some of the
largest banks in the U.S. to mine what’s known in
the trade as purchase data and use it to encourage
customers to buy more things with their plastic.
Conventional banks are trying to raise their
data game to fend of fast-growing inancial tech-
nology startups and hold on to customers. “This
is the bank’s secret weapon in the digital wars,”
Silvio Tavares, chief executive oicer of the trade
group CardLinx Association, says of purchase data.
But it’s a weapon they have to be extremely care-
ful about using.
Although consumers are constantly being asked
to trade some privacy for convenience and ser-
vice, banks hold a particular position of trust. In
early August the Wall Street Journal reported that
Facebook Inc. had approached banks and asked
them to share data about their customers, to help
it create services such as a way to check balances
inside a Facebook app. Facebook said it wasn’t
using purchase data to push advertising. Several
major banks quickly put out statements saying they
weren’t sharing data with the social media company.
The banks’ response underscored the sensitivity
of their transaction data. “Most people would be sur-
prised to know that banks are potentially monitor-
ing that information and going to use it to give them
sales ofers,” says Lauren Saunders, associate direc-
tor of the National Consumer Law Center, which
advocates for consumer protections and privacy.
Banks send Cardlytics data without customers’
names or other personally identiiable informa-
tion. Last year the company analyzed $1.5 trillion
in purchase data from 2,000 inancial institutions.
It hunts for trends in how people are spending and
then ofers that information to retailers, which
can pay to put customized coupons and other
ofers onto banks’ mobile apps. Cardlytics has,
in essence, data pipelines running back into the
banks, so the ofers can go to the speciic custom-
ers most likely to respond to them. In the U.S.,
customers of banks that work with Cardlytics are
given a chance to opt out of its program, but the
company says only a small percentage do so.
Unlike even a large retailer, Cardlytics says it
can see how consumers spend their money among
multiple merchants. For instance, it might iden-
tify active travelers based on their spending on
hotel stays and airline purchases and work with