But did you know that data enhancement is also at the core of many online businesses? For example, in banking, billions of transactions get enhanced this way every day. We call this payment or transaction data enrichment.
Understanding Data Enrichment and its Impact on Banks
Payment data enhancement is a process of adding additional information to the transaction data that already exists. The goal is to make the data more valuable and informative, typically by filling in missing values or by providing context that would otherwise be unavailable. In banking, transaction and payment data enhancement is probably the most visible kind of enrichment.
It is also important to know the difference between enhancement and enrichment. In the financial world, data enrichment and data enhancement are often used interchangeably - but they actually describe two distinct processes that both play a crucial role in helping banks and other financial institutions unlock the full value of their transaction data. What is the difference?
Data Enhancement refers to the process of correcting, standardising, or filling in missing values in existing data to make it more accurate and usable. In banking, this might involve cleaning up raw transaction records by identifying unknown merchant codes, correcting typos, or attaching standardised metadata to improve consistency.
Data Enrichment, on the other hand, goes a step further by adding new, contextual information to existing data. This can include supplementing a transaction with the merchant’s logo, category (e.g., “grocery” or “entertainment”), location data, social signals, or even sustainability metrics like carbon footprint estimates. The goal is to transform basic, often cryptic transaction data into a rich, human-readable format that adds value for both the bank and the customer.
Think of enhancement as fixing or completing what's already there, and enrichment as giving it extra context and meaning.
Enhancing transaction data is essential because it helps the customers know more about their transactions through insights and additional data, which helps them make smart decisions about their financial lives and build trust with their bank, who becomes their financial partner on the life journey. Merchant enrichment, specifically data like logos, names and locations, all updated in real-time, play a crucial role in the banking app experience and customer satisfaction. Banks also learn more about their users without asking them for extra information by analysing transactional data, which can improve their services in many ways. For example, it helps to understand their clients more and bring valuable new products to the market that will actually have practical use. As such, with transaction data reconciliation, you can significantly improve the customer experience and make banking more pleasant and engaging. The more data are enhanced, the more robust the financial ecosystem of a bank becomes. It's a win-win.
The Benefits of Payment Data Enrichment for Banks
Banks have access to a large amount of data, but this data is often siloed and difficult to use. Enhancing this transaction data can help to overcome these challenges by providing a more holistic view of the customer. By supplementing customer financial data with data from external sources, banks can gain a better understanding of who their customers are, what they need, and how they behave. This data can improve customer service, target marketing campaigns, and make better lending decisions. Besides understanding the customer better, payment data enrichment allows banks to streamline operations, reduce fraud, and enhance customer satisfaction by making data more actionable.
In addition to improving customer understanding, payment data enhancement can help banks manage risk more effectively. By incorporating data from multiple sources, banks can get a more accurate picture of their borrowers' spending habits and identify early signs of financial distress. This information can then be used to manage risk and proactively prevent losses.
Finally, payment data enhancement can enable banks to develop more targeted marketing campaigns. By understanding their customers better, banks can identify opportunities for cross-selling and upselling products and services most likely to interest them. This data-driven marketing approach can improve customer satisfaction and higher sales volumes.
While banks are often at the forefront when it comes to the smart use of transaction data enhancement, it also holds strong potential for a wide range of other financial institutions. These include insurance companies, asset managers, payment processors, and credit unions, all of which stand to gain from enhanced data utilisation across their various departments. Transaction enrichment in these broader financial contexts is not just about improving customer understanding; it plays an important role in refining decision-making, improving risk management, and uncovering deeper customer insights.
In financial institutions, departments such as compliance, finance, marketing, and operations all benefit from enhanced financial data. For instance, finance teams can gain a clearer picture of cash flow trends and investment opportunities, while compliance departments can better track and flag suspicious activities through more detailed transaction categorisations.
How Non-Banking Financial Institutions Use Enriched Transaction Data
Credit Unions - Credit unions often serve niche or community-focused customer bases. Enriched transaction data allows them to create highly personalized member profiles, identify financial wellness opportunities, and design tailored loan products. With improved visibility into spending patterns, credit unions can also enhance their underwriting models and offer more competitive rates while managing default risk more effectively.
Asset Managers and Wealth Advisors - For asset managers, enriched transaction data provides an extra layer of insight into retail and HNW (high-net-worth) client behavior. By analyzing spending, saving, and investment behaviors, advisors can refine financial plans, assess risk tolerance, and recommend products that align with real-world cash flow dynamics—not just portfolio theory. This leads to better client engagement and long-term retention.
Insurance Providers - Insurance companies use enriched data to improve underwriting accuracy and detect fraud. By understanding lifestyle spending patterns (e.g., travel, wellness, or alcohol consumption), insurers can refine risk assessments and tailor premiums more precisely. In the claims process, enriched data also supports anomaly detection, which can prevent fraudulent activity and improve claims validation.
Fintechs and Digital-First Lenders - Fintech firms and alternative lenders rely heavily on enriched data for instant decision-making. Many use transaction-level insights to power alternative credit scoring models, especially for underbanked or thin-file users. This enables faster, more inclusive lending decisions. Additionally, fintechs can use behavioral data to power features like budgeting tools, financial health scores, and proactive notifications—enhancing user stickiness and satisfaction.
Let's quickly look at some of those enhanced data aplications in real-life scenarios. Revolut, a rapidly growing neobank, leverages enhanced payment data to offer a highly personalised banking experience. Revolut uses transaction enrichment to categorise spending automatically, providing users with real-time insights into their spending habits across various categories like groceries, entertainment, and travel. This data not only enhances the customer experience by offering clear and intuitive financial overviews but also helps Revolut in refining its product offerings. For example, by analyzing aggregated spending data, Revolut can identify trends and gaps in their service offerings. If a significant number of users are spending heavily on international travel, Revolut might introduce a new travel insurance product or special foreign exchange rates to meet this demand.
Deutsche Bank, one of the largest financial institutions in the world, has used enhanced data to streamline its operations and easily follow regulatory compliance. The bank enriches its data with detailed information about transaction parties, including their legal and financial history. This data allows Deutsche Bank to automate much of its compliance reporting, ensuring that transactions meet all regulatory requirements without manual intervention. Furthermore, enhanced payment data helps Deutsche Bank improve its anti-money laundering (AML) efforts by analyzing detailed transaction histories and identifying unusual patterns. The bank can then flag and investigate suspicious activities more effectively.
How to Choose a Right Provider for Data Enhancement
Regarding transaction data enhancement, banks have a few options to choose from. One option is to develop the data enrichment capabilities in-house. However, this can be costly and time-consuming. Alternatively, banks can work with external providers. When choosing one, a few things to remember are their data sources, quality, and pricing.
Data sources are important because they determine the types of data provider can offer. Banks should make sure that the provider has access to high-quality data sources. Additionally, data quality is crucial because it determines how accurate and reliable the data is. Banks should ask potential providers about their data quality controls. Finally, pricing is important because it will affect the bank's bottom line.
Although before data can be enriched, it must be cleansed. Cleansing involves removing duplicate records, correcting formatting errors, and eliminating outdated or inconsistent entries. Think of it as preparing the soil before planting - the cleaner the data foundation, the more meaningful and accurate the insights from enrichment.
Why it matters:
- Reduces noise in the data, making enrichment algorithms more effective and consistent
- Prevents mislabeling or miscategorization, especially in merchant recognition
- Lowers the risk of false positives in fraud detection, which can otherwise trigger unnecessary alerts or customer frustration
Without proper cleansing, even the most sophisticated enrichment process can fall short - leading to misleading insights and lower customer trust.
The choice of provider can also hinge on the type of financial institution that's seeking help. Besides regular or online banks, such data can be very helpful to other financial institution services (FIS). Compared to banks, they should prioritise providers that can offer tailored solutions specifically for FIS, ensuring that the enriched data aligns with their unique regulatory and operational challenges.
Choosing a payment data enhancement provider doesn't have to be complicated. By keeping these factors in mind, banks can find a provider that meets their needs and budget.
Learn more about how Tapix can transform your digital banking experience
Tips for Getting the Most Out of Their Services
Transaction data enhancement services can be valuable for banks and other financial institutions. By providing accurate and up-to-date information about their customers, banks can utilise them to assess risk better, identify opportunities for cross-selling, and prevent fraud. However, transaction data enhancement services can also be expensive, and many banks are unsure how to get the most out of them.
Here are a few tips:
- First, make sure that you have a clear understanding of your data needs. What information do you want to enrich, and why? This will help you to identify the right service for your needs.
- Second, don't be afraid to negotiate. Many services offer discounts for volume customers, so it pays to shop around.
- Try before you buy. This simple principle is extremely popular in B2C. Not so much in B2B. You should, however, test the desired API and your data to see how well it suits your needs. This way, you can determine the usefulness of the integration.
- Finally, consider using such services with other data sources. By combining data from multiple sources, you can get a more complete picture of your customers and their needs.
Get the Right Partner
Transaction data enrichment is a process that can provide banks with more prosperous, more valuable customer data. Adding additional information to your customer data sets can improve your marketing efforts and increase sales. Many different types of services are available, so choosing the best provider to meet your needs is essential. When working with a provider, take advantage of all the benefits they offer to get the most out of the service. Want to learn more? Tapix offers free intro calls so you can discuss your specific needs with one of our experts and see how we can help you drive sales and grow your business.
