Business Intelligence acts as a foil against customer irrationality. A recent study by McKinsey group identified that customers do not act as rational as businesses expect them to. This has been highlighted in the recent mortgage industry collapse, where banks incorrectly assumed that home owners would be rational in managing their debt. And it wasn’t just the sub-prime market that behaved this way.

Behavioural economists have long recognised that peoples choices, the effect of incentives and information do NOT make people make rational decisions. Advertisers depend on it!

And to make it worse, people often make the same mistake, over and over. As these mistakes aggregate and compound upon each other in the market, the danger of the market mechanisms currently being put in place being misused in the same way again is a real threat.

This is where corporate responsibility must lead the market. Using business intelligence, businesses can in many cases know more about an individual customer than the customer is aware of themselves. And BI doesn’t fool itself into believing that all will be well. For instance, in most cases, banks tell customers how much they CAN borrow, not how much they SHOULD borrow. Maybe this is one correction banks can make now. The same should apply to consumer loan agencies that finance furniture, home appliances, cars, boats etc.

BI provides a transparency to the truth that cannot be shielded by smart advertising copy. With the governments of most countries intervening to kick smart the economy again, the temptation for corporations to use this to help bail themselves out of their own credit crisis is obvious.

I urge businesses to take a longer term approach and care for their customers MORE than their businesses – after all, customers ARE your business!