(PoV) Engaging customers in a meaningful way drives loyalty

The acceleration towards electronic payments globally means its more important than ever for banks to have personalizable and actionable services at the moment of payment. In our latest thought leadership, we look at some of the experiences that can be delivered when you combine a flexible product platform with payments data

Banks globally are implementing initiatives to uplift data analytics capabilities so they can provide meaningful suggestions (‘nudges’) to consumers. However, without the ability to develop new products quickly, or to change existing products already in the hands of customers, those analytical efforts and ‘nudges’ are often quite fruitless. They are ‘nice to know’ but in reality are not very practical for customers.

As we highlighted in previous articles, the ‘moment of payment’ is a frequent and relevant interaction between a customer and their bank. For a bank to be ‘present’ in those interactions and use the troves of data available to them is a massive opportunity that is often missed. This is further compounded by the lack of relevant offers that can be made to consumers and inability to access transactions in real time.  

With the acceleration of electronic payments globally, personalised and actionable offers and benefits at the moment of payment is critical in delivering consistent and meaningful value to the customer at a moment in time when it is relevant for them (as opposed to when it suits the bank to present a standardised offer). Having a flexible platform that can access real time payments data, that can combine the data with existing analytics engines and a platform that can access a wealth of constantly updated relevant offers and benefits, banks can start to reap the benefits of true and proper hyper-personalization. Some use cases include:

Top of wallet becomes the ‘competition for every transaction’

The fight for top of wallet has intensified. Until recently banks thought of this as having the payment product (card) physically as the first card the customer saw in their wallets. Nowadays, it is much more relevant to think about it as a fight for every payment transaction. Customers have more choice than ever and with virtual mobile wallets becoming more prevalent, the physical restrictions (how many cards fit into a physical wallet) is becoming less and less relevant. Customers today often use different payment products for different transactions such as direct debits, subscription services, use in digital wallets and even separate cards for specific merchants.

Given the high ROE of digital payments, it is surprising to see that very few issuers today reward consumers if and when they use their product(s) more than competing products. Issuers who want to ‘own’ this space should look to reward consumers with relevant benefits (e.g. doubling points earnings on direct debits, discount on subscription services, etc) in the moment of payment. This does not necessarily imply a higher cost of rewards as merchants are often quite prepared to (co)-fund these offers and benefits. Until now, banks have been unable to access these benefits and provide them to their customers at a moment in time when it actually matters. With enhanced merchant data, tokenization and readily available (3rd party) hyper-personalization platforms , it is easier than ever to identify and reward these transactions and behaviours and provide true hyper-personalization.

Leverage analytical insights to make timely and personalised offers

The ability for consumers to obtain and maximise benefits is a key buying driver when consumers look at opening a payment account (debit, credit or prepaid). Whilst consumers today are able to get differentiated bonus points offerings, these tend to be driven by merchants that the bank has partnered with and who fund the additional bonus points. A more personalized way of delivering meaningful value to a consumer is giving customers the ability to ‘boost’ points earning at merchants of the customers’ choice. This will drive greater engagement and transaction volumes from the consumer. In this context, analytically driven ‘nudges’ from the bank can become both relevant and meaningful.

Supporting customers when their circumstances change (i.e lifestyles changes)

By looking at payments data, banks can gain an understanding of when a consumer’s lifestyle is changing or they have passed a key life event. This analytics data is generally used to cross-sell products to the consumer (e.g. home loans) as opposed to meaningfully engaging the consumer through the period of change. This paradigm can shift when the payment product itself is dynamic. Nudges can be used to inform the customer of when changes could be made to the benefits attached to their account to ensure benefits remain relevant to their lifestyle. A relevant example of this capability is playing out in real time right now. Covid-19 temporarily made frequent flyer cards significantly less relevant (planes aren’t flying as frequently). Wouldn’t it be great if customers can temporarily opt-out of earning frequent flyer miles and opt-in to earning cash-back? Once the pandemic has passed, the bank can ‘nudge’ the customers that travel is back, and customers can opt-back in to earning frequent flyer points.

The technology platforms to enable this hyper-personalization exist today and are readily available to banks at limited cost. Digitally enabling this process via mobile apps and wallets makes it easier for consumers to act on recommendations and nudges and is also critical in ensuring a seamless transition from current to new benefits attached to the card.

Oliver Wyman – Achieving Top of Digital Wallet:
Pega – Moments of Truth in Retail Banking Study: https://www.pega.com/system/files/resources/2018-05/moments-of-truth-in-retail-banking-study.pdf
Forbes – How Banks Analyze Your Lifestyle to Make Finance Personal: https://www.forbes.com/sites/insights-teradata/2019/05/06/banks-analyze-customer-data-make-finance-personal-us-bank/#b5c242814062
Harvard Business Review – The Age of Personalization: https://hbr.org/resources/pdfs/comm/mastercard/TheAgeOfPersonalization.pdf

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