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The credit union's attracting brick and mortar consumers with GPS-enabled smartphones with a rewards program-based on mobile social media "check ins" at branches, an approach also being tried by DBS Bank in Asia.
September 7 -
With sponsorship from Citigroup, Billing Revolution is trying to help convert people who window-shop on their mobile phones into paying customers.
November 19
New regulations that are sweeping across the banking industry, particularly the Durbin amendment to the Dodd/Frank Act, have financial institutions and other card issuers scrambling to find alternative ways to boost fee income as traditional revenue streams tighten over time.
In many cases, these new products involve loyalty perks or coupons tied to mobile apps, online banking, location-based marketing or other digital commerce, which places pressure on bank IT systems to handle extra maintenance, cross channel integration and data management chores.
"These new products place stresses…there's obviously going to be more integration across multiple channels," says Zachary Aron, a principal at Deloitte Consulting, and one of the analysts who offered an analysis of the new digital loyalty market. "You'll also need to be able to track that type of spending appropriately, so you can have a real-time account balance. And on the back end, the Holy Grail is capturing spending data and making sense of it."
There are already numerous examples of
Zil Bareisis, a senior analyst at Celent, also says the introduction of mobile loyalty programs makes the game more complex for IT departments charged with making sure the programs work.
"Loyalty is easier to do in the online environment," he says. "But with mobile at the point of sale, you can have sales agents at a merchant's location walking around to approach consumers, or the consumers walking around with their mobile devices," he says. "So you are almost starting to replicate the online shopping environment, only since it's with mobile phones the merchant is much closer to the customer, where decisions can be made more instantly."
Aron says these new loyalty programs will increase the need to capture more data faster, and tie that data to a personalized offer via quick analysis. Since most institutions still can't afford to replace their entire core system, the key to making mobile-enabled coupon and loyalty programs work consistently will be strong middleware. "You're talking about the orchestration [of the new marketing programs] and the trigger mechanism of the offer," he says. "The skills required here include the ability to integrate multiple systems…you can't just plug and play."
For example, American Express's
"American Express built the Smart Offer APIs to enable merchants to easily and effectively measure the success of their location-based marketing efforts and to offer tailored specials to card members without investing time and money in training staff to decipher a coupon code or process a coupon-based offer," says Dave Wolf, vp of global business & market development for American Express. Wolf did not offer specific details on how maintenance and performance of the enabling technology are managed to ensure access, saying the maintenance is managed across the firm's business units and with its digital partners. "In digital and especially mobile, the simplicity and non-clunkiness of the user experience is key."
Executing loyalty programs properly goes a long way toward getting consumers to actually use the program. Loyalty marketing consulting and research firm Colloquy says the average American household is enrolled in 18 different loyalty programs (counting mobile and more traditional loyalty programs), but only participate in about eight of those programs at any given time. The firm also says that about half of the perceived annual value of loyalty programs (the total of what all consumers nationwide believe special offers are worth, based on Colloquy's analysis) come from credit and debit-related reward programs.
As these loyalty programs become more digital and available on handsets, maintaining the flow of accurate data between CRM, point of sale, and an financial institution's database will be just as important as speedy access-requiring regular data scrubbing and automated updates to user accounts in real time as new transactions are executed. "Consumers don't want to hear different messages from different channels," says Jim Sullivan, a partner at Colloquy.
The consulting firm says the interdepartmental IT integration within the card issuer also needs to expand-bringing marketing and other departments together in a common effort to engage consumers, including direct dialogue driven by point of sale and prior data analysis. "Now we're seeing a convergence around mobile techniques and payments," Sullivan says, adding that the growth of initiatives such as the Google Wallet is forcing all payments firms and card issuers to consider how the underlying tech behind payments and loyalty should be managed. "There's no standard. So there will be an experimentation across a number of platforms," Sullivan says.
A financial institution's corporate culture also plays a role in execution of loyalty programs. Colloquy mentioned U.S. Bank as a bank that's made strides in this area-a recent Colloquy white paper includes a description from U.S. Bank of its enterprise revenue office. That office works across departments such as payments, cards and consumer loans in an effort to link loyalty offers to a consumer's mix of relationships and transactions. Since the enterprise revenue office doesn't have P&L responsibility, it can be objective in determining that customer's best needs.
