The transaction processor Total System Services Inc. said its reward unit, TSYS Loyalty, has introduced a product that lets banks link rewards to any type of account.
The product, TSYS Enterprise Rewards, is designed to help banks recreate the success many have had with card-based loyalty programs.
"What we're offering here is a tool that allows financial institutions to drive loyalty to the financial institution itself, rather than to a card product," Kevin Lewis, TSYS Loyalty's director of business development, said Friday in an interview.
The product lets bank customers pool reward points earned on several accounts, such as those held by the same family or business, while restricting redemption privileges. For example, a parent can let a child's account contribute to the family's overall point total but permit the child to redeem points only accrued on the child's account.
The concept resembles the one behind the ThankYou Network reward program developed by Citigroup Inc., since both allocate points for activity on multiple accounts.
Mr. Lewis said Citi's program, which grants points for a variety of banking activities, is focused mainly on card use.
TSYS' product gives bank clients the ability to focus their rewards programs on any banking product by letting one account generate more points than another for similar transactions.
Rod Boyer, who was promoted to president of TSYS Loyalty last week, said the flexibility of Enterprise Rewards would appeal to a wide variety of banks.
"There's so much happening in the marketplace," Mr. Boyer said. "Our customers are looking to us to help sort through the myriad of options" for developing their reward programs.
Brian Riley, a senior analyst in the bank cards practice at TowerGroup, the Needham, Mass., independent research firm owned by MasterCard Inc., said the current economic environment is driving bankers to reconsider the way they offer rewards points to customers.
Though the idea of attaching rewards to financial products other than cards is not new, it is increasingly appealing to an industry that has been feeling the effects of encouraging cardholders to spend too much, he said.
"As the economy starts deteriorating, how does the existing rewards model get disrupted?" Mr. Riley said. If consumers fall behind on card payments, they lose the benefits of being in a reward program.
"In today's world, points are typically shut down when you hit 60 days delinquent. With today's delinquency environment, is that a good play?" he said.
A bank that cuts off a customer's reward points may end up losing the entire relationship, according to Mr. Riley.
By offering rewards through other account types, "it certainly can keep the relationship alive," Mr. Riley said. "People have different payment hierarchies. … You'll save your mortgage before you save your credit card," and a delinquent cardholder may still be a good customer to have for other products and services.
Mr. Riley said TSYS Loyalty should have an easy time finding customers for the product, especially among the processor's existing clients, he said. "They have a terrific base of customers that take advantage of their loyalty services."
