Creating new experiences to align with changing consumer expectations
There is a paradigm shift in how top-earning consumers are spending their time and money. Across the globe, this demographic is prioritizing experiences that allow them to enjoy precious time with those who matter most, as opposed to accumulating material things.
In a recent panel session chaired by Chana Schoenberger, Editor-in-Chief at American Banker, senior leaders from Barclays, Citizens and Mastercard delved into consumers' increased propensity to spend on bespoke experiences, and the ways in which financial institutions are responding.
An elevated landscape
In the US, the top thirty percent of earners are responsible for around half of consumer spending; and across the world, this higher-spending cohort contributes $3.2 trillion to consumer expenditure each year. Capturing this audience's attention is key.
As observed by Bunita Sawhney, Chief Consumer Product Officer at Mastercard, "This segment of spenders is incredibly discerning. They value their time and have expectations that we need to meet through value propositions that are personalized, immersive, and memory-making. What they are after is not dissimilar to a typical consumer; there is unanimous interest in travel, dining and entertainment. It's how we deliver these opportunities to the affluent consumer that is key."
Higher earners are looking for options that elevate existing offerings. This fact is supported by Mastercard research, which reveals that sixty-four percent expect rewards programs that take their experience to new levels. "We call this experiential luxury", shared Sawhney.
Doug Villone, Head of US Cards and Partnerships, Barclays, concurred. "When it comes to travel, lines are longer, parking is harder, and delays are much more frequent. Putting a premium on anything that might improve this experience has high perceived value. When we talk about a successful credit card program, we consider these as benefits that provide a better travel experience."
Beyond the individual
Nearly half say one of their top five personal goals is spending more time with family and friends, and around three-quarters feel best when they spend on experiences that enable them to be with those who matter most. In a busy world, where time has become an increasingly valuable commodity, designing rewards programs that grant people access and flexibility to enjoy shared experiences with loved ones presents a real opportunity for financial institutions.
As Michael Cherny, Head of Citizens Wealth Management explained, "Where once the financial goal may have been buying a boat, today's affluent consumers instead want to take a family of 12 on a vacation around the world. Shared experiences are the priority, and material things are a secondary thought."
Tracing generations
Financial institutions also need to consider the inevitably different needs of younger spenders as the great wealth transfer – the shifting of capital from the older to the younger generations - unfolds.
Understanding the preferences and spending habits of the individuals this wealth is being transferred to – and knowing how to effectively engage them – will be key for financial institutions in the coming years.
Research shows that younger generations are also favoring intention-led lifestyles, and millennials aged 30 - 44 years are most likely to seek luxury experiences. Research also shows that this younger demographic is also digitally native, and they will expect brands to recognize this. As noted by Cherny, "Over the next 20 plus years, over $140 trillion will be transferred to millennials, Gen X, Gen Z and Alphas. These generations live in a digital world, so we need to offer digital-first, human-backed rewards programs."
Data and digital – paving the way to intention-led living
Delivering a suite of personalized benefits requires a depth of insight that can only be gathered by harnessing data to create tailored rewards that are delivered to the end user in a simple, highly-accessible digital format. This is the next move for financial institutions looking to support consumers' shift from image to intention.
"At Mastercard, we are designing solutions that align with consumers' evolving priorities. In the US, people have more cards than average. We are working to develop a centralized card that offers everything – one front door!" explained Sawhney.
Earlier this year, Mastercard announced One Credential, a single credential with multiple ways to pay, to give consumers – especially those just starting on their financial journey – more control and choice over their payments.
This focus on a customer-centric approach is shared by Citizens. "The banks that win are those that support clients when, where and how they want. Providing bespoke services that champion people's goals is how we are meeting affluent consumers' needs", shared Cherny.
Banks that fail to recognize the importance of a bespoke offering, which can change and adapt in tandem with customers' evolving needs, risk missing out on opportunities to develop consumer trust and loyalty. As Villone explained, "As people's lives change and wealth evolve, so do their needs. A customer who values airline miles for work travel today, may prefer family holiday offers in a decade. Providing flexible loyalty programs is essential."
These insights have informed The Mastercard Collection: a new suite of benefits offered across World, World Elite and newly-created World Legend cards.
Whether it's culinary exploration, artistic endeavors, or cultural immersion, The Mastercard Collection grants eligible cardholders and their loved ones access to elevated, globally-connected dining, entertainment and travel experiences.
To find out more about The Mastercard Collection visit
