The move to digital has shifted the way businesses approach and understand the concept of customer loyalty. This has resulted in an evolution of customer expectations. There has been a general shift from aspirational rewards to everyday value, where financial institutions take a personalized approach to loyalty rewards programs.
In this piece, we’ll be highlighting five innovative ways that businesses like MasterCard and TD Bank are reimagining loyalty in the digital age.
How financial institutions can reimagine loyalty in the data age
1. Offer everyday value in loyalty rewards and cards
While there has been a general shift toward digital personalization, the emergence of COVID-19 has played a massive role in pushing the trend forward. The pandemic has changed the way people interact with the world around them, and financial institutions (FIs) have had to adjust their services to suit a new digital customer.
Loyalty products and card points have shifted to focus on the everyday experience rather than larger aspirational rewards. Within this, FIs need to create relevant and personalized experiences and perks for their customers.
TD is activating customer-led experiences to meet this market through loyalty programs and personalized rewards.
For example, a person who loves coffee can earn extra loyalty points for buying coffee.
Similarly, someone who loves online shopping can get Amazon points every time they purchase online.
At Mastercard, the institution is rising to trends within the rising health and wellness vertical. From grocery delivery to fitness memberships, insurance, and assurance products, they work on intelligent promotions that genuinely matter to their cardholders.
The key point here is the personalization of brands. This is the trend where customers can identify and choose brands and cards that are important to them versus having to choose from pre-made packages
2. Use the opportunity to increase internal efficiency, productivity, and full bank loyalty
With data comes responsibility: responsibility to do the right thing by customers, and responsibility within the FI to utilize information in the best way possible. FIs are now thinking about full bank loyalty. This means seeing customers not as cardholders or mobile payment wallets but as whole customers with unique wants and needs.
After all, what is profitable for one might not be for the other. Lose the low-profitability engagement, and this can ultimately break the higher profitability touchpoint.
As a result, departments are working more closely together in a space of co-creation. There has been a move to break down traditional silos and organizational structures and increase collaboration.
The aim is to come to the customer with reflective actions based on insights as an entire bank instead of fragmented departments.
3. Recognize the value of travel rewards in a post-pandemic space
Both Mastercard and TD Bank agree that after being cooped up from the pandemic, travel remains one of the most valued loyalty rewards.
There’s opportunity now to go beyond the traditional pay with points rewards. People are looking to travel safely and with peace of mind. MasterCard points out that financial institutions can be a secure and trusted port of call by offering an insurance platform or travel concierge service.
4. Keep the conversation open to bottom-up personalization
The industry is not yet there with complete bottom-up customer personalization, partly due to legal restrictions. As a result, financial institutions are focused on protecting their customers’ data while simultaneously working to offer digital personalization and customization.
A key enabler in this sense is to consider how to pick the right partnerships that apply to customers and how to offer customers the choices they are looking for.
In short, how to provide rewards that are meaningful?
There is no one-size-fits-all in this scenario. In fact, customers’ preferences are changing every day. What a person wants today might not be what they want in six months.
The answer here is for banks to acknowledge they are on a journey and keep the conversation open to get where they want to be.
5. Consider the future of online and offline spaces financial spaces
Digital and online financial spaces have become prominent in the post-Covid world. These days, people have their groceries delivered, prefer to shop online, and are comfortable handling their finances online.
However, this doesn’t mean that there isn’t a place for offline spaces.
It comes down to preference. Some people love shopping and going to stores, while others prefer online shopping. Therefore, FIs cannot design for one over the other. They need to think about an engagement ecosystem, including both digital and offline experiences.
From points to personalization: takeaways from the last CX series webinar
Speaking on the points above were Hossein Rahnama, Founder and CEO of Flybits, and guests Katy Boshart, SVP, Enterprise Customer Engagement Platform at TD Bank, and Dana Rosenberg, SVP Issuer Loyalty at MasterCard.
During the last CX series webinar, the trio offered the finance industry valuable insights into the current state of loyalty and emerging trends coming out of the pandemic.
They discussed the general shift from aspirational rewards to everyday value, where financial institutions take a personalized approach to loyalty rewards programs.
Below, we have summarized some of the webinar’s key insights and talking points. To access the full recording, sign up here.
Utilize personalization strategically to drive loyalty
Digital personalization is focused on adapting user experience. To build loyalty, financial institutions need to leverage data to truly understand the needs and wants of their customers. They also need to consider the context of their customers’ experience while respecting their privacy.
Digital personalization involves the shift from aspirational rewards to everyday value. While some people still love collecting larger rewards like travel points, others prefer everyday rewards like points from buying coffee. The key here is ensuring that rewards remain uniquely relevant.
Similarly, there is a move to provide personalized brand rewards in order to drive customer engagement. For example, one customer might want to choose rewards related to health and wellness while another might want rewards related to online shopping.
Lastly, in order to provide a truly personalized experience, FIs need to approach the customer as a complete entity instead of a fragmented selection of departments. This means increased intra-departmental collaboration in order to improve the product offering.
Uphold trust with secure data management
Data management and security are key concerns with open banking and digital personalization. While customers’ personal data is essential for providing a customized banking experience and personalized loyalty perks, this data needs to be treated carefully.
Most times, banks and financial institutions manage and store personal data by using distributed ledgers, blockchains, and data encryption software. These programmes help safeguard client data.
However, there has been a shift away from storing and safeguarding data to allow users to use their data as they see fit. The aim is to empower the user with the data assets they have.
FIs should prioritize user experience and work toward building transparency with predictive and contextual interfaces. Client data fuels digital personalization, but institutions should remember to give their clients a choice on how their data is used.
Loyalty webinar panelists
Dr. Hossein Rahnama, Founder and CEO @ Flybits. Dr. Hossein founded Flybits in 2008. He established the company because he recognized that customers needed a personalized banking experience that considered their individual needs. Dr. Hossein is also a visiting Professor at MIT and an Associate Professor at Ryerson University.
Katy Boshart, SVP, Enterprise Customer Engagement Platform @ TD Bank. Before her current role, Katy led the Canadian Credit Cards Business. She has 28 years of experience working within financial services and has specialized in cards and payment spaces.
Dana Rosenberg, SVP Issuer Loyalty @ MasterCard. Dana has extensive experience working in loyalty from her background at Starwood Hotels, where she led global partnerships and sponsorships. She has also worked as a brand manager at a large global CPG company.