Banks should ditch cash to boost customer loyalty (Part 2)
The cashless society is not a new concept.
Perhaps the biggest opportunity arising from the cashless experience is the chance to generate more data and use this to retain customers.
A traditional card payment gives the bank insight about a purchase based on outlet, time and location. For mobile payments, more information is available such as links to social media profiles, mobile browser history and other contextual information through collaboration and shared APIs. Analysis of this behavioural data, including real-time data can help banks to create better services, deliver great experiences and provide more valued rewards for customers.
Today the majority of consumers have used digital wallet services such as PayPal, increasingly for face-to-face as well as online transactions. Consumers will choose the fastest, most convenient and secure digital payment option and offering a frictionless, channel agnostic service is a way for brands to add value to consumer experiences.
To demonstrate the potential for banks, in China the two main players in this area – Tencent’s WeChatPay and Alibaba’s AliPay are far ahead of the West in terms of frequency of use and share of wallet across all demographics. Alibaba is also expanding into other areas of financial services, with its proposed acquisition of US-listed money transfer service, MoneyGram International.
Overcoming the barriers is the first step to success
Banks are taking steps towards a digital first engagement strategy but these changes are incremental. One of the biggest barriers banks face is overcoming legacy systems and infrastructure, with new platforms facilitating rapid analysis of big data and increased collaboration with third parties through open APIs. By working with the right partners and adopting a digital first mindset, such as facilitating the reduction of physical cash, banks have a massive opportunity to increase revenue and boost loyalty.
Banks have a significant opportunity to build real-time loyalty initiatives based on behavioural data, enabling customers to collect and redeem rewards that are relevant, personal and broad enough to engage more members, more of the time.
A completely cashless society is still a long way off, but there are many reasons why banks should champion contactless payments and couple this with loyalty programme apps or messaging platforms. It provides the opportunity for consumers to pay with points and cash, increasing the utilisation of loyalty currency, and presents an improved customer experience and more value to customers overall. For financial services brands, it offers the opportunity to deliver a differentiated, personal, relevant and unique customer experience. It is undoubtedly a win for customers and a win for banks.