Banks have long been a player in the loyalty arena, but their potential has yet to be fully recognised. Historically, banks have run loyalty programmes on the card issuing side of their business. They offer customers “points” or “cashback” as an engagement tool to drive use of that particular card – versus another card, or cash. Think of Club Lloyds, Santander 123, or Chase rewards. Card issuers used to use the profit from interchange to fund these rewards. But as interchange is being regulated, we often see the rewards disappear.
A new role for banks: Acquirer-side loyalty
Whether banks or stand alone acquirers, these companies have the transaction data to enable a loyalty platform, and shift the consumer relationship back from issuers to the merchants. Creating a platform that SMEs want to use and is valuable leans on the core strengths of banks and their customer relationships.
Fundamentally banks have the opportunity to own the loyalty space if they can reduce the time and cost for both consumers and SMEs in finding and redeeming loyalty, offers and rewards. SMEs are desperate to retain their relationships as they continue to be disintermediated by aggregators from ecommerce platforms to buy now pay later providers. Have we lost the point about the value in connecting transactional data, across merchants to create a single customer view?