Where Payments and Loyalty Meet – On a Mobile App of Course

By Mehmet Sezgin, myGini

As we see millennial spending power increase and await the impact of Generation Z, it is an absolute must for banks and credit unions to understand how these demographics interact with technology. Mehmet Sezgin, CEO and Founder of leading integrated payments and loyalty provider myGini, explains the ways banks and credit unions can deliver the services these consumers want and how to earn their loyalty.

Millennials are showing more discretion when it comes to spending habits and are looking to technology to help them manage their money. It might sound cliché to say that this is the ‘first digital generation’, but many just feel more comfortable interacting with a mobile app than walking into a shop, office or bank.

Generation Z – the cohort following millennials – is projected by some to make up 40 per cent of all North American consumers by 2020, and is naturally digital and more mobile-centric. These are the ones who have never known life without smartphones or Google!

Changing demographics, changing relationships

Millennials want to manage their finances and are looking to technology, in particular mobile technology, to help them better manage their cash flow and get the best deals and rewards possible. For this powerful group of spenders and for the upcoming Generation Z, banks and credit unions need to introduce mobile into their ecosystem through host card emulation (HCE) and QR-ready apps if they want to keep their interest – and their loyalty.

This means banks and credit unions whose skillset is money management, need to look to fintech partners help them deliver.

They can’t do it on their own, they need partners

While over the last few years traditional financial institutions saw fintech startups as rivals entering their arena – and some still do – more are starting to see collaboration as a way to offer a new type of user experience. They know their consumers want it, but – especially in the cases of small and mid-sized banks – they don’t have the experience or infrastructure to make it a reality.

Banks need to act now to make sure they stay on the right side of digital disruption in the industry. But equally, fintech partners need to ensure they are offering services that provide real business results – not just vanity metrics.

Making your card the card of choice – options and flexibility

Introducing features that enable cardholders to keep their cards in a digital wallet, monitor finances from an app or have spending control settings for outgoing payments are important to help customers feel they are able to better manage their finances in a convenient way.

Equally, banks and credit unions need to empower their cardholders with more options to help them discover new and better ways to spend their money and increase cardholder purchasing power.

Easy installments

There’s a simple way for banks and credit unions to take advantage of the rising trend of installments on card payments and enable cardholders to make purchases in a way that gives them greater control over their cash flow. With the right mobile technology, it is becoming a whole lot easier for card issuers to offer installments on purchases, as this can be done in real-time at the point of sale via push notifications.

Being able to easily control which card types or customers are eligible for installment options, which retailers, spending thresholds or interest rates and over which time periods would mean card issuing banks and credit unions can be a lot more dynamic and creative over how they make their installment offers.

Loyalty, rewards and points

It’s about building ongoing relationships with customers through digital services delivered on mobile. Rewards and loyalty programs are one of the best ways to achieve this – almost one in three American adults spend money on credit cards to get rewards. But we are not talking about collecting coupons anymore. For today’s shoppers it has to be a seamless digital experience. In a recent survey 76 percent said they want to redeem deals tied to their card when swiping at the point of sale.

But loyalty isn’t static – it is an outcome of proactive digital engagement. Being able to offer more dynamic rewards programs is going to be key to winning the battle for loyalty in banking – and mobile will be at the heart of this. Why? Because evergreen loyalty programs that do not change or update can quickly become the norm – and people will get bored of them.

Targeting consumers via mobile based on past shopping behavior will help make an institution’s credit card the consumer’s preferred card as they get relevant offers and receive the benefits immediately – in real-time.

Easy delivery – no new infrastructure pain

A serious pain point for some of the small and mid-sized banks and card issuers in the US is the lack of infrastructure to roll out these types of services. As the rate of technology disruption seems to increase in the sector, it also makes it more difficult to commit to a single approach if it requires a big infrastructure investment. What if that infrastructure investment is superseded by the next great invention before you see any ROI?

This is where collaborating with the right fintech is so important for traditional financial institutions. Service providers delivering from the cloud do not require an investment in new infrastructure, or re-engineering of IT systems. Payment installments or building loyalty and reward programs via cloud-based mobile apps such as myGini has the bonus of giving customers more options without the need for banks to rip and replace their IT.

Defining loyalty in consumer terms – payments and rewards go hand-in-hand

It is these types of integrated services that provide the right user experience. People expect more from their services and they expect a high degree of personalization. If a bank or financial institution doesn’t provide it, consumers will find someone else who does. As Accenture’s ‘10 mega trends driving the future of payments’ points out, “Providers that are present across the payments journey in the moments that matter to consumers – not just if or when a transaction occurs – are golden.”

Being able to push fresh, relevant and exciting offers straight to mobile and match these offers to the latest trends or upcoming events is what is going to keep customer interest – and it’s easier than you think.

CEO and Founder of myGini, Mehmet Sezgin is the former director of Global Payment Systems at BBVA and was the co-chairman of Garanti Payment Systems between 2012 and 2016. In May 2016 he set up his own payments company myGini, Inc., a payment and card management application designed to connect merchants and consumers with their financial institutions via the Mastercard/Visa payments networks.