Mehmet Sezgin
Mehmet Sezgin Oct 25, 2018

Make your credit card the consumer’s choice: payments, loyalty and the mobile app

As a generation that shows more discretion in spending habits, millennials look to technology—and mobile in particular—to help them manage money and get the best deals and consumer rewards. Beyond their status as the first digital generation, many just feel more comfortable interacting with a mobile app than walking into a shop, office or bank.

And coming up fast: Generation Z, the cohort following millennials. Gen Z is projected to make up 40 percent of all North American consumers by 2020. A naturally digital and more mobile-centric lot, they’ve never known life without smartphones or Google—or for that matter, using the former to run the latter.

If banks and credit unions want to keep the interest—and loyalty—of powerful millennial spenders and the upcoming Generation Z, they must introduce mobile into their ecosystem through host card emulation (HCE) and QR-ready apps. That means institutions stronger on money management than tech development need to connect with fintech partners to help them deliver.

Listening to consumers, banks certainly have lots of incentive to change. A 2018 BAI Banking Outlook report shows that roughly one in five consumers (18 percent) experience frustration because banks haven’t done enough to enhance their mobile channels.   

The leading part that partners play

While traditional financial institutions first treated fintech startups as rivals (and some still do), more now embrace collaboration to craft new user experience types. They know their consumers want them but especially at small and mid-sized banks, they don’t have the experience or infrastructure to make those experiences a reality.

Regardless, banks need to act now to stay on the right side of digital disruption. In equal measure, fintech partners must offer services that provide real business results—not just vanity metrics or innovation theater.

Options + flexibility = the card of choice

Features that enable cardholders to keep their cards in a digital wallet, monitor finances from an app or set spending controls for outgoing payments are important. They help customers to better manage their finances in a convenient way.

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

Easy installments, no stalling

There’s a simple way for banks and credit unions to leverage the rising trend of installments on card payments—and enable greater cash flow control in purchasing. The right mobile technology makes it much easier for card issuers to offer installments on purchases; this can occur in real time at the point of sale via push notifications.

The rewards for millennial and Gen Z consumers are self-evident. They can easily determine:

  • which cards or card types are eligible for installment options,
  • the spread between retailers, spending thresholds or interest rates
  • over what time periods payments can be made

The potential rewards for card-issuing banks and credit unions are also clear: They can undertake a more dynamic, creative approach to how they make their installment offers. 

Scoring points with loyalty, rewards and points

Winning the game means building ongoing relationships with customers through digital services delivered on mobile. Rewards and loyalty programs represent valuable ways to achieve this—almost one in three American adults spend money on credit cards to get rewards. But we’re not talking about coupon clipping anymore. Today’s shoppers demand a seamless digital experience: In a recent survey, 76 percent said they want to redeem card-linked deals when swiping at the point of sale.

But loyalty isn’t static; it results from proactive digital engagement. More dynamic rewards programs pave the way to winning the battle for banking loyalty. And mobile will be at the heart of this—but why? Simply, evergreen loyalty programs that fail to change or update can quickly become the stale old norm and people will get bored of them.

Targeting consumers via mobile based on past shopping behavior will turn an institution’s credit card into he consumer’s preferred card. It all revolves around relevant offers and immediate benefits in real time.

Easy delivery gain, no new infrastructure pain

The lack of infrastructure to roll out these types of services represents a serious pain point for some small and mid-sized banks and U.S. card issuers. As the sector’s technology disruption seems to increase, committing to a single approach becomes difficult, especially if it requires a big infrastructure investment. What if the next great invention supersedes that investment before you see any ROI?

Thus collaborating with the right fintech is so important for traditional financial institutions. Service providers that deliver from the cloud don’t need to invest in new infrastructure, or re-engineer IT systems. Payment installments or building loyalty and reward programs via cloud-based mobile apps offers the bonus of more customer options without banks needing to rip and replace their IT.

Putting it all together: payments and rewards, hand-in-hand

People expect more from their banking services along with 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.”

Pushing fresh, relevant, exciting offers straight to mobile and matching them to the latest trends or upcoming events will keep customers interested. And going golden is easier than you think. Fintechs and financial institutions are ripe for productive relationships that set the stage for connecting to millennial and Gen Z consumers—and forging the most powerful relationships of all.   


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The CEO/founder of payments company myGini, Mehmet Sezgin is the former director of global payment systems at BBVA and co-chairman of Garanti Payment Systems between 2012 and 2016.

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