Digital Payments

Making Digital Card Features Stick – And Sticky

Consumer engagement has become a very different ballgame for financial institutions (FIs) in the past several months, as the physical branches that were the cornerstone of making connections with customers closed down. That left FIs scrambling to “rapidly figure out how to get that same emotional and engagement outcome when the possibility of face-to-face is virtually nonexistent,” Randy Piatt, head of product solutions at card technology firm Ondot Systems, told PYMNTS in a recent conversation.

Piatt noted that FIs have come up with a variety of solutions, like beefing up call centers or creating drive-thru-only banking services. Piatt said FIs have also increased their focus on debit offerings, as consumers slowed down credit card usage in recent months in response to financial uncertainty.

“More generally, financial institutions are now in the position of having the highest [level of U.S. consumer savings] ever, and they have to figure out how to drive their noninterest income and get folks spending,” Piatt said. “They want to shift those deposit dollars sitting in those savings and checking accounts onto the debit card and other card products to be spent.”

And FIs want to help consumers spend money in the places where they want to spend money — which, in the wake of COVID-19 — is largely online.

Piatt said card-present transactions have fallen by as much as 20 percent during the pandemic, but card-not-present transactions have bounced up by 40 percent. Meanwhile, contactless card payments are up 150 percent year on year, pushed by consumer demand that’s growing by the day as customers fear touching point of sale (POS) terminals that they fear could carry germs.

In other words, time is officially up for FIs to dither when it comes to digitizing. “It really has highlighted the digital divide in financial services between the organizations that had formulated and executed a true digital strategy prior to COVID and those that didn’t,” Piatt said.

Those that are behind the curve “have to rapidly evolve, and in some cases create new processes just to compensate for the increases in digital interaction,” the product solutions chief added.

How should those that have fallen behind make the first leap forward before they find themselves disrupted out of business by the big banks and FinTechs already ahead in this race?

Simple: Start with the cards.

Recreating The Card For A Digital-First World 

Cards are the most frequent touchpoint that FIs have with consumers — more important than branches, ATMs or even online banking pages or apps.

Piatt said that’s become particularly true in the pandemic era, when a rising wave of online shopping has combined with a U.S. coin shortage and a general squeamishness about handling cash. He said that means FIs need to double down on improving their card products to meet customers' emerging needs.

That starts with upgrading the onboarding process to include instant digital card issuance to a customer’s chosen mobile wallet. “With digital issuance, you now have the ability to accelerate the entire process,” Piatt explained. “The customer can get the card activated immediately on the digital side into the wallet so they can spend using their mobile device while they're waiting for the physical plastic.”

That’s a win/win all around: Customers are delighted because they aren’t waiting for a card, while issuers don’t lose consumer spend while the person waits for a piece of plastic to arrive in the mail.

Moreover, Piatt said getting a slot in a consumer’s digital wallet is critical in today’s era of changing payment preferences. After years of incredibly sluggish adoption, many consumers are suddenly drawn to contactless payments due to COVID-19.

Piatt said figures show that 76 percent of consumers who’ve made the switch to contactless intend to continue using it even after the pandemic has passed. “So, consumers can adjust habits and change those card usage reflexes very quickly if the right motivation is provided to them, and as they realize that using a phone to pay is so much quicker than digging through a wallet or purse to find a card.”

He added that customers aren’t going to wait for FIs to catch up with their needs. If necessary, they’ll just switch to competitors who already meet them.

Moving Forward  

For all of the challenges the pandemic has created for financial services, Piatt said, it also presents an incredible opportunity to build closer, more connected relationships with customers — if institutions are willing to do so.

But FIs that fail to offer their customers premium experiences — like digital issuance and a full suite of digital card journeys — will find that megabanks, digital banks and Big Tech and FinTech players will.

Piatt’s warning to financial firms that dawdle: “Make no mistake, these are the players who are coming for your transaction volumes and your customer relationships.”



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