As merchants increasingly explore the realm of mobile payments, they are starting to explore ways to steer consumers toward certain purchase decisions, including which payment tender to use. And while those solutions are today being brought to market by innovators, that doesn’t mean financial institutions will fall behind, says Bruce Lowthers, Executive Vice President for FIS North American Retail Payments. In a recent interview with MPD CEO Karen Webster, Lowthers describes several important ways that financial institutions can stay ahead of these alternative services, and how they plan to benefit from the convergence of mobile, loyalty and payments.
KW: So Bruce, you are responsible for FIS’s North American retail payments division servicing three markets: financial services, emerging commerce and retail. What are some of the most significant trends you have observed in these sectors?
BL: Now more than ever before, we are seeing issuers and retailers focus on steering and influencing consumer purchasing decisions surrounding what payment tender to choose and what mobile device to use. Issuers are collaborating with merchants in merchant-funded offerings and offering retail-banking solutions in partnership with retailers.
Combined with the fact that merchants are exploring and engaging in mobile payments, as well as stepping into providing alternative financial solutions, this has paved the way for innovators to enter this space.
We see opportunities for growth emerging from changing consumer needs and behavior. One of the leading growth areas is loyalty: Nearly 90 percent of Americans participate in a rewards program, and there are currently over 2.4 billion loyalty memberships. We also see opportunity in the prepaid space for corporate payroll, government benefits and general use – projected to make up 63 percent of the global open-loop opportunity by 2017. In the merchant arena, with U.S. domestic retail spend over $4 trillion, traditional sales channels are under attack due to technology and consumer preference. Retailers are also using big data, which has the potential to increase their operating margins by more than 60 percent. Finally, major innovations are driving toward the bypassing of the traditional network model.
KW: Earlier in 2014, FIS launched GenNOW™, designed to help financial institutions attract and retain customers interested in alternative sources for financial services, such as mobile and prepaid cards. This is, of course, a highly competitive environment. Based on your experience, how are financial institutions able to effectively compete with alternative services?
BL: Research indicates that banks and credit unions already have the confidence of consumers – in fact, three out of four people still believe financial institutions are the best custodians of consumer data (AITE). By creating the same convenience that retailers and alternative service providers offer through strategic partnerships and technology, financial institutions are well positioned to attract, acquire and retain customers using new bundled offerings that add convenience and enable consumers to bank the way they live.
Consumers gravitate toward financial institutions because of the natural and secure confidence that comes from the financial services industry. Innovators and other alternative service providers message against this, but there are a number of reports that continue to confirm that financial institutions have the upper hand in all of these areas.
KW: From your perspective, what are some of the most innovative and progressive strategies available today for engaging with consumers that financial institutions should take note of?
BL: 2015 will be about influencing and controlling the customer relationship end-to-end. Consumers having control of their payment cards and interacting through mobile devices is clearly a growing trend, so engagement strategies employed by retailers and financial institutions that leverage mobile devices, as well as loyalty and real-time redemption, are ways to increase customer loyalty and sales.
Furthermore, for financial institutions, the introduction of revitalized prepaid strategies and programs that offer a full suite of convenient transactional and money management tools will help to attract new customers and reengage existing customers.
KW: So how can financial institutions best benefit from the convergence of mobile, loyalty and payments? Do you expect this trend to continue?
BL: The trend will absolutely continue. The adoption of smartphone devices continues to rise and the friction around mobile engagement, real-time loyalty and mobile payments continues to be reduced by new innovations and technology.
The benefit that financial institutions receive is the real-time engagement with the consumer. You can’t remind consumers about their banks’ solutions when they use a debit or credit card in its physical form; however, as you use a mobile wallet or mobile payment solution, you now have a number of interaction opportunities that will keep your brand front and center with the consumer.
Executive Vice President
North American Retail Payments
Bruce Lowthers is executive vice president for FIS, which is ranked as the world’s No. 1 financial technology provider. He is responsible for the North American Retail Payments division, which delivers approximately $1.7 billion in revenue derived from payment processing and ancillary services. Lowthers’ business unit, which is supported by more than 4,000 employees, serves three markets: financial services, emerging commerce and retail services.
Previously, Lowthers served FIS in a number of executive positions, including division executive of card services, head of product sales and global sales operations, and general manager of the global payments software business.
Prior to joining FIS, Lowthers held the position of senior vice president of community markets for eFunds, where he was responsible for the P&L for all payment and risk products for that market. He also held executive officer positions at four startup companies.
Bruce holds a bachelor’s degree in business administration from the University of Massachusetts and began his career as a certified public accountant.