There’s more to consumer life than purchase history — and more to card acquisition, too. This implies that there are more pleasing perks to cardholders than rewards. Consumers want engagement and experiences, and issuers that can provide that can not only gain new customers, but keep tighter and more profitable holds on their cardholders.
Those were among the messages offered during a new PYMNTS podcast discussion between Karen Webster and Ondot CEO Bharghavan Vaduvur. The talk came amid increasing attention from issuers about using automation and better software to reduce friction from cardholder onboarding, more focus on deploying real-time data to influence transactions, and to understand the contextual nature of consumer life so purchases can be made “in the moment.” The increasing reliance of payments and commerce on mobile devices renders location another important tool in making the three pillars of the customer relationship satisfying and relevant.
“Once you understand where a person is, then you can start to become really meaningful” to those consumers, and base card-related offers, incentives and experiences on more than “just [purchase] history,” Vaduvur told Webster during the podcast discussion.
Make no mistake, rewards are still a massive part of the card acquisition game, and they play a role in making sure customers keep specific cards in the top-of-wallet position. That is not going to change overnight. However, if an issuer is just “peddling offers, that becomes really old very soon,” he said. Loyalty and rewards are indeed “table stakes at this point,” but consumers increasingly want something more — and that includes not only larger global financial institutions (FIs), but credit unions as well as community and regional banks.
Vaduvur used a personal example to illustrate that point.
A self-proclaimed cigar lover, he told the story about arriving at John F. Kennedy International Airport and having a prompt appear on his mobile phone for a “cigar store near the airport,” he said. “It would have been nice if an offer had been attached,” but he still enjoyed receiving the information. It was part of an experience, based on how he lives as a consumer. “I got something meaningful to me at a point I was not really expecting that,” Vaduvur said.
This story demonstrates that the standing assumptions that issuers must, in effect, buy the loyalty of their customers is not all there is to it. Sometimes, it’s just about giving cardholders a helping hand and passing along information or guidance — and doing so in a way that fits the context of where that consumer is at a specific time.
That’s easier said than done, of course.
Providing such a service — such engagement and experience — depends on the use of real-time data, along with other information. “It’s not just about analytics,” Vaduvur said. It’s about learning who a person is, and what the person wants from the issuer. It’s about going from “non-real time to real time.”
In short, it’s about recognizing that “consumers want control,” he said. The good news is that issuers are getting that — and understanding the importance of doing so via real-time data. The bad news is that such work can be challenging. “Banks might have started a little bit late, but I think they are getting it,” he added.
That work is probably easier for the larger FIs than regional and community banks, and credit unions, he said. Not only are funding and IT capabilities potential issues, but so are vendor relationships.
“Real-time access is a challenge” for those smaller FIs, Vaduvur explained. The problem is complicated because those smaller institutions tend to rely on, as he put it, one processor for debit cards, another for credit cards and a different vendor for online banking. Those credit unions and small banks may indeed want to change how they do things, to provide those engaging experiences to cardholders, but they are often “stuck, based on what their providers can do,” he told Webster.
“If you have a legacy infrastructure, you have to live with it,” he explained.
That creates an opportunity, though, for middleware technology — software that can bridge the gap between banks and their third-party providers, and can enable an easier path to change. There is no switch that can be pushed to pump up those cardholder experiences, of course. However, for issuers that go beyond mere rewards to worthwhile customer engagement, the payoff is not only more satisfied and profitable cardholders, but customers who serve as better brand ambassadors, he said.