Customers are getting more and more used to the rewards of loyalty programmes, and many are beginning to question why banks – who know more about them than any
other commercial entity – are not using this information to serve them better.
Anna Milne speaks to CGI’s Kevin Poe about its latest research into the issue

Banks are failing to realise the opportunity they could be exploiting in the realm of customer loyalty programmes and credit cards are missing the market completely. Such are the findings made by CGI, a Canada-based global IT services provider, into what customers have come to expect, and what they want, from their bank.

Kevin Poe, retail banking global lead at CGI, says the key stand out from the survey goes against much of the fintech rhetoric in that customers ultimately have sufficient faith in their banks to be able to meet their expectations.

On a consistent level across the six geographies surveyed, there was dissatisfaction with banks providing value. It seems there is a finite window of opportunity for banks to
respond and deliver. Mobile financial services providers are not delivering on this front
either, according to the study, and are also losing out on revenue growth.

REWARDS

Customers are used to getting rewards – from supermarkets to airlines and coffee shops, there are loyalty points systems galore. It is not uncommon to have 10 different plastic card accounts, all amassing loyalty points.

Poe says: “What we have learned is that customers are wondering why they can only
get these loyalty reward systems across certain parts of their spending.

“Could a bank not help them get more across all of their spending, irrespective of
where it is spent? As a consumer, spend is spend; however, the banks categorise spending rigidly.”

There is widespread agreement that banks are not yet ready to move quickly into this
space. Some forerunners have web-enabled existing services rather than deploying omnichannel services.

“Some Swedish banks put out new services based on consumer feedback every three
months. That requires a different development cycle to a normal bank’s IT department. It also requires a different type of architecture, as well as additional underlying security, and testing across multiple channels.”

Digital consumerism in banking is only just starting. Some banks think they have to
go through multiple strategy testing before deployment.

“Banks should be extremely cautious about going through that strategy planning deployment process, because actually what they need to do is get out there and try it and see what happens. There are enough apps and widgets in the new cross-channel portal capability, so they can deploy quite quickly.

It’s the internal processes that are slowing things down together with whether they’ve got sufficient insight on their customer base.”

RETAIL PARTNERS

Banks are already partnering with retailers, says Poe; however there is more opportunity to be exploited – reward wallets with participating retailers can interchange and potentially add to that.

“Monitise is very quickly getting into the e-commerce space and trying to facilitate
those networks,” notes Poe.

“What I don’t see is Monitise and the banks teaming up on that e-commerce platform –
they’re using it just as a technology platform. Also, I don’t see credit cards teaming up with the banks to do it. The credit cards seem to have missed this market completely.”

What rewards are customers expecting, and do they have any concerns? From the survey, it is clear that consumers recognise that the banks know more about them than any other retailer, and are confused as to why banks are not customising and offering bespoke services and products in way that a retailer would, privy to that amount of information.

“There is definitely a limit to which a consumer is comfortable about using that info, and there are security issues about banks looking after that info,” notes Poe.

According to Poe, the most important customer-facing concept “across every demographic in every country” among 1,670 consumers surveyed globally was protection from ID theft, data theft and fraud, and that 90% of those consumers said they expected banks to address it within the next two years.

“It’s a real opportunity for the banks to either win or disappoint,” Poe adds.

So, are new banks at an advantage? In terms of speed, Poe says they are at a significant
advantage. Something like 26 new licences have been applied for in the UK since 2013.

“Some are using other banks as a back office so they can focus on service innovation. What they don’t have is call centres and branches, which from the survey we can see very clearly are very important. Banks are trying to meet this challenge by setting up new brands under a similar or separate brand.”

A ‘new bank alongside old bank’ model makes things quicker and easier, and the new
bank ‘arm’ can be used as a test case without jeopardising the historical business, so they can switch it. The upshot is that customers may switch to a brand which is, in fact, the same bank.

Face-to-face service is desirable, but complementary. People want to start transactions with their bank at any time of the day or night, and that tends to be using a digital device, the survey showed.

“At some point they’ll want to continue a transaction on another channel,” says Poe.

“Respondents expressed dissatisfaction that when they walked into a branch they weren’t as well known as when they phoned up or went online. Nobody comes up and says hello in the branch.”

GENERATIONAL DIVIDE?

Originally, certainly, the technology was all built towards the younger generation, but Poe believes things have changed. “What’s come out of this research is that all generations are buying stuff online,” he explains.

“In the retail sector, this is consistent across all age groups – except for very aged people
who still like social interaction,” adds Poe.

“The way people want to access a digital brand is quite consistent today.”

So, what of the future for rewards? “On banks’ own products, raising loyalty for
additional products and high credit will significantly increase,” predicts Poe.

Who else is missing an opportunity?

Banks are not the only organisations that are missing a trick. Mobile financial service MFS) providers are also failing to realise the potential of loyalty programmes in driving growth. Research conducted early 2017 by customer experience solutions company Amdocs, and analyst and consultancy firm Ovum showed a “significant gap between what customers want and what they are offered”.

This was found to be especially true for unbanked respondents, 80% of whom were not enrolled in any loyalty programme. Usually, the first thing on an MFS provider’s agenda is to mop up the overspill of banks, or indeed provide financial services in underbanked regions.

The study surveyed 1,800 consumers and 42 service providers across nine countries in emerging and mature markets including the US, Singapore, Russia, Brazil, Indonesia, Mexico, the Philippines, Bangladesh and Vietnam.

The consumers and the MFS providers were surveyed independently of each other, and this revealed a disconnect between the loyalty features consumers desire most, and support for these features in MFS loyalty platforms. This was most pronounced with the ability to integrate multiple loyalty programmes within a single mobile wallet, social features and gamification.

Moreover, many MFS providers underestimate the positive impact they can have on MFS usage, with the majority believing customer retention is the major benefit – it is,
but it is only one of many. More banks than mobile operators – 38% and 28% respectively – have already linked payment cards to loyalty programmes, according to the survey; similarly, with regard to future plans to link the two, banks were more committed than operators.

Most respondents were keen on being able to manage different loyalty cards from within a single wallet, with 61% stating this as ‘very important’, and 31% as ‘important’. This was higher among banked users, with ‘very important’ at 61%, compared to unbanked users at 51%.

The ability to use reward points across programmes from different service providers also scored highly in terms of desirable factors, with 49% stating this as ‘very important’
and 43% as ‘important’.