From air miles to cash back, introductory rates to travel insurance, rewards are a standard perk card issuers use to entice new customers.

However, the ubiquity of hyper-personalized tech experiences from the likes Netflix and Spotify, means a one size fits all approach to rewards and loyalty in banking is no longer enough.

Banks that can tailor the customer experience in real time to offer differentiated, personal, and compelling offers will stand out from the crowd – retaining customers and acquiring new ones.

Campbell Shaw, SVP FI & Publisher Partnerships at Cardlytics, shares his insights on how banks can boost loyalty with a real time approach to rewards.

In today’s economic climate, retail banks are facing significant challenges. With interest rates high, contributing to the broader increase in the cost of living, there is clear caution around consumer borrowing and spending – including everything from essential goods to bigger ticket items.

Indeed, our data, based on the spending activity of 24 million active accounts of UK bank consumers, found the likes of electricals sales dropped 20% over the Christmas period – indicating a tightening of the purse strings around larger investments when we might typically expect increased spending levels in such areas.

While more recent data from the British Retail Consortium found total UK sales rose by 5.2% year-on-year in February, much of that rise could be put down to high levels of inflation pushing up the value of goods sold, concealing overall reduced sales volumes.  
With this dampened consumer confidence in mind, rewards become even more relevant for high street banks to differentiate themselves from the newer players eating into their market share. With households across the UK tightening their belts, any way banks can ease this pain through relevant offers and rewards is sure to drive customer value and loyalty.

Rewarding credit

Many customers use credit cards to spread out payments, especially for bigger ticket items. Of course, this isn’t anything new, but it’s become especially relevant during this period. Yet for banks, the challenge is to responsibly encourage customers to use their credit cards more often for more day-to-day spending – where they can and where it can help them budget. They’ll need to do more than offer competitive interest rates to do so. And this is where personalized rewards come in.

With a real-time core banking platform that unites banking products from current accounts to mortgages and credit cards, underpinned by purchasing intelligence, banks can build a true-to-life picture of who their customers are and how they live their lives.  
Harnessing such data in real time can not only help drive spending through rewards. It also ensures that customers feel cared for by their bank with the offers that matter to them.

Typically, banking infrastructure is siloed and disconnected. These systems will inadvertently view a mortgage and credit card customer as two different people who share the same name and email address. But by breaking down those barriers with a central platform, banks can see the full view of a customer across the products they’ve purchased, delivering the right rewards at the right moments.

For example, suppose a bank understands when a customer’s mortgage offer gets approved. They can then provide a series of rewards or cashback based on predicted spending in the likes of furniture and home improvement retailers. Alternatively, on a more day-to-day basis, a bank could deliver real-time offers for travel insurance through a push notification after a customer has booked a holiday or flight.

Real-time data means receiving a coffee offer via push notification as you get your morning caffeine hit. That’s already good customer service, but seeing the reward paid into your account in real time takes it to another level. The alternative is buying a coffee and being told after the event that you could have earned cashback – because the bank’s batch reward process only runs daily. This doesn’t deliver for anyone – the customer, bank, or the merchant who wants to engage with both.

Enabling a virtuous circle of rewards

The delivery of more tailored rewards from a customer’s debit or credit card provider will, of course, encourage increased usage, which drives revenue from the bank’s perspective – through transaction fees – and provides more data and intelligence to deliver more and better rewards.

At Cardlytics, we call this “mutual loyalty” a virtuous circle.

While banks are building customer engagement and loyalty through targeted rewards schemes, brands can benefit from placing offers on these channels to identify, map, and target existing and new customers with relevant discounts underpinned by spending data.

Purchase intelligence, working in tandem with a real-time core banking platform, can help banks move from one size fits all rewards and double down on personalization to foster loyal customer relationships.

To learn more about the power of real-time data, delivering hyper-personalized rewards, and migrating to a next-generation core banking platform, get in touch with the 10x team today.

About Cardlytics

Cardlytics is a digital advertising platform that partners with financial institutions to run their banking rewards programs to promote customer loyalty and deepen banking relationships. As a result, Cardlytics has a secure view of where and when consumers are spending their money – these insights help marketers identify, reach, and influence likely buyers at scale.