Nikhil Khandelwal, Vice President of Growth, Pulse iD
Can you name an industry that is worth $ 200 billion and yet remains partially untapped?
Well, the after-effects of the pandemic have shaken the world on the whole, but it’s the financial sector that has suffered a major drawback. Call it the dire urge to compete or stay in the market. As a result, financial institutions worldwide are launching innovative products and services to capture and generate new revenue streams for themselves.
What’s the billion-dollar untapped Industry?
When coming to the customer’s point of view, what could retain them helps them make their lives easier. The payment transformation has a strong capability to improve the liquidity and increase the revenue capture of the FI’s.
Coming back to the question that has been raising your anxiety since the first glance, it’s the next-gen loyalty program. The evolving technology is advantageous for digital-savvy institutions that have accepted Fintech. Yet, at the same time, the industry analysts still claim that some $100 billion worth of loyalty points go unused every year since several Financial Institutions are still resisting innovation.
Therefore it shouldn’t be surprising that about 44 million people moved to a new primary Financial Institution for themselves single-handedly in 2020.
What calls in for a high-end Gen-Z Turnover Rate?
The reason for the great switch among Gen Z remains the same; Lack of Convenience, High and Intolerable Friction, and Negligible Customer Rewards. While we still sit and blame the decentralized exchanges (DEX) for capturing a considerable share as digital currency media, loyalty points as an alternate digital currency are equally pacing up.
When banks integrate with simple API (Application programming interface), they can mend a bridge between their customers and selected retailers to monetize the loyalty reward digital currency across their merchant network. The loyalty dynamic converts the points to currency during the online checkout process within the bank’s network of designated merchant partners.
Why is Loyalty Programs Game a big step towards a Digi Savvy Future?
#1 Today, millennials and Gen Z need creative ways to engage with the institution’s financial services. The loyalty network can attract young depositors looking for a new and revamped Financial Institution. The innovative technique is a key theme to attract the new and retain the existing ones.
#2 The wider future aims to recognize loyalty points as a payment mode equal to debit or credit card, irrespective of the program. Currently, API integrations allow customers to pay with points at online e-commerce sites to help them enhance their payment experience.
#3 The loyalty points can also help to pay off bills or contribute to a favorite charity. The flexible usage of the points is also useful in promoting the local businesses widely affected by the pandemic.
#4 A carefully crafted cyber loyalty framework can personalize the consumer’s whole purchasing experience and thus boost the expanded options to create a meaningful retail experience for the ultimate user.
Nikhil Khandelwal is the Vice President of Growth at Pulse iD
The views expressed are those of the writer and do not necessarily reflect those of Bank Negara Malaysia, the organiser of MyFintech Week 2022.