Retail-style perks can help banks battle fintech wallets

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In order to inspire loyalty among new and existing customers, institutions must enhance their apps in ways that create an even faster, more convenient mobile experience. Digital wallets which enable consumers to make in-store purchases in a contactless fashion—by tapping their smartphones to near-field-communication (NFC)-enabled devices—instead of taking out their wallets to pay with cash or card, are on the rise.

According to Statista, the use of digital wallets to make in-store payments, pay bills, or send and receive money has increased to such an extent that, according to its 2019 survey, 29% of U.S. consumers would like to make all payments with their smartphones, and 38% believe mobile payments are the most effective method of payment.

Statista predicts nearly $190 billion in transactions will be completed in the U.S. through contactless payments in 2020. As the use of contactless and mobile payments increases, banks are under pressure to strengthen the flexibility and convenience of their digital wallets due to competition from Big Tech companies. Apple Wallet and Google Pay are growing in popularity, as users can harness them to easily make in-store payments, pay at restaurants, or pay at other points of sale.

Earlier this year, Facebook launched its Facebook Pay tool to enable users to make secure payments across Facebook, Messenger, Instagram, and WhatsApp systems. Uber also unveiled its Uber Money division, allowing its drivers to take advantage of a digital wallet as well as other financial products and technology.

Banks can remain competitive in a more crowded field by offering attractive rewards through easy-to-navigate, secure microsites. Rewards such as discounts on movie theater tickets, restaurant deals, Broadway show tickets, cruises and other vacation/travel opportunities, or discounts at clothing stores and supermarkets are examples of perks banks can offer through their apps’ microsites. Reward programs can also enable users to choose whether to apply points from mobile transactions toward gifts and gift cards, or redeem them for cash back.

In order to make the rewards for loyalty as seamless to access and implement as possible, banks will continue to improve the design and navigation of their microsites with mobile-friendly features. For example, Chase’s Ultimate Rewards microsite provides users with a dashboard on their mobile screens which breaks down their rewards by earning category, and shows them how much they have earned on recent individual purchases. Chase Ultimate Rewards microsite users can also search, filter, and sort gift cards, and add offers from merchants to their cards through the Chase mobile app.

The American Express rewards microsite recommends offers to customers based on their proximity to merchant locations, thanks to Amex’s partnership with Google. Barclays provides access to its rewards microsite from more than one location on the mobile app, and provides a miles calculator to assist customers in understanding their reward balances and earned rates.

Crucially for increasing app use and loyalty, the Barclays rewards microsite provides a featured display of loyalty bonus miles which also explains how much customers need to spend in order to earn loyalty bonuses. Other reward microsites still require mobile users to redeem rewards through partner sites from airlines and other third-party vendors—but continuing to eliminate the need for third-party partner sites, and enable customers to directly redeem awards within the banking apps themselves will save customers time and foster brand loyalty.

Banking customers are more frequently relying on mobile apps to conduct banking operations; according to 2019 survey data from Jupiter Research, approximately 1.75 billion customers have used their financial mobile apps throughout the current year. Customers prefer the convenience of a mobile banking app, as opposed to the hinderance of frequent bank visits. Mobile banking apps are a crucial tool for engaging and retaining customers in a marketplace that is becoming even more competitive.

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Loyalty and rewards Mobile wallets Retailers American Express Barclays ISO and agent