Blog article
See all stories »

Shopping Rewards: The Cornerstone of Consumer Engagement for Banks, Card Issuers, and Fintechs

At Money 2020 in October of 2022, I met with 26 banks and other financial institutions. Do you know what ALL of them said? 

Every one of the consumer-facing FIs that I met with said that their strategy for 2023 and beyond was to shift from being a “back office” utility to being a “consumer-centric” function, and the key to all of their plans is “customer engagement.” 

When asked how they plan to go about that, their answers all included deploying products that improve their customers’ financial lives, and they were very interested to hear about the report that Wildfire published about loyalty, engagement, and shopping rewards titled “Online Shopping Rewards Have Gone Mainstream, Offering A Win For Banks, Retailers, And Consumers Alike.” 

For financial institutions with a keen interest in better engaging their customers and attracting new ones, they might be interested in one of our key findings: One quarter of U.S. consumers say they would switch banks for a better shopping rewards program.

Shopping rewards are simple to understand and use – a user simply puts an extension on their browser, and when they go shopping, they are rewarded by their bank or other financial institution with cash back and coupons. 

A few such stand-alone shopping rewards products have been bought recently to form the backbone of a company’s internal loyalty program, namely Wikibuy, which became CapitalOne Shopping, and Honey, which is now part of PayPal. Every other bank, issuer, fintech or other FI that wants to offer a similar program for their customers can deploy a fully branded solution, customized and configured to their specifications, using Wildfire’s white-label shopping rewards platform.

And they should – the report also revealed that 85% of consumers want their banks to offer a cashback rewards program! 

The data tells an interesting story: 90% of consumers agreed that concern about a tightening economy is driving increased interest in shopping rewards. 

It makes sense - when times are good, people don’t mind saving money, but when times are bad, they absolutely seek out opportunities to do so. However, they also want the convenience of seamless integration with their bank of choice: Rather than having shopping rewards siloed in yet another company’s offering, they overwhelmingly preferred to have it be part of their trusted primary financial institution. In fact, 80% said they consider cashback rewards to be an important feature when choosing a new bank.

Shopping Rewards Can Drive Customer Loyalty

We seem to be witnessing a perfect storm of events that are evolving shopping rewards from a nice-to-have offering to a must-have cornerstone product to drive engagement, retention, and revenue. To begin with, as the report makes clear, such products are in high demand from consumers. This is due in part to the evolving familiarity with shopping rewards programs over the years, and is being accelerated by the economic anxiety among consumers facing an uncertain financial future. 

Secondly, the entire financial services industry is in the middle of a paradigm shift from “back office” functions to “consumer-centric” products that help customers stretch their dollars further. 

Lastly, shopping rewards programs have improved since the last round of innovation in the space. Card-linked offers, for instance, simply do not drive meaningful engagement online, and as more and more consumers move to e-commerce, FIs have an opportunity to bring their loyalty programs up to date. 

There are plenty of non-consumer-centric, complicated rewards programs. According to our survey, 47% of respondents said they did participate in some sort of rewards program from their bank, however, 38% of them had never even received any rewards! Of those, 63% indicated some sort of confusion about the programs.

 

Consumers are busy, and they require simplicity, even when the product they are using is literally giving them free money. This is most likely why 79% of consumers said they want their loyalty rewards to be easy – simply applied automatically when they shop – and that is exactly what shopping companions do.

The survey report is a treasure trove of information on consumers behaviors and desires which arms FIs with the knowledge they need to energize their plans to bring rewards programs to their customers. Financial institutions are bringing to market these new loyalty rewards programs at the perfect time when consumers are demanding them, external forces are making them more attractive, and the technology has evolved to a place where the products are equipped with features that go far beyond the first iterations of shopping companions.

 

 

 

 

a member-uploaded image
579

Comments: (0)

Shawn Conahan

Shawn Conahan

Chief Revenue Officer

Wildfire Systems, Inc.

Member since

18 Jan 2022

Location

San Diego, Ca

Blog posts

1

This post is from a series of posts in the group:

Fintech

Fintech discussions and conversations around the development of fintech.


See all

Now hiring