Blog article
See all stories »

Big Data and Payments Drive Loyalty in Business Banking.

So - not the most original title, but I did promise a follow-up to my recent blog post: "Big Data and Payments Drive Loyalty in Consumer Banking"

In the 'consumer edition' of the blog I suggested that banks can reinvigorate their payments brand and influence customer loyalty by integrating incentives and offers to their payments solutions. The premise is that banks are missing out on an opportunity to become more influential in where people shop and what they buy, rather than just how they pay. Offers can be driven by analytics into a combination of historical payments information and big data analysis of demographics, location positioning and peer group analysis. Such a strategy requires more than an offers solution, or a mobile banking app. It requires a platform strategy for building and integrating enterprise grade payment solutions with data analytics, an offers platform, and a host of mobile devices. However, banks have the opportunity to deliver far more than just offers to a retail banking customers. This edition looks at the value banks can take the same payments modernization initiative and drive value (and in turn loyalty) to their business and merchant customers.

When acting almost as a 'Groupon' for behavior-linked offers, banks can also drive a complete new range of services to their business customers - small businesses in particular. Most of the current card-linked offers programs are designed to drive the offers of major retailers and merchants - typically those that may be payment acceptance customers of the bank in question. But what of small business and merchant customers? Business customers need more from their banks - they need solutions that help them operate more efficiently and solutions that help them grow their revenues. How can a bank add such value to the chain of local bakeries it services? By creating new product that helps small businesses compete with mega-retailers. 

A Platform for Commerce
By taking the platform approach - rather than just an offers engine (which is valuable in its own right), the bank can offer business customers a white-labeled incentives and payments service. The bakery in this example can create its own offers and incentives for seasonal items, regular customers, or to attract first time customers from the competition. The bank - through analysis of payments and spending patterns - then acts as the distribution vehicle of those offers through its online and mobile banking channels to the retail customer base. data analysis can also show the business customer how successful the uptake of their offers has been, and help them target new potential customers. In this case the 'platform' not only delivers offers to consumers, it is driving offers created by small businesses on the bank's payments platform service. If I was a small or medium business, I would be thrilled if my bank helped me compete to grow my business in this way! 

Leading banks will integrate this to their merchant acceptance solutions and so use commerce to complete the value chain between their business and consumer lines of business.In fact - I call this Payments Platform as a Service - a transaction platform then allows businesses to build offers, retail customers to 'clip' offers to their phone, and then redeem then at point of sale of the business in question. Merely providing offers to retail banking customers isn't enough to transform payments and grow the bank's bottom line - but using a platform to connect retail customers directly to business customers just might be....



Comments: (3)

A Finextra member
A Finextra member 05 September, 2013, 07:30Be the first to give this comment the thumbs up 0 likes

Colin, I agree, banks could integrated this to their merchant acceptance solutions and, even general banking and so use commerce to complete the value chain between their business and consumer lines of business.

Payments Platform as a Service is achievable but it would take a banking giant to take what I see a a really big leap forward.


Masha Cilliers
Masha Cilliers - iBe TSE - London 12 September, 2013, 15:47Be the first to give this comment the thumbs up 0 likes

Colin, this indeed sounds like a great idea and that which compliment the SME banking services.  And in my experience the banks miss this segment when it comes to innovation while trying to go after the 'big fish' who indeed doesnt need bank's innovation, as it has a capacity to innovate by itself.  But what would it take for the banks to invest in this platform if there are no enterprise customers behind it?

A Finextra member
A Finextra member 13 September, 2013, 04:06Be the first to give this comment the thumbs up 0 likes

Masha, banks do indeed miss out on the SME segment when it comes to
innovation. My experience is that banks providing SME banking
services do so because they have to off-set the cost of doing business
with the "big fish."

To allow for maximum flexibility in business payment data processing and make e-payment processing far more efficient for transacting parties, we create a single, unique transaction on payment origination by introducing a URL (< 16 characters) that is carried in existing payment Lodgement Reference fields (e.g. ISO 11649). The URL’s identifies the payment originator/merchant, links unlimited amounts of rich payment data and signifies a location where the data can be securely exchanged or passed between payment participants, outside of clearing and settlement systems.  

This approach would afford “Payments Platform as a Service” as an overlay solution outside of existing payments clearing and settlement system architectures. Data unique to each transaction could be referenced and captured and used as Colin suggested to complete the value chain between B2C and B2B lines of business.