TBT: A financial institution could learn a thing or two from a Harley rider

Here’s a thought for moving forward: Not just frequency, but loyalty

ONE FINE DAY amid the airline deregulation of the early 1980s, a visionary at American Airlines reasoned that it would cost nothing—and might just earn goodwill—to give unsold seats to frequent customers. In no time, the idea bled into other airlines and, later, into other verticals, from sandwich shops to financial institutions.

Not that the idea was new. Over a century ago, retailer L.H. Parke created Parke’s Blue Point Trading Stamps. Customers earned stamps by paying with cash and were able to use them to buy merchandise. Parke’s idea was a hit. Soon grocery stores, gas stations, and other merchants across the United States were offering the likes of S&H Green Stamps, Top Value Stamps, Gold Bond Stamps, Plaid Stamps, Blue Chip Stamps, and more.

The trading stamp heyday has passed, but points-toward-freebies to incentivize frequency and spend is alive and well. Such programs are ubiquitous to the point that the term “rewards program” has risen from industry jargon to common usage.

If your rewards program increases frequency and spend, congratulations are in order, for not all do. It doesn’t follow, however, that loyalty necessarily rises in sync. In fact, loyalty may remain flat. As direct response marketing guru Steve Cuno recently blogged, “If you think a bribed customer is a loyal customer, just wait until a competitor comes along and offers a richer bribe.”

Want to see real loyalty? Try selling a Kawasaki to a Harley rider, a Yamaha piano to a Steinway pianist, a PC to a Mac user, Wrangler jeans to a Levis wearer, Pepsi to a Coke enthusiast, or a Mets T-shirt to a Yankees fan. If you try, you may want to wear body armor.

Some of the above-named products have rewards programs and some do not, but every one of them has loyal customers. That’s “loyal” not so much as in “frequency and spend” and more as in “wild horses couldn’t drag ’em away.”

Loyalty of that variety is not the sort of thing you buy or bribe your way into. It’s something customers bestow. To date there is no sure formula for making them bestow it. Come up with one and you’ll be rich.

But here’s a clue. Recall any time that you have heard someone rave about a favorite product or place of business. Chances are that behind the rave were one or more anecdotes, not about technology and systems, but about treatment beyond the norm. Perhaps it was a problem solved, a name remembered, a courtesy extended, a generous policy, extra time taken, or a human approach.

In the financial services industry, we hear and preach ad nauseam that ours is a relationship business, and that, as interactions and transactions continue their march to digital platforms, strong relationships can save us from morphing into lookalikes.

Therein lies the opportunity. We’re dealing with people’s money! Few business transactions, legal ones, anyway, are more intimate. If any industry is in a position to perform in a way that deserves loyalty, it’s the financial services industry.

I have often blogged and spoken about the need build into functional systems a compelling customer experience. High tech shouldn’t mean detached.

Looking for a New Years Resolution? Consider that with no shortage of ordinary customer treatment out there, it doesn’t take much to be extraordinary. Besides frequency and spend, why not go for earning true loyalty?

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How the pandemic is changing, or accelerating change in, the payments and other industries

In the category of iconic TV shows, The Twilight Zone is right up there with Star Trek and The Simpsons. Just about every generation gets Twilight Zone references. To this day, almost no one reacts with bafflement when comedians and satirists do impressions of the show’s late host, Rod Serling.

So I figure I can safely invoke the show now: It wouldn’t have been difficult to imagine any aspect of 2020 as a Twilight Zone episode. Rampant infections, widespread death, losses of various notables, economic upheaval, devastating storms, a mercifully fizzled murder hornets threat, or the image of people distancing and wearing masks—any one of these could easily have served. You can just hear Serling’s crisp enunciation as he opens with, “Imagine a world where people do not dare show their faces …”

In the payments industry in particular, the pandemic has certainly effected change. I have already noted the growth of pandemic-related fraud … an upsurge in onboarding … the possibility of shopping from home remaining a standard long after the pandemic has passed … a toll on the movie industry and on ticket payment appsa rise in telecommuting that may or may not last … and the possible speeding of physical bank obsolescence.

Meanwhile, technologies that were most likely already underway are debuting to cheers. Take Amazon, for instance, which “… has unveiled technology that lets shoppers at physical stores pay for their purchases by scanning the palm of their hands,” reports PYMNTS.com. The article continues:

Initially, the system will be used at select Amazon Go stores … However, Amazon plans to extend the rollout and also wants to sell to third parties, arguing it could be used for everyday activities like paying at a store, presenting a loyalty card, entering a location like a stadium, or badging into work.

While many fast food restaurants adapted their drive-thrus to the pandemic with gloved, mask-wearing help using a tray to hand over bagged food, Burger King recently upped the game with the announcement of its “restaurant of tomorrow.” According to HYPEBEAST:

… the new Burger King branch will feature three lanes for “Pick Up, “Park & Order” and “Drive-Thru”—one lane dedicated for food delivery drivers. The store will operate with a solar charging system and seating arrangements will be placed on the second floor for dine-in. Drive-thru customers will be given their orders via a conveyor belt at a designated pickup spot in the parking lot; curbside pickup customers can park their vehicles under a solar power canopy and place their orders through QR codes, and customers ordering takeout without vehicles will be served via a walkup window.

But how do you keep up if yours isn’t a fast food restaurant? In Portland, Oregon, Shine Distillery & Grill owner Jon Potee’s solution was to create the world’s first “drag thru” restaurant. Now, every night, cars line up around the block with customers eager to part with cash and enjoy a drag show while the chef prepares meals to order. The Oregonian describes the show this way:

Drag performer Bolivia Carmichaels cued the music and began lip syncing Abba’s “Dancing Queen” as she snaked, cabaret style, among the small cars already in line for takeout. Nearby, a neighbor set off a mass of bubbles that floated through the intersection, adding unexpected sparkle where, given what was underway, none was needed.

Restaurant delivery services like Grubhub and Doordash, though already up and running, certainly grew with the pandemic. Not that it’s a happy marriage from restaurateurs’ viewpoints. According to PYMNTS.com,

Some eateries allege that the apps’ commission fees—which can be as high as 40 percent—are eating into their margins, but they cannot abandon these apps lest they risk losing the customers that use them, leaving eateries in a

For a while, dining-in was staging a limited comeback with masked servers tending to distanced tables. But recent infection surges have caused many states to order a new hiatus. In the midst, a new initialism has emerged: QSR, for “Quick Service Restaurant.” The name is self-explanatory for an industry gearing itself for fast turnaround and delivery.

Meanwhile, savings appear to be up. To cite another PYMNTS.com post:

During the pandemic, individuals have been playing it safe financially. In June … Bank of America had seen $2 trillion in deposits, a record number, since the pandemic hit, as people hedged their bets against the tumultuous economy and potential job losses. That included an April number of $865 billion in deposits—more than usually is deposited in an entire year, although that happened as the federal government doled out $1,200 personal checks.

With one or more viable—we can only hope—vaccines on the horizon, life may—may—return to pre-pandemic normal by late 2121. But will it? Perhaps home delivery will reign supreme. Perhaps more people will continue saving. (Ok, that one is a long shot.) No matter what, I am counting on the payments industry to continue its growth.

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TBT: Last year’s $7.4 billion Black Friday


If you live in the United States, you may be aware that today is a national holiday known as Thanksgiving. Its purpose is exactly what it sounds like it would be: setting aside time to feel gratitude for … well, for whatever. In the U.S., Thanksgiving falls on the fourth Thursday of November. The next day, “Black Friday,” has traditionally been the biggest retail sales day of the year. But so-called “Cyber Monday” may be turning Black Friday on its head, as this week’s TBT, originally posted last year, suggests. This year, Cyber Monday may be even bigger due the pandemic.


This just in from Associated Press

This year’s Black Friday was the biggest ever for online sales, as fewer people hit the stores and shoppers rang up $7.4 billion in transactions from their phones, computers and tablets. That’s just behind the $7.9 billion haul of last year’s Cyber Monday, which holds the one-day record for online sales, according to Adobe Analytics … Much of the shopping is happening on people’s phones, which accounted for 39% of all online sales Friday and 61% of online traffic. Shoppers have been looking for “Frozen 2” toys in particular. Other top purchases included sports video games and Apple laptops. 

Will Black Friday out-cyber Cyber Monday? 

I had set out to write about the origin of the term Cyber Monday—but the truth is there’s no outdoing how Matt Swider and Mark Knapp put it in techradar.com:

As a term, “Cyber Monday” was coined by Ellen Davis and Scott Silverman of the US National Retail Federation and Shop.org, in a deliberate move to promote online shopping back in 2005 when the Internet was made of wood and powered by steam. 

Cyber Monday is, of course, a play on Black Friday, which needs no introduction. The latter follows on the heels of Thanksgiving, which in the United States falls officially on the fourth Thursday of November

For brick-and-mortar retailers, Black Friday marks the biggest shopping day of the year. It is a day of self-punishment during which crowds descend upon stores and malls while complaining about crowds descending upon stores and malls.

I probably don’t need to tell you how Black Friday got its name. You probably know that, as the official start of the holiday shopping season for millions of Americans, it is responsible for nudging many a retailer “into the black.” 

As origin stories go, that one for Black Friday makes so much sense, it’s a shame it isn’t true. According to Business Insider, the first use of Black Friday referred to a severe stock market crash:

The term “Black Friday” was first used on Sept. 24, 1869, when two investors, Jay Gould and Jim Fisk, drove up the price of gold and caused a crash that day. The stock market dropped 20% and foreign trade stopped. Farmers suffered a 50% dip in wheat and corn harvest value. In the 1950s, Philadelphia police used the “Black Friday” term to refer to the day between Thanksgiving and the Army-Navy game. Huge crowds of shoppers and tourists went to the city that Friday, and cops had to work long hours to cover the crowds and traffic.

For a while, retailers pushed to change “Black” to “Big.” It never took hold.

According to Adobe Analytics as reported by Wikipedia, in 2006, one year after Swider and Knapp coined the term Cyber Monday, gross sales on that day came to $610 million. Last year, Cyber Monday topped “a record $7.9 billion of online spending which is a 19.3% increase from a year ago.”

To me, the only wonder is that Cyber Monday isn’t even bigger. It is, after all, the ultimate crowd-avoidance opportunity. At the same time, think of the gasoline you won’t burn, traffic accidents you won’t risk, register lines you won’t endure, picked-clean retail shelves you won’t face, the ache that won’t be splitting your head, and sore feet you won’t have to soak when you finally return home, assuming you have time for foot-soaking when you return home.

But then, not every online holiday purchase must be made on precisely that day. The “rush” has already begun, for some as early as late August. And as CNET put it, “there are certainly a zillion Black Friday deals available right now.” 

And it’s not as if online shoppers will go into hibernation at sunset tonight. Digital Trends noted, “As with most buying holidays … many of the major sales are probably going to go live even earlier than that and bleed all the way through Cyber Week.” It continues:

You can be sure Cyber Monday will bring great deals on computers, TVs, smart home devices, games and gaming machines, and other tech products. For many, Black Friday is the time to shop for everything, but Cyber Monday is the day to focus on electronics … we expect to see loads of head-shaking deals on 4K HDR TVs, especially for 55-inch to 65-inch models, as well as 70-inch TVs. There will also be tempting deals on soundbars, Nintendo Switches, Amazon Echo, Google Nest, and other smart home devices. Laptops, tablets, and noise-canceling headphones will be highly sought-after and of course, smartwatches including Apple Watches and Samsung wearables. Apple deals for iPhones, iPads, AirPods, and other entertainment options are sure to be on everyone’s list. You can also bet there will be plenty of deals on Instant Pots, coffee makers, and robot vacuums.

To more fully appreciate the mammoth event that Cyber Monday has become, you need only google “Cyber Monday deals 2019.” In fact, permit me to spare you from having to key in all of that: just click here.

As payment options multiply, merge, and grow in capability, you can bet Cyber Monday will only continue to wax bigger and bigger. As one working behind the scenes in the digital payments industry, I hope shoppers will pause to thank us for making possible this respite from the stresses of in-store shopping. But the ironic reality is that the better we all do our jobs—that is, the more seamless and effortless we make digital payment processes—the less shoppers will even know we’re here.

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They’re baaaaack …

Credit cards are so last-millennium. That is, they were. They’re enjoying a resurgence.

Perhaps you recall, about a year and a half ago, when tech leader Apple executed a seemingly giant, antithetical, technological backward leap with the introduction of its own plastic credit card.*

But why not? Google had already introduced—then withdrew—and now plans to reintroduce—its own debit card. Moreover, reports Finextra, “The Google Pay app has been given a makeover, growing from a simple payments tool to a full-blown financial management service and, from early next year, a gateway to a full bank account.”

Not to be outdone, Venmo, too, has announced a credit card. Venmo promises its card will deliver “a different user experience.” (Ironically, every card promises a different experience—like all the others.) A recent PYMNTS.com article cites Venmo Senior VP Darrell Esch:

The Venmo card will give cash back to customers based on where they actually spend money—categories that can change month to month. “We’re effectively gaming it on the customer’s behalf,” Esch said. “They’ll get the maximum reward for their maximum spend category in any given cycle. It changes with their behavior from cycle to cycle.”

Yet Venmo is arguably late to the party. PayPal introduced its own credit card three years ago. Square launched a debit card at the beginning of 2019. And there is no end to co-branded cards. There’s one for every interest, whether you wish to accrue airline miles, points toward purchases, or support your favorite charity.

Cards go full circle

If I had to summarize the history of credit cards in a single sentence, I might come up with this: They came, it looked like they were fading, and now they’re coming back stronger.

Early charge cards were made from cardboard or metal. I used the word charge on purpose. These were not true credit cards, for they required customers to pay off their balance each month. By the mid 20th century, it seemed as if every substantial business issued its own charge card. The idea wasn’t for issuing merchants to generate interest-generating balances but to create loyalty. The thinking was that customers would be more likely to return to the issuing department store or gas station.

We can thank a forgotten wallet for the first charge card not confined to a single merchant or chain. Chagrined at having dined out only to realize his wallet was still at home, businessperson Frank McNamara introduced the Diner’s Card in 1950. It was a “travel card,” for use within the hospitality industry. American Express introduced its own travel card in 1958.

In time, cardboard and metal charge cards gave way to plastic credit cards. Proprietary cards continued, but “credit card” soon largely referred to two or three major players that had attained near-universal acceptance. By “two or three major players,” I refer to Bank of America with its BankAmericard, later rechristened Visa, and, on its heels, Interbank’s Master Charge, later rechristened MasterCard. These were true credit cards, for they allowed cardholders to carry balances and pay interest. Their use wasn’t limited to a single store, chain, or industry, and it wasn’t long before they were all but universally accepted worldwide. In the 1970s, a store that didn’t accept Visa or Mastercard wasn’t unusual. Within 10 years, it was unthinkable.

Although proprietary cards and credit departments continued, Visa, Mastercard, the later expanded American Express Card came to dominate. In 1985, the Sears Financial Network introduced Discover Card, a would-be threat to Visa and Mastercard. It’s still around, but it never attained equal footing.

For a while in the early 21st-century, it looked as if the rise of digital banking and RFID technology was going to render the “card” in “credit card” quaint if not obsolete. Not so fast. Today, credit cards—physical ones with near-universal acceptance—are coming back in a big way.

And they’re coming from multiple players. Or are they? Mastercard powers PayPal’s, Square’s, and Apple’s cards, and Visa powers Venmo’s card.

Either way, cards yield a wealth of data. Card Expert℠, a product of my employer, Fiserv, provides a great example. According to a Fiserv press release, it …

… aggregates key data and delivers actionable insights in easy-to-use, interactive dashboards, providing financial institutions with the information they need to make critical business decisions about the performance and profitability of their card portfolio … Organizations without a data analyst on staff will appreciate the robust business intelligence capabilities of Card Expert … [it] allows users to type in portfolio questions using natural language to launch powerful custom-data queries … proactively monitors critical key metrics and sends real-time, data-driven alerts; [and provides] instant intelligence on portfolio metrics that are exceeding or underperforming.

The market still seems to appreciate a tangible versus a virtual card, along with the convenience of whipping out a card as opposed to fiddling with an app on a portable device, no matter how convenient.

Cards, it seems, have gone full circle more than once and in more than one way. Chances are they will never disappear.


* Meanwhile, Loup Ventures avers that “Apple Pay is fast becoming a must-have payment option for retailers and banks.”

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TBT: Banking on Daylight Savings Time

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If you live in a part of the U.S. that springs forward and falls back, which is most of the U.S., your body may finally have adjusted to having fallen back 20 days ago. Today’s TBT looks at the effects of biannual time shifts beyond sleep issues. Originally posted on November 11, 2019.


Daylight Savings Time wreaks havoc on everyone, but it brings particular challenges to the banking industry.

There’s a reason we call it cuckoo.

I hope you have recovered from this year’s wrapping up of the shock to your system known as Daylight Savings Time.

Seriously. David Gorsky, MD, an oncologist and contributor to the Science Based Medicine blog, did a deep dive into the health effects of DST, resurfacing with a well-documented, not-pretty picture. Here’s what science has been able to document during the few weeks it takes our bodies to adjust to getting up an hour earlier: a measurable increase in traffic-related deaths and pedestrian fatalities (the incidence declines with the return to Standard Time); increased risk of heart attack and stroke; an increase in suicide among men (this also occurs with the switch back to Standard Time); increased human error; and an increase in wasted time on the job.

(And pity the poor clock shop proprietor. Bob Capone, owner of Hands of Time in Savage Hills, Maryland, has the privilege of manually resetting an inventory of some 400 clocks twice per year.)

To be fair, Gorsky points out, DST is also associated with increased physical activity among children and lower robbery rates, both easily attributable to increased daylight hours. But he may be mistaken in allowing that DST may increase retail sales, a belief that helped drive the United States Department of Energy’s 2007 decision to push the cutoff date from October to November. If credit card purchases are an indicator, a JPMorgan Chase study suggests that the increase is illusory. The study tracked credit card purchases in Los Angeles, where DST is observed, and, as control, in Phoenix, where it is not. The study found: 

… a 0.9 percent increase in daily card spending per capita in Los Angeles at the beginning of DST and a reduction in daily card spending per capita of 3.5 percent at the end of DST … The magnitude of the spending reductions outweighs increased spending at the beginning of DST.

Ironically enough, the one thing DST doesn’t do is what it was meant to do, that is, cut energy consumption. Depending on whose measure you accept, DST cuts energy use somewhere between 0.03 percent and not at all, or actually increases it.

In financial markets, it appears that moving in and out of DST correlates with riskier investment activity. The University of Glasgow’s Antonios Siganos found that:

… when a merger is announced over a weekend or on a Monday following daylight saving time, the average stock return went up by around 2.50% more in relation to announcements that took place on other days—a statistically significant increase in profits for the target firms. 

By way of explanation, Siganos proffers:

With plenty of evidence that investors experience relatively stronger mood swings and higher risk-taking behaviour when their circadian rhythm is disturbed, it seems as though daylight saving time causes investors to push the stock prices of target firms to more extreme values. 

It goes without saying that people working in financial services industries are as subject as anyone else to mood, safety, and judgment swings due to time shifts. This can certainly increase human error during acclimatization. Over and above, the banking industry has its technical DST challenges, as this 2007 warning from the FDIC makes clear: 

The impact of the DST change may not cause system failures; however, without remediation and preparation, financial institutions could experience automated logging errors, system monitoring difficulties, degraded system performance, or disruption of some services. In addition, malfunctioning systems could result in compliance errors (e.g., incorrect ATM disclosures) and malfunctioning security systems. Examples of other systems that may be affected include those controlling heating, air conditioning, lights, alarms, telephone systems, PDAs (personal digital assistants) and cash vault doors.

An industry with (arguably obsolescent) standards like “close of business” and “working days” already has its hands full with time zones. Regional, national, and international banks need to be mindful that a closed business day in New York will remain in full swing for another five hours in Hawaii. Switching between Standard and Daylight Savings complicates matters further, and locales within the U.S. that opt out of DST, such as Indiana, Hawaii, and certain U.S. territories, complicate them even more. And then there are states like Arizona, where most of the state has opted out of DST, but 27,000 square miles of it—namely, the Navajo Nation—have opted in.

In 1784, Benjamin Franklin wrote that Parisians could conserve candle wax by getting up an hour earlier. But Franklin was joking. He would have been surprised when, a century and a half later, New Zealand entomologist George Vernon Hudson proposed DST in earnest. Germany implemented DST in 1916. The United States followed in 1918 with the passage of the Standard Time Act, better known as the Calder Act. 

Not exactly pulling punches, the Financial Post called Daylight Saving Time “dumb, dangerous and costly to companies.” They may have been on to something.

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