Oct
1
THE GOOD news for your financial institution is that it’s fairly easy for clients to add your card to a digital wallet.
The bad news is that it’s fairly easy to add everyone else’s card, too. Or, they can bypass your card entirely with store cards paid via store websites. I need hardly point out that every time that happens represents a lost-opportunity cost to banks.
A major contender perhaps falling in-between is Amazon’s credit card. Issued by Chase, it is at once a merchant card and a full-fledged Visa credit card. Cardholders can choose the card for their default payment option for purchases on Amazon.com—or for their default card, period. And many do, for the card packs an incentive: besides the usual one to two percent reward for use at sundry merchant locations, purchases at Amazon and recent Amazon acquisition Whole Foods Market earn three to five percent. That poses quite the threat. Between Amazon and Whole Foods, about the only purchase category for which customers need stray is gasoline. And by shopping online, they consume less of that, too.
Nonbanks galore, and not just merchants, are getting in on the plastic card act. This represents something of a reverse trend: The Motley Fool suggested that plastics may be the future for digital payments. Paypal now issues its own Mastercard credit card, and Square has introduced a Visa debit card they’re calling Cash Card. (That’s an arguably generic term. I’d be curious to see how it would hold up under a trademark challenge.)
To increase use of their own cards, banks have typically relied on increasing the cardholder base, rewards programs, and promotions à la Use your card for a chance to win a trip for two to Hawaii. These remain viable marketing tactics, but they also smell of old school at a time when consumers expect the new and exciting. Moreover, non-banks engage the same tactics.
Fortunately, there are other tactics for rising to the top of the digital wallet.
Play up security. From the onset, banks can discuss security with greater credibility than nonbanks, thanks to a perception that banks with physical facilities are more secure than other issuers. (See my post “The digital branding challenge” here.) Of course, banks had better back their claims by being truly proactive about security, and by finding ways to discuss the matter with clients that are, first, accessible and, second, that assuage rather than worry.
Mind the brand. Here I am talking about a good deal more than graphic identity, important as that is. I’ve written before about delivering a brand in digital banking by use of design, intuitive apps, more than mere functionality, and becoming versus claiming. When your brand is strong, your graphic identity conveys a value perception absent lookalike products. And—let’s be honest—lookalike describes just about every financial service.
User-friendly interface. A by-product of the digital age is the lazy consumer. For example, in 2016, the New York Times suggested that for many a Millennial, breakfast cereal is “… just too much work … Almost 40 percent of the millennials surveyed by Mintel for its 2015 report said cereal was an inconvenient breakfast choice because they had to clean up after eating it.” If rising generations find post-breakfast-cereal-cleanup daunting, do not expect them to bother figuring out a challenging digital banking app. Today, “user-friendly” means “easy to use without having to think very much.”
Make rewards programs simple. In their zeal to differentiate, some banks cook up fancy rewards programs. The problem is that consumers are accustomed to simple spend-X-get-Y programs. Most are not up to the effort required to figure out a new program. Even an arguably superior program, if such exists, must be understandable at a glance.
Collaborate. From BCG.com:
An example of a mutually beneficial collaboration is the one between JPMorgan Chase and PayPal, which enables Chase cardholders to easily add their Chase cards to PayPal accounts, see a digital representation of a Chase card in the PayPal interface, and redeem Chase reward points in the PayPal network.
What Jim Marous said. Marous, co-publisher of The Financial Brand and owner/publisher of the Digital Banking Report detailed twelve ways to get to the top of the digital wallet in his article entitled, appropriately enough, “12 ways to get to the top of the digital wallet.” No, I’m not going to summarize it here. Instead, I highly recommend clicking the preceding link and reading the whole piece.
Digital technology has made banking more accessible to clients. But “more accessible to clients” inevitably means “more fiercely competitive than ever for bankers.” This is no time to relax.