It might surprise you – we think it’s payment alerts, or rather what their increasing uptake portends. From October 2016 VISA have made it mandatory for US issuers to offer them (with Mastercard due to follow suit this March). There is pressures on banks outside the US to implement them, too – they’ve been a popular part of Apple and Android Pay, and are effective in the fight against fraud. This growing impetus offers significant opportunities for increasing customer engagement that go beyond the alerts themselves.
The reason for this is lies in the implementation route for alerts. They require an additional technological ‘layer’ within the payments process – often a bugbear for major banks, whose legacy systems can mean a slow execution time. Once in place however, it opens doors to additional functionality – direct control over when and where a card can be used, how much can be spent with it, and more.
This is functionality which is usually only provided over the phone by banks, if it is offered at all. But with the infrastructure for alerts in place, banks are well positioned to execute and evolve a system to allow their customers to do all this from their smartphones.
There are some obvious benefits to implementing this, and some not so obvious benefits. A key boon for banks is the increased face time they are able to get with customers who use such a system – ‘customer engagement’ is a major buzzword du jour among senior mobile and innovation teams in retail banking. This goes hand in glove with the equally sought-after ‘banking beyond the branch’ – i.e. offering all or most of the same functionality as a branch via digital, while retaining the benefits to the bank that the branch brings (chiefly, the opportunity to build relationships, build loyalty, and increase revenues by selling additional services).
Another key benefit – and corollary to the above – is in preparing for the incoming PSD2 legislation, which will force banks to allow customers to connect their accounts to third party systems. These new aggregators of money management, budgeting and borrowing could take over as customers’ primary touchpoint. The downsides to this for retail banks are obvious.
Nimble expansion in digital can help mitigate the risk of this, however – and a comprehensive mobile offering for control of credit cards is something of a USP in many markets. Credit cards have evolved in many significant ways over the past decade, but fine-grain control over how they are used is still not common – we believe it’s the next step forward, and it’s why we’ve created a dedicated insights hub on the next generation of the credit cards.
Will implementation of card controls allow for the elusive combination of improved customer convenience and increased bank touchpoints? Implemented correctly, it certainly can. Crucially, customers will use the app because it can offer features not available elsewhere. Generic wallets such as those offered by Apple Pay are popular partly because they are non-denominational, but there is no real possibility of them offering the functionality that banks can: the blocking of certain retailers or merchant categories, the setting of monthly, weekly or daily allowances, and more.
With the pressure now on issuers to begin offering alerts, now is the time to broaden horizons and look beyond, to the controls that will grab customers’ attention and keep it.
Watch our interview on this topic with Jeremy Nicholds, former Head of Mobile at VISA below: