Sergey Butyrskiy, Head of Payments Consulting at BPC Banking walks us through the modern approach to attracting customers in a card payments ecosystem that seems more innovative than ever
The payments world evolved rapidly ever since credit cards have come into existence. The concept was considered to be cutting-edge, and the idea of buying something first and paying for it later was appealing to everybody.
Banks all over the world are now considering more innovative strategies to create more value for credit card customers. According to an article by Business Insider, the credit card payments are all set to reach USD 1.82 trillion in annual volume by 2024. This growth is recorded mainly due to many challenges customers faced due to the impact of COVID-19, which involved loss of jobs, and closure of commercial activities.
Credit card scheme leaders such as Visa, MasterCard, JCB, and American Express are creating various elements to win customers in a competitive market space. One such initiative is of the joint ecosystem. Many times, numerous small and medium merchants dealing with a financial institution often require business loans. In a joint ecosystem, these merchants often become credit card customers, and financial institutions provide ease by eradicating the process of applying for a business loan.
Gamification, on the other hand, is a modern way to approach customers and experiences in a surprising manner. According to the Financial Brand, this gaming spice is ‘a deliberate effort to make a product or service more ‘sticky’ by using gaming psychology to ingrain desired behaviours.’ It has proved to be a successful method in order to draw the attention of more depositors and help them reach their saving goals.
BBVA, a 21st century Spanish digital-bank is working on bringing the gamification concept for the millennials using their platform. They launched a BBVA game which revolved around educating millennials on making simple banking transactions, paying taxes online, and banking app tutorials, in a modern way. By completing these courses, they were able to earn points and redeem them by deciding to stream movies, download songs or participate in giveaways.
Fintechs have paved a great way in order to let consumers stay glued on to the concept of gamification. Google Pay, the second largest UPI player in the market has considered some serious gamification modules into its app by providing its customers with a scratch and win card after every transaction. The value of each prize differs every time, which keeps the users engaged, compared to a monotonous cash back prize. Applying gaming principles in banking is providing an opportunity for financial institutions and fintechs to go beyond a traditional process and connect with their customers on an emotional level.
Credit card segmentation based on customer groups has played an integral role in helping financial institutions build various strategies, as it provides an analysis of what to sell to whom, along with identifying newer target segments for an existing product. Lending products for specific segments can include businesses, students, and various ethnic communities. This trend has risen keeping in mind a simple mantra, ‘one size does not fit all.’ Credit options for various lenders can be based on their account balance, and buying patterns, which would indicate large, medium, or small credit limits.
Embedded finance, known as the future of the financial services industry, has found a great way into bridging the gap between financial institutions and consumers. The power it has to assess customer habits and provide a customised service for each preference has a potential of making it a market of USD 230 billion in revenue by 2025. Lenders are being able to build APIs and offer embedded financing to their partners. This trend has been a huge success in the automotive dealerships industry. Tesla’s attempt of also offering car insurance during the time of paying for a lease shows how embedded finance can help in cross-selling, re-selling, and customer targeting. It has played a major role in changing the history of relationship between a financial institution and its customers.
The main focus of various trends in the credit card industry is to make customers feel like their credit process as easy as playing a game. To ace in this race, it is crucial for fintechs and financial institutions to partner, which can compliment an issuer’s offerings such as insurance allowance, bad loans recovery, scoring engines, etc. The future looks bright in terms of creating a consumer services ecosystem which could include entertainment, healthcare, social activities, and education, all within the financial services bubble. In this digital era, banks want to keep up with providing something new in order to maintain a customer’s attention span, which tends to rapidly decline. This will only be possible of customers always have a greater experience to look forward to.
About Sergey Butyrskiy
Sergey Butyrskiy, Head of Payments Consulting at BPC Banking Technologies has a 13+ years background in electronic payments with various business development roles including consulting, presales, business development. He has immense experience in payments professional, and helps organisations in designing their payment solutions mainly in the digital payments and financial inclusion space.
Founded 25 years ago, BPC Banking, Payments: Context is what defines the organisation. We deliver innovative and best in class proven solutions which fit today’s consumer lifestyle when banking, shopping or moving in both urban and rural areas, bridging real life to digital. With 300 customers across 90 countries, BPC collaborates with all ecosystem players ranging from tier one banks to neobanks, Payment Service Providers (PSP) to large processors, ecommerce giants to startup merchants, government bodies to local hail riding companies.