+44 (0)20 7930 4158POPULAR TOOLS
US banks jump on deals bandwagon
1 Image(s)
US banks are entering the deals space to offer customers discounts attached to their financial statements. More than 2,000 American banks have signed up to the service, in partnership with rewards service BillShrink, which will target offers based on customer spending habits, potentially bringing deals to some 7m US consumers.
The service, which will launch this week, will enable retailers to pin highly targeted advertising directly onto customer bank statements, based on whether they have previously spent money at that business. Revenues from redeemed discounts will be split between the partner bank and BillShrink.
"Regardless of the reward program, it is obvious that customers are more likely to engage a certain bank or credit card if they will be rewarded. This engagement can be quite valuable to a bank," writes BillShrink on its blog. "To win back customer loyalty, banks are evolving their programs to better provide offers that appeal to their customers."
The developments highlight a potentially lucrative new revenue stream for financial companies, which have so far struggled to navigate a rapidly shifting payments landscape. AmEx is also venturing into daily deals, partnering with AOL to offer local discounts through the service provider's 'Patch' network of local news websites. AmEx's newly-launched online payments platform, Serve, will power the deals, which will see AOL teaming up with local businesses to offer discounts to readers via e-mail. Commentators speculate that the pair are taking aim at Groupon, which currently dominates the daily deals market.
The partnerships mark a growing willingness on the part of banks to explore more technology-driven methods of retaining customer loyalty, although they are making a late entry into an already-crowded space. While Wells Fargo, JPMorgan and Bank of America attempt to compete with PayPal with a joint online payments venture of their own, the market is already shifting again as mobile payments powered by near field communications (NFC) technology, plus growing consumer interest in real-time, location-based discounts simultaneously attract new players to the payments space. With no one player dominating the arena as yet, mobile operators, card companies, tech firms and startups are all vying to provide new methods of payment.
However, as a raft of new payment services from the likes of Google start launching, PayPal's UK MD, Carl Scheible, predicts that payment companies will eventually win out.
"Risk management and regulation will become very diff for a lot of these startups and other companies whose core business isn't payments," he tells StrategyEye. "Right now too many people in payments for the wrong reasons, and it'll consolidate again and become clear to the consumer."
