Mastercard’s APAC EVP on the new rules of loyalty in a changing world

The rapid digitization of the past few years has done a lot to effect change in the loyalty habits of consumers, which has been accelerated by the rise in usage of smartphones, increased availability of data and enabling technology such as 4G and 5G, and the emergence of new digital banks and other service providers. With open banking, new digital players and apps are often becoming the primary experience provider for consumers, with their intuitive and completely digital experiences adding a new competitive dimension for traditional banking players to contend with.

Consumers, especially those aged under 35, are becoming more open to having a banking relationship with these companies. Banking and financial services organizations must adapt or risk having their customer relationships and loyalty significantly eroded by these new players.

What does this mean to the hitherto prized marketing instruments – the loyalty programs – of banks?

Consumer’s expectations for loyalty programs were changing even before the pandemic, and this has only been accelerated as Covid-19 forced consumers to become more digitally savvy, more discerning about how they are being engaged and more demanding of the service providers they use, including banks. To compete effectively, banks need to deliver a significant improvement in their digital experience and be ready with a seamless digital-first delivery model.

Banks need to create loyalty programs that are relevant to their consumers’ evolving needs, and supported by hyper-personalized, relevant and flexible rewards and offers.

What, then, would the success metrics of a new-age banking marketing program comprise?

As consumer demand and competition increases, how banks secure and retain the loyalty of the new-age consumer has become more complex. Transparency in how the consumer’s data is used to inform a loyalty program or augment the consumer experience is going to be a very critical factor in this journey.

The success will depend on several factors: the ability to deliver a seamless digital customer experience; competitive product value and relevant offers; highly contextualized rewards and relationship recognition; and building of deep trust with the consumer, especially with regards to their data.

How would data and personalization be critical as banks work on building on their customer experience?

There would be a shift in the traditional ways of consumer engagement, which have been very transactional in banks. Going forward there would be a much higher degree of personalization throughout the entire customer lifecycle, from acquisition and onboarding to retention and usage stimulation. It would also drive greater affinity between the consumer and the brand, leading to repeat business and a greater share of existing consumers’ business, thereby increasing both usage and spend.

Another aspect to consider on the back of the recent consumer shift to digital-first behavior is plugging the knowledge gaps around products, options and strategies. Banks can tap on this power as they build out their digital strategies to ensure they are connecting with consumers across ages and backgrounds.

Against this emerging backdrop, how has Mastercard pivoted its strategy to remain relevant?

As the world’s largest loyalty solutions provider, we have expanded our solution sets, ensuring we can cater for all segments. We have also augmented our loyalty consulting expertise to aid our clients in both developing loyalty strategies, as well as in driving the execution of their engagement programs via marketing services solution sets.

As a part of investment in merchant loyalty we acquired SessionM, one of the world’s leading merchant loyalty firms, in 2019. This has enabled us to offer our loyalty expertise and capabilities beyond banking, and help merchants leverage purchasing insights to build more relevant and compelling loyalty programs.

We are enhancing our data analytics and marketing ROI tools to help customers measure marketing and loyalty program effectiveness more precisely. In addition, we are also augmenting our personalization and contextual marketing capabilities with ethical artificial intelligence (AI) and machine learning.

What would you call out as some of the most defining trends of the APAC market?

The two most prevalent loyalty-related trends across the APAC region would include the expansion of personalization (enabled by data, insights and technology) and the reinvention of travel-related programs ahead of the much-anticipated travel recovery.

Personalization: With Covid-19 forcing consumers to go digital just at the time when industry forces and technology trends were intersecting, and now the promise of web3 as a further force multiplier, there is a huge focus on personalization and contextualized engagement in loyalty right now. And with Asian consumers demanding mobile-led engagement, this is a hugely exciting space for the industry.

Readying for travel recovery: We are also anticipating a return to travel rewards as borders slowly start to open and international travel picks up. While the recovery path will be somewhat uneven as we face new variant challenges and countries implement variable approaches to mitigate them, it is also clear from other parts of the world that the underlying desire and demand for (future) travel is strong. Therefore, travel rewards will come back into focus, but with new benefits and features designed to make the entire travel experience easier and safer.

In addition, buy now pay later (BNPL) continues to boom in Australia and New Zealand, and is now rapidly expanding across South East Asia and beyond. As competition intensifies from other fintech, technology platforms and banks, there will logically be a need for loyalty strategies for BNPL providers to help secure and cultivate their hard-won client relationships.

Despite these nuances, what remains important across the board is the need for rewards programs to be developed in a digital-first manner, seamlessly delivering flexibility and choice, and adding value via engagement, offers, loyalty points and rewards in a timely and personalized manner.