How Advanced Tech Helps Financial Brands Maximize Program Potential

In an age where new fintechs and challenger banks are reshaping the traditional banking landscape with the promise of more flexibility, streamlined customer experiences, and technology-forward interactions, “dissatisfied” customers and cardholders are on the rise.

This is evidenced by the fact that nearly half of consumers hold financial accounts across multiple institutions and are ready to switch banks entirely if it means better service, better utility and/or better value.

At this point, the erosion of loyalty is one of the major issues impacting the sector, and it means that program sponsors must rethink and reinvest in their customer engagement strategies to deliver personalized and value-driven experiences that reflect what consumers are looking for from their providers.

• While bonuses and incentives have long been central to financial institutions’ loyalty strategies, baseline rewards are no longer enough to meet cardholders’ changing needs.
• New regulations on credit card fees squeezing revenues, banks and issuers must focus on increasing the value and expanding the scope of their rewards programs.
• These investments are essential for boosting spending volume and compensating for the shortfall.

Catering to cardholders’ individual earning and redemption preferences, expanding rewards to include both everyday redemption opportunities, such as tours, live events, and dining, alongside big-ticket items like travel rewards, and streamlining the rewards experience across channels are therefore essential to the growth of a financial institution’s loyalty program.

Yet many programs are unable to offer a more robust rewards portfolio; Why? Because a good percentage still rely on legacy infrastructure and outdated rewards frameworks that block them from offering their members dynamic, personalized, and relevant rewards.

Below we explore how loyalty technology can address this challenge, improve the value proposition of financial institution programs, and ensure that they meet the evolving demands of today’s banking customers.

Personalization: A Cornerstone for Customer Retention

Personalization has emerged as both a differentiator and a value driver for credit card loyalty programs, particularly for younger generations of cardholders. According to our annual analysis of major financial rewards programs, the  State of Loyalty: 2024 Credit Card Rewards Report, 75% of cardholders say personalized offers are important to them, with the majority of Millennials and Gen Z believing that bespoke rewards would help them save money. 

Delivering personalization at the scale necessary to create individualized reward experiences for every cardholder, however, requires the ability to analyze vast, often fragmented datasets. This is only possible by leveraging AI-powered loyalty platforms that can centralize customer data and mine it to effectively predict consumer preferences and behavior in real-time.

Tailored rewards not only foster deeper customer relationships but also increase the likelihood of reward redemption. For instance, customers interested in travel may receive targeted offers for a fantastic vacation package or exclusive hotel discounts, while others focused on dining may benefit from cashback rewards for restaurant purchases. These personalized interactions can significantly improve retention as customers feel understood and valued by their financial institution.

Streamlining Management with Automation

Managing a successful loyalty program requires flexibility, especially as banks expand their rewards portfolios and adopt new features. Advanced loyalty solutions can automate many of the manual processes associated with program management, such as reward redemptions and customer segmentation, allowing loyalty managers to focus on optimizing customer engagement instead.

Automating loyalty management also reduces errors and enhances efficiency, leading to cost savings. Additionally, banks and credit card issuers can use advanced analytics to monitor the performance of their programs in real-time, making quick adjustments to align with shifting customer needs.

Scalability and Integration: A must for success

For financial institutions that already have loyalty platforms in place, it is difficult to reconcile the idea of scrapping a solution in its entirety. Fortunately, a wholesale rebuild is rarely necessary, and the right loyalty technology solutions can often work with a financial institution’s existing infrastructure.

As institutions look to modernize their programs, they must consider how advanced loyalty technologies integrate into existing systems like CRM and customer profile databases. Our CTO Mike Engelhart explained in a recent blog post, loyalty solutions that use APIs to ensure compatibility with a variety of platforms will minimize friction both internally and in terms of the customer experience.

Improving Accessibility Across Digital Platforms

Today’s loyalty members expect their programs to be accessible across multiple touchpoints, including mobile apps, websites, and in-branch services. Cardholders want to engage with their rewards programs through different channels for different purposes, and the loyalty experience should be calibrated to accommodate that behavioral tendency.

What does that mean in practice? For example, integrating loyalty features directly into a bank’s mobile app offers customers real-time access to points balances, available rewards, and redemption options. The ability to redeem points for everyday purchases—such as gas or groceries—through mobile wallets improves engagement and strengthens the overall user experience.

Enhancing accessibility also involves rethinking how rewards are delivered. Our State of Loyalty: 2024 Credit Card Rewards Report, found that while 100% of card issuers provide point redemption for air travel, only 80% have integrated a travel booking portal into their loyalty programs. By integrating booking capabilities (versus directing customers to a third party), banks can offer a more connected experience while also keeping travel spending within the credit card ecosystem.

Driving Revenue Through Everyday Redemption Opportunities

Regulatory pressures, including recent changes to credit card fee structures, are forcing financial institutions to find alternative revenue streams. Loyalty programs offer an effective solution for offsetting revenue losses by driving increased engagement and higher spending among members.

To encourage this type of behavior and reach new customer segments, banks, and credit card issuers will need to expand their portfolios to include lifestyle rewards like dining, wellness, and live events, as well as earning and redemption opportunities for everyday purchases. This is particularly important in a prolonged era of cost-consciousness, where consumers are actively looking for ways to save.

According to our report, the number of credit card programs offering fuel rewards jumped by 23% between 2023 and 2024, a clear indication that financial brands understand that their loyalty members want everyday value from their credit card rewards programs in addition to more aspirational perks.

Financial brands know that their loyalty programs have the potential to be significant strategic drivers of customer retention and satisfaction. But with increasing competition from new entrants from both within and outside the industry, existing loyalty providers in the banking sector can’t pause to rest on past success but need to consistently push the envelope and create more recognizable value for their members.

Investing in advanced loyalty technology that incorporates AI-driven personalization, automation, and consistent experience in all channels will help both create value and meet cardholder expectations.

These investments will yield increased engagement, spending, and cardholder satisfaction – all critical aspects of setting a rewards program apart from competitors and stemming the erosion of loyalty that threatens their long-term performance.

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