Viewpoint: Winning the Prepaid Loyalty Challenge Is about Financial Empowerment
By Walt Granville, Cachet Financial Solutions
Prepaid cards are approaching a critical juncture in their evolution. Having achieved status as a “mainstream” financial services product, prepaid cards now must prove themselves indispensable to cardholders’ lives. To take prepaid to the next level, prepaid providers need to connect with and engage cardholders in ways that position the product as vital to their financial wellbeing.
A critical challenge is discerning what combination of features and services will position the card as a financial imperative. This is not a static objective—it must be adjusted to accommodate changing demographics, consumer preferences, economic conditions and technologies, and do so in ways that keep cardholders coming back.
Not surprisingly, mobile is the optimal channel for both banked and unbanked prepaid cardholders. Banked consumers have come to expect it from financial services providers. Unbanked consumers expect it as well. They’ve grown up with the mobile channel and depend on it as their primary Internet access. Smartphones have given prepaid providers a valuable tool for engaging their cardholders. Most have the basics down: allowing cardholders to use their mobile devices to check transactions and balances, locate branches and ATMs, and deposit checks to the cards. Now let’s turn the tide of attrition by providing cardholders with a first-rate mobile experience.
Prepaid providers today have access to more innovative mobile tools and services than ever to connect with and engage cardholders in ways never before possible. It’s time to focus on personalization, behavior-based messaging, location-based marketing, meaningful social media engagement, instant credit scores, innovative ways to pay, and a robust suite of services that help cardholders better manage their financial lives. In short, it’s about partnering with cardholders to build trust and further their financial empowerment.
The following are four key areas prepaid providers should consider as they expand mobile financial services to empower cardholders and build long-lasting relationships. It’s important to emphasize that since many prepaid cardholders are new to financial services, these financial tools must be simple to use. High effort, too much information or tedious data entry are likely to intimidate and turn off new users. First impressions matter, so prepaid providers would be wise to ensure a great experience from the get-go.
Money Management Tools
More and more consumers are using prepaid cards to help them control spending and stay out of debt. A 2015 survey by the Federal Reserve found 18 percent of GPR cardholders use the cards to stash away money for later use. A survey of millennials by TD Bank found 56 percent of those who use GPR cards consider budgeting tools a key benefit of the cards. This presents unique opportunities for prepaid program providers to collaborate with cardholders, particularly maturing millennials, to provide savings, budgeting and other mobile money management tools that support financial empowerment.
For prepaid card programs serving a large immigrant demographic, offering convenient and safe international money transfer is vital to securing a relationship with these cardholders. Families all over the world rely on remittance payments from people working in the U.S. Per the World Bank’s latest stats, the U.S. is the biggest sender of remittances worldwide, with more than $56 billion flowing to other countries. Saving a trip to a brick-and-mortar location for international money transfer represents a huge convenience for many prepaid cardholders, and a surefire way to earn their trust.
Prepaid providers also can keep their cards top of wallet by offering cardholders mobile coupons. With easy access to local deals, cardholders can save hundreds each month on everyday purchases. With as much as 96 percent of the population using coupons, their inclusion adds everyday relevance to prepaid apps. Mobile coupons give cardholders a reason to spend a few minutes with the app every day, each time they make a purchase. More importantly, mobile coupons help cardholders save money and improve their financial outlook.
Meaningful Marketing Offers
Never in the history of financial services have providers had access to so much data (structured and unstructured) about consumers than is the case today. Yet, large numbers of consumers complain they are inundated with irrelevant financial services offers. Prepaid providers can use product and cardholder insights to craft relevant, timely and behavior-based financial services offers and promotions and communicate these to their cardholders via mobile alerts or inside their program’s mobile app.
The financial services marketplace is changing, creating opportunities for prepaid cards to become a focal point of customer engagement. Loyalty is the fuel that drives success in the prepaid space. Yet, the techniques commonly used to drive loyalty in traditional card markets—like affiliations and broad brush discounts—don’t garner much usage and are disregarded by prepaid cardholders.
A new approach is needed. An approach founded on trust, quality service and meaningful engagement, with tools and functionality that deliver value beyond mere transactions. Prepaid card providers are positioned to take advantage of these marketplace changes. To succeed they need to help cardholders manage their financial lives, on the go and securely, as easily and efficiently as they manage their social lives. Those that do will be best positioned to score big in the cardholder loyalty challenge going forward.
Walt Granville is senior vice president of mobile innovation at Cachet Financial Solutions. He has more than 20 years of experience in the highly competitive mobile, emerging payments, loyalty and card markets in the U.S., U.K., Germany, Spain, France, Turkey and Brazil. Walt can be reached at [email protected].
In Viewpoints, payments professionals share their perspectives on the industry. Paybefore presents many points of view to offer readers new insights and information. The opinions expressed in Viewpoints are not necessarily those of Paybefore.