Rethinking rewards in the era of alternative payments

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Everybody loves free stuff. It’s human nature.

Although rewards programs were once highly prized and true differentiators among financial services providers, it appears that typical rewards programs have grown stale. Traditional rewards are in a poor position to shape customer loyalty and influence spending going forward.

Why is this important?

  1. For starters, we are now in an instant-gratification and mobile-first society. Thus programs that merely deliver simple points or cash-back well after purchase are unlikely to influence spending.
  2. And let’s not forget that we are firmly entrenched in an era of alternative payments. Therefore, banks must rethink rewards and approach their customer-loyalty challenge by integrating programs seamlessly into new smartphone-based shopping paradigms.

Merchants have already been catering to evolving consumer expectations, and banks and card issuers need to do the same. Understanding consumer behavior will be critical for banks going forward if they wish to redesign effective rewards programs that actually acquire and retain customers. Among other actions, banks need to invest in advanced analytics and do away with cumbersome redemption processes that now ignore mobile-led consumer behaviors.

“A vast majority of card rewards programs today are not aligned with consumer spending habits, and an overhaul of these programs to match real-time consumer engagement should be pursued.”

How PwC can help 

PwC offers a seamless end-to-end services portfolio to help financial incumbents to leverage FinTech trends and convert threats into opportunities: 

  • FinTech solutions: Operating at the intersection between financial services and emerging technology 
  • Banking and capital markets: Delivering cost effective technology and operations to the industry. 
  • Consumer finance - Credit card services - Improving effectiveness and sustainability in a challenging and dynamic marketplace. 

Contact us

Julien Courbe

Financial Services Leader, PwC US

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