Constant innovations and emerging trends in the payment space have brought about several accelerating winds of change in the credit card industry. Stringent regulatory guidelines, progressive industry initiatives, and evolving customer expectations have ushered in a new era of technology-driven, touchless transactions. As alternate payment methods emerge (and evolve), the card industry is struggling to stay afloat. So, what’s to come for the credit card industry? What does the future of credit card rewards look like? Let’s find out!
Credit cards have, for a very long time, enabled people to make quick and easy payments. However, ever since the pandemic, several behavioral and technological changes have brought about a slew of instant payment options around the world, putting the credit card industry in jeopardy. Many users now prefer digital wallets and voice payments to payments via credit cards, which has made customer retention a dreadful challenge.
Yet, there is still a large market for credit cards. In 2023, the worldwide credit card purchases made using Visa cards alone are forecasted to reach over $5 trillion. As the credit card industry continues to boom, rewards are a booming business opportunity for issuers and are popular among consumers across the credit spectrum. According to a 2021 consumer credit card market report, even people with very low credit ratings put over 60% of their credit card purchase volumes on rewards cards.
In today’s ever-evolving market, high-value rewards can encourage cardholders to keep accounts open long-term. Let’s look at the bottlenecks (and opportunities) that have to be catered to:
As technology (and the world in general) continues to metamorphize at an accelerated pace, how can credit unions keep up?
With the world entering a new era of cashless transactions, credit card reward programs also need to transform at a rapid pace. The future calls for enhanced user experiences, improved accessibility, and expanded options. Let’s look at what credit unions can do to shape the future and sail smoothly:
Credit unions looking to keep up with the pace of development need to provide members with exciting rewards programs and incentives – from exclusive merchandise to event tickets, travel vouchers to cash savings, and more. They also need to offer more choices for members to redeem points and allow them to use their reward points to make purchases online or in-store.
Credit issuers need to plan for offering a full suite of rewards products that enable benefits to consumers in the long run. Whether the goal is to reach people focused on increasing savings or budgeting, a long-term rewards program can enable customers to achieve their financial goals and earn more on their regular expenses.
As online banking and cashless transactions break records left, right, and center, companies will need to leverage technology to deliver better user experiences with more accessibility and redemption options. To make the most of digital advancements, they will have to harness the capabilities of modern technology and pivot the business with speed and confidence.
As the credit card industry transitions through challenging times marked by evolving customer expectations, hyper-personalizing engagements and offering strategically relevant products and services is the need of the hour. To survive and thrive in the Banking 4.0 era, engaging with partners that embed the latest trends into customer experiences is critical. A specialized partner that carries contextual knowledge of the business can help suggest appropriate and actionable strategies and handhold them through the execution lifecycle to eventual success.
Today’s banks need a winning transformation strategy powered by insights from data that can be executed at scale, with speed and certainty across the organization. To that end, optimizing business models can help withstand financial and non-financial threats, and implementing resilient and agile platforms can enable high-impact and long-term results.
To fine-tune offers to meet customer needs and reward affinity, issuers must also leverage partnerships with companies to create co-branded credit cards for niche markets. For instance, offering credit card rewards for sports team fanatics can pave the way for direct benefits, like discounts on merchandise, free passes to sporting events, and cash-back multipliers, enticing consumers to spend more on the brands they already love.
As the shift toward remote banking and digital wallets continues to accelerate, credit card companies must make major changes to their rewards programs to retain existing customers and attract new ones. Embracing digital technologies to offer flexible and personalized incentives and other exciting vouchers and cash-back options to members is a great way to navigate the current business landscape and maintain relevance.
At Verinite, we deploy a comprehensive range of proven methodologies to help financial institutions reimagine their business and build future-ready business models. We put together digital strategy roadmaps, draft appropriate agile product development methodologies, and build agile IT infrastructure so that credit unions can unlock true and sustained business value – today and every day!
Contact us to understand how you can leverage our services to up your credit card rewards game!