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This is the second installment of Loyalty360’s recent discussion with Mladen Vladic, General Manager of Loyalty Services for FIS. Part One can be read here.
FIS has been building and implementing modern loyalty and rewards programs for retailers and financial institutions across the nation for over two decades. In Part 2 of our conversation, Vladic discusses how FIS has brought together its financial institutions and retail clients to create effective, mutually beneficial loyalty programs. He also highlights the benefits of FIS’ partnership with PayPal.
How do the partnerships FIS has forged across its client groups work?
FIS administers loyalty programs for many financial institution and retail clients nationwide. About four years ago, we came up with the concept of connecting these two groups. Survey after survey suggested that consumers are looking for more innovative and engaging ways to monetize their loyalty currency, points. The idea is to give the financial institution loyalty customer the opportunity to monetize their loyalty currency as they patronize merchant locations.
We launched this idea with our client BP, which has over 7,100 stations across the country. The program enables millions of financial institutions cardholders with loyalty points to redeem them at BP stations in exchange for a discount at the point of sale in real time. It is not merchant funded, and it’s not the in-app, native app experience, and redemption experience doesn’t require any registration and offer activation. None of that. It’s a payment card purchase-triggered experience.
As the cardholder uses the card at the point of sale, FIS runs a dual authorization. The payment network authorizes the transaction while a second look up through the FIS proprietary loyalty network in real-time confirms whether the customer participates in this loyalty program. If yes, does the person have enough points for this offer to be presented? If there are two yeses, then we present them with an offer. They exchange the defined amount of points from this bank-sponsored loyalty program in exchange for the discount at the point of sale.
It’s a very powerful engagement tool with tremendous success in terms of the recognition and adoption from cardholders. One key reason is that it meets our consumers’ growing expectation for instant gratification.
How does FIS intend to build on these connections?
Our ultimate vision is that this becomes another payment tender that expands consumers’ purchasing power. As consumers go from one store to another or to an e-commerce space, they have the ability for the loyalty currency to be monetized in real-time. We are expanding and extending buying power by the amount of the loyalty currency that can be converted in a real-time discount. That's a very powerful concept. As retailers of all sizes and our economy recovers from the Corona virus impact, this solution will play even larger role by expanding buying power for cash strapped consumers while giving yet another reason for them to visit retail locations that offer this type of experience.
FIS is building an industry network with financial institution loyalty programs on one side – all of the big issuers and all the loyalty providers that support loyalty for financial institutions. The other side is the retailer. To succeed, this partnership must be a win-win. If there is no benefit for everyone in this ecosystem, the ecosystem is not going to be sustainable.
How do banks benefit from these partnerships?
Banks can reduce their expense of running the loyalty program. Let me explain. We have been trained consumers that typically each point is worth one penny. So, a $50 gift card should cost me around 5,000 points. This type of offer can be priced any way the financial institution would like. Because of the high perceived value of the offer – real innovation, real-time savings, and convenience - these programs can be priced a bit differently. Therefore, the bank can burn higher numbers of points for this benefit compared to what is available in a traditional catalog for the same cost.
That is a tremendous benefit for the bank because now they’re burning points at the lower cost per point redeemed. That makes every CFO happy because they budgeted and forecasted that a point is going to cost them “X.” If we are able to monetize that point at “X” minus whatever factor that is, then we save them money. We monetize and we burn that point at a lower cost than they originally forecasted in terms of that expense.
Can you tell us about the PayPal partnership?
There are a few large issuers such as Citi, Discover and American Express that already enabled pay with points feature with Paypal. FIS is the first processor organization that has partnered with PayPal to bring this same benefit to the masses - to thousands of financial institutions and the millions of their cardholders.
We are proud to bring that same benefit that is available to the customers of large issuers to the broad market. That is a huge appeal that prompted PayPal and FIS to work very hard on this partnership.
In terms of the consumer experience, it is very similar, if not identical, to what is already in the market for these large issuers. Effectively, there’s going to be a dynamic conversion of points in the PayPal wallet in exchange for the real time discount off the purchase price. The cardholder will be able to decide if they want to take advantage of this, and if they do, how many points they want to redeem in every single purchase.
We at Loyalty360 are eager to follow the partnerships facilitated by FIS going forward. It is exciting to see how FIS creates a customer engagement tool through the connections or partnerships across their client base. It is certainly a recipe for success – and something that benefits clients while increasing consumers’ purchasing power.
For more information, please visit fisglobal.com.
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