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Open banking is a revolutionary concept that is quickly changing the financial landscape. In this blog post, we will explore the case for loyalty in open banking, specifically the untapped potential for loyalty rewards and incentives in the form of digital gift cards.
Before diving into the specifics of loyalty rewards in open banking, it's essential to understand the concept itself - so what exactly is open banking?
Open banking leverages digital technology to increase accessibility and competition in the financial sector. It allows third-party financial service providers access to consumer banking, transaction, and other financial data from banks and non-bank financial institutions through application programming interfaces, also known as APIs.
By improving access to data in the banking sector, open banking encourages a more integrated and efficient financial ecosystem where banks, fintech companies, and other financial service providers can offer improved and innovative services.
Open banking offers significant potential benefits to the consumer but also carries with it certain apprehensions, primarily around data security. While the benefits of Open Banking outweigh its risks, some businesses still need help encouraging user adoption.
While further education and awareness will slowly sway consumer sentiment, loyalty rewards provide another cost-effective opportunity for fintechs and banks to increase the adoption rate of their open banking initiatives.
By actively encouraging consumers to try the technology through the delivery of rewards and incentives, market-leading fintechs can accelerate adoption and fast-track their innovations.
Digital gift cards present a unique opportunity for loyalty rewards within the open banking ecosystem. They are flexible, digital-native, and offer immediate value to the end-user
Here are a few of the key reasons why digital gift cards make a compelling case for loyalty in open banking:
Digital gift cards can be integrated into existing platforms. They fit seamlessly into the online spaces where financial institutions interact with customers. This makes them a cost-effective and convenient solution for banks and other institutions keen on adding loyalty programs without a massive system overhaul or expensive new tech.
Another key benefit of digital gift cards is their near-universal appeal. Because gift cards can be used with many businesses, from the most popular online retailers to much-loved local restaurants and global travel platforms, there's something to suit everyone's tastes.
The versatility of gift cards means that no matter who your customers are, their interests, or their lifestyle, you can offer them something they'll genuinely value, maximizing the efficiency of gift cards as a reward or incentive.
Perhaps one of the most intriguing aspects of digital gift cards is their proven ability to encourage additional spending. According to a study by First Data, a staggering 75% of consumers who use gift cards end up spending more than the card's value. And we're not talking small change here - on average; these consumers spend an extra $38!
This means that not only do digital gift cards make customers feel valued and appreciated, but they also actively encourage economic activity, benefiting businesses and the economy as a whole.
For customers, digital gift cards offer flexibility and convenience. They can be redeemed and used anytime, anywhere, and are easily stored and managed on a smartphone or computer.
At Tillo, we make it easy for fintech businesses and banks to harness the power of digital gift cards. Our award-winning gift card API allows for a single integration to 2,000+ global brands, making it easy to surprise and delight every customer.
To find out more about the Tillo network and uncover the potential of Tillo for your business, get in touch with us today and start supercharging the adoption of your open banking initiatives.