Great ideas are worth reinventing for a new generation. This is the global message I took to Cardware 2015 in Ontario, Canada, earlier this week for a presentation entitled, “The Case for a Retro Revolution in Payments Marketing.” The basic premise – card marketers need to reinvent the value proposition for credit cards to reflect not only the changing attitudes of today’s consumer but also the changing marketing environment and rapid ascent of FinTech. In the presentation, I outline five areas of opportunity for card marketers in Canada:

1. Reinvent Benefits

Opportunity: Credit cards are loaded with benefits and features, many of which were developed decades ago and have become standard. In many cases consumers don’t even know they exist. There is an opportunity to re-invent and/or raise awareness of these benefits – from customer service to car rental insurance – for evolving consumer segments.

Example: 20 years ago, before rewards and teaser rates became the norm, purchase protection was a key selling feature for credit cards. Last year, RBC elevated the feature in online banner ads, targeting students, with the RBC No Annual Fee Rewards Credit Card “with Purchase Protection” along with the message, “it’s your I-just-spilled-coffee-on-my-laptop Student Solution.” This is classic re-invention of a decades old benefit typically relegated to the fine-print.

2. Reinvent Ways to Pay

Opportunity: Consumer payment preferences continue to evolve and vary greatly by segment. Mintel’s Consumer Payment Preferences – Canada 2014, identified four broad segments of opportunity that go beyond the typical generational assumptions regarding Millennials. Mintel found that even those “Credit Card Lovers” who use credit cards for both small and large ticket items continue to use cheques for certain types of purchases and pockets of opportunity exist across the board to encourage card use, such as recurring payments.

Example: One sector that still relies on cheques is renting, but Rentmoola is looking to change the status quo. The Vancouver based start-up partners with landlords to enable tenants in the US and Canada to pay their rent with a credit or debit card. The service, established in 2013, is targeted at 25-35 year old professionals and recently added MoolaPerks – rewarding customers with special offers at partners such as Rogers and Uber.

3. Reinvent Credit

Opportunity: Canadians have a high level of debt per household. The average balance per consumer – excluding mortgages – rose 2.3% in the fourth quarter of 2014 to $21,428 from $20,945 a year earlier, according to the latest report on credit trends by TransUnion. At the same time, high interest rate on credit products is creating an opportunity for non-traditional players to offer a cheaper alternative to the major banks.

Example: As in the US, marketplace lending (also known as peer-to-peer lending) is starting to gain traction in Canada as new start-ups look to provide cheaper access to credit. Borrowell recently followed Grouplend into the space and went live in April after receiving $5.4 million in funding. Borrowell matches institutional lenders with borrowers and offers loans up to $35,000 with interest rates ranging from 5.9% – 20%.

4. Reinvent Rewards

Opportunity: Canadian consumers increasingly expect their rewards to be relevant, contextual and easy to redeem. In Mintel’s report Loyalty in Financial Services – Canada 2015, 72% of Canadian loyalty program participants said that convenience when redeeming rewards was the most important feature of a loyalty program.

Example: SCENE, the entertainment loyalty program established by Scotiabank and Cineplex Entertainment back in 2007 has recently expanded its list of partners to enable members to redeem points instantly at the point of sale in Sport Chek stores as well as CARA restaurants. The SCENE Prepaid Reloadable Visa from Scotiabank is a quintessential re-invention product by offering younger consumers a card that will keep them out of debt but also enable them earn and easily redeem relevant rewards.

5. Reinvent Wallets

Opportunity: The way we pay will continue to evolve as the world becomes increasingly connected.  According to the Mintel Healthy Lifestyles – Canada 2014 report, 5% of Canadians already use a wearable that tracks heart rate, blood pressure and movement and 37% would be interested in such a device. RBC’s Head of Innovation Jeremy Bornstein, in discussing the RBC Payband, was bullish regarding the payments application of wearables at the Card Forum conference in April. He stated that by next year we will all be paying for our coffee by tapping our wrists at the point of sale.

Example: Card issuers are looking increasingly at creative new ways to become the “card of choice” within the mobile wallet whether that is via Uber, Apple Pay or any other mobile wallet or mobile payments app. Capital One recently partnered with Uber in the US so that Capital One Quicksilver cardholders could receive 20% back on rides through Uber for a year. The two companies sent more than 20 million emails, combined, to their respective customers promoting the partnership, according to Mintel ePerformance/eDataSource.

 

Andrew Davidson is SVP Comperemedia at Mintel. He is a multi-channel marketing and payments expert with over 20 years of marketing research experience. Andrew is regularly called upon to provide analysis for leading media publications worldwide and is also a key speaker at Card Forum and other high profile international industry events.

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