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Earlier this month, the British Retail Consortium reported a 3.5% decrease in footfall during the Christmas period – the largest decline since 2013.
Retail pundits have been quick to respond that high street retailers will need to deliver a more rewarding shopping experience if it is to combat the highly-personalised one that is already found online.
Much of the attraction of online shopping lies in speed and convenience, but as well as providing a faster and more efficient way to pay for goods, the high street will need to create more personalised and engaging CRM programmes to take customers on a positive shopping journey that goes beyond the checkout.
The beginning of 2018 has also seen retailer attention fall upon the introduction of Open Banking, where, for the first time, trusted third parties will be able to access a consumer’s banking data. According to consulting firm Accenture, 74% of retailers they surveyed in December want to access this data so they can better tailor their products.
For all the gloom that is reported, high street retailers are still processing millions and millions of transactions a year, and some have been quick to realise the additional value these transactions can generate at the point-of-sale.
Brands such as Caffè Nero and Planet Organic launched combined payment and loyalty mobile app services for their customers last year, which have, uniquely, been able to tap into the point-of-sale and gain individual basket data from each transaction.
Through this mobile-led strategy, this basket data insight has been able to turn anonymous app customers into individuals with purchasing preferences and habits, who gain a more personalised experience by being instantly rewarded with tailor-made offers at the point-of-sale.
Open Banking starts to open up a whole new world of opportunity for retailers that goes beyond mobile. As we hurtle towards a cashless society, the payments process could be transformed for virtually every retail customer, whether they pay through card or mobile.
The potential benefits for the customer? Being instantly rewarded with offers, discounts or special offers based on their individual shopping behaviour, regardless of their card or mobile payment method and without the need of a loyalty app or card.
At the same time, retailers would have at their fingertips a mechanic that didn’t just appeal to their most loyal customers, but a tool so frictionless it would broaden CRM activity to identify and segment customers, as well as set conditions that could really drive behaviour.
One retailer has already proven how powerful data-led customer segmentation campaigns can be through its combined payment and loyalty app.
Last year, Vietnamese fast food chain Hop wanted to increase the frequency of purchases on a slow business day – Tuesdays. Through their combined payments and loyalty app, Hop decided to offer double loyalty points to all customers who came in on that day.
Activity on a Tuesday for the month after the campaign launched looked very different: Unique app customers increased by 85% and app transactions went up 51%.
Imagine the results if this had been frictionlessly available through all card payment methods, not just those who paid through Hop’s combined mobile payment and loyalty app.
Stealing a march on using the Open Banking framework to open up retail loyalty to the wider banking experience, in November Yoyo entered into a first-of-its kind partnership with Starling to enable the startup bank’s customers to automatically reap the benefits of retailer-specific loyalty programmes every time they used their Starling payment card in Yoyo-accepting high street stores.
This partnership with Starling shows the awesome potential of Open Banking and marks the start of a new phase in high street retail to add even more value to the payments process and attach retailer loyalty to the wider banking experience.
The other side of the coin of Open Banking is going to be consumer reaction to handing over their banking data to third parties.
On face value, it could all sound a bit dangerous – who wants to let total strangers have access to their personal banking details?
However, the way in which Open Banking has been designed means it is actually very safe – banking customers are always in control.
Giving a trusted organisation permission to access your bank account will be done in much the same way as you give apps and websites permission to access your Facebook profile.
From the trusted organisation’s app or website, you will be redirected to your bank, where you will sign in and be told exactly what information and permissions the company is asking for – importantly, you are in control of whether to give that permission or not.
But, I hear you say, that’s my Facebook profile – this is my bank account!
The major difference is that when it comes your bank account data, these trusted organisations are registered with the Financial Conduct Authority (FCA), and will be the only ones legally able to access your data. The FCA will keep this list of those that are registered up-to-date and public.
Open Banking has the potential to offer a well-needed lifeline for the high street – providing the opportunity to create data-led campaigns that can reward all shoppers as individual customers, regardless of the payment method. Those banks and retailers who can take Open Banking even further will soon find themselves stealing the march on their competitors.