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IS REWARDING POWERFUL ENOUGH TO BE ITS OWN CURRENCY?

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By David Handlos, co- founder of Europe’s leading mobile wallet company Stocard.

 

Reward schemes are nothing new, but the way both companies and consumers use them is. Their gain in popularity is because they offer so many layers, they can attract and keep consumers, provide valuable data insight and also help customers save money. So, will we get to a point where rewarding is so powerful it becomes its own currency? David Handlos, Founder, Stocard looks at why loyalty programmes may hold more value than you think. 

 

It’s no secret that rewarding customers benefits both them and the company. Since the 1950s retailers have used these schemes as a way to appeal to prospective customers as well as keep them coming back. Now 90% of companies have them from My Waitrose, to Costa and Nandos. They’ve even spread to smaller businesses such as cafes and in the b2b world.

In fact such is the popularity that 59% of Brits think all companies should offer a loyalty program and companies are responding. From start ups to established companies most are aware that investing in a reward scheme will yield returns.

 

Why do we need a loyalty scheme? 

The old rule is it costs 5 times more to acquire a new customer than retain one. This is a crude measurement though it will differ based on the product and future value of the consumer but in general its more cost effective to utilise existing customers to generate more income. One way to do this is through a loyalty programme. 81% of customers say that being a member encourages them to spend more so it’s a proven way to increase revenue.

David Handlos

Yet it’s not just about attracting and keeping your buyers though. Rewards can also be a great tool to change consumer behaviour. For example, most of the world has accelerated its digitalisation with financial services being one. Rather than see people return to traditional banks, fintechs can use reward schemes to encourage consumers to continue to use online solutions for services.

 

Why do customers like rewards? 

The internet has made the business world more competitive. We can all access so many more companies than we could before and as a result we are more likely to shop around for deals. Due to this consumers now often try to hold out for an offer to entice them.

Many of us try to find a company or product that we like and continue to use, but we like to be rewarded for that loyalty – 78% said they would switch to a company that offered a better reward programme.

 

Reward schemes create customer profiles 

One of the perks of reward schemes is that they generate huge amounts of useful insight on an individual’s habits. The power of data as we know is enormous on businesses – it helps provide confidence in decision making which has never been more important since the pandemic started.

Data is a great way that brands can do this. By using analytics organisations can create more personalised offers and rewards to customers. It ensures that targeted ads or offers reach the right person at the right time with exactly what they want. By sending content or notifications at the wrong time you significantly reduce the likelihood of engagement. The place to do this is by a digital ad on a phone as typically we have them with us at all time and they drive a quick action by the consumer.

But this data not only helps shape business decisions but also for helping companies create rewards that target the customers based on their individual wants and needs. For us at Stocard the data is hugely valuable and allows us to consult with our clients on what offers work best for their loyal customers. It can also help identify cross company partnerships which we see as becoming a huge part of reward schemes.

 

Technology has made it easy

For many of us reward schemes have barriers preventing us getting the maximum out of them. In  fact 69% agree that it’s too hard to join or earn rewards. The main issues are we need to have a physical card to access the loyalty scheme- we are guilty of leaving them home or misplacing them. It’s why Starbucks has one of the most successful reward schemes in the world, because it ran out of its app. It even then took it one step further by allowing people to pay in the app too, creating a more holistic experience.

That’s why the digital wallet approach is having great success with facilitating better access to rewards. Stocard is one example where users can host all their schemes in one app and use them seamlessly with their phone.

 

The new way to reward? 

Of course we all know about the likes of Boots’ Advantage points and Tesco Clubcard points but today’s consumer wants something more. 96% said companies should find new ways to reward their customers. We can see a shift in what types of rewards are being offered – those such as Vivid are offering shares to customers.

One key growth area is responsible rewarding with 61% said they would rather donate their rewards to a good cause than redeem them personally.

We will start to see a transition from personal benefits to altruistic lead ones being offered. For example, recently Sephora, the US cosmetics company, allowed members to convert their points to a donation to the National Black Justice Coalition. This move shows that companies are willing to allow consumers to have choice when it comes to loyalty schemes.

As you can see rewards continue to be a huge part of the ways in which both companies and customers use the other to their advantage. It will be interesting to see how loyalty is compensated in the future.

 

Finance

THREE STEPS TO ENSURE RECOVERY OF COVID LOANS GOES SMOOTHLY

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In the wake of the pandemic, the government acted quickly to provide financial Covid support packages to help struggling businesses. With the economy now recovering, Mike Hampson, CEO at Bishopsgate Financial explores the range of options available for banks to ensure that those loans are repaid.

 

Since the start of the pandemic, businesses have raised over £75bn[1] from banks and financial markets, through interest-free emergency support schemes. But the harsh reality is that not all loans will be honoured as the economy recuperates.

As a result, banking professionals with client relationship management experience and skills in supporting clients to repay loans in a challenging business environment, will be in high demand.

 

Mike Hampson

Setting up training capabilities for client support post-pandemic

Commercial bankers estimate 60% of new coronavirus scheme loans[4] will default or suffer other repayment issues that will drive previously unseen levels of non-performing loans. It’s a tough balancing act and one that demands careful management of the lending transaction lifecycle, from origination through to collection, recovery, and handling bad debts. Banks no doubt already have frameworks in place to manage these elements, but it’s highly important to make customer interactions as easy as possible and ensure their genuine concern for their customers is clear.

Subsequently, hundreds of workers at major banks including HSBC, NatWest and Metro Bank[5] are understood to be receiving training in how to deal with vulnerable customers and “demonstrate empathy” as the first wave of repayments for coronavirus loans fall due. Staff ‘sensitivity[6] training builds on client-support and workout capabilities, such as improving sensitivity to early-warning systems, developing short-term forbearance solutions and loan modifications, and providing guidance on alternative products.

This approach may further avoid the additional pressure on the UK’s mental health crisis as financial institutions prepare to call in loans issued during the pandemic.

HSBC, which now has 400 staff in its debt collection team,[7] said the aim was to ensure staff had a “consistent understanding of vulnerability” and are “aware of the factors that could make an individual vulnerable” when having repayment conversations with customers.

An executive at another bank said its expanded debt collection team was being trained in “empathy, vulnerability and listening skills”. The individual told The Telegraph: “Ultimately, we don’t want to damage the economy by being overly aggressive.”

A peculiarity of a crisis situation is that customers don’t always know what they will need until that need is pressing. Finding that their bank is prepared to help in unexpected ways will go a long way toward reassuring them.

[2] https://www.law360.com/articles/1355897/

[3] https://www.bishopsgate-financial.com/insights/the-change-perspective/the-change-perspective-2021

[4] https://www.grantthornton.co.uk/insights/how-to-manage-upcoming-non-performing-loans/

[5] https://industryslice.com/NewsLetter/8_33

[6] https://www.telegraph.co.uk/global-health/climate-and-people/covid-19-has-amplified-parallel-pandemic-poor-mental-health/

[7] https://www.msn.com/en-gb/money/other/bank-staff-get-sensitivity-training-before-calling-in-covid-debts/ar-BB1fNMte

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FOUR STEPS TO INTEGRATING INTELLIGENT AUTOMATION IN THE FINANCE DEPARTMENT

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Marieke Saeij, CEO of Visma | Onguard

 

It’s clear that Intelligent Automation (IA) is still very much an emerging technology, with one indication being that is has only been mentioned a handful of times on Twitter since the beginning of 2021. Results from our latest annual FinTech Barometer reveal a mixed picture in terms of awareness, with half of finance professionals having never heard the term before. Whilst this is unsurprising for a technology concept very much in the ‘early adopters’ stage, organisations can stand to gain real benefits from embracing Intelligent Automation now, particular within the finance department. With this in mind, we explore some of these benefits and share a step-by-step best practice to implementing it into business operations.

 

Intelligent Automation ensures a predictable order-to-cash process

Such is the speed of introduction of new technologies that it’s a challenge for businesses to keep pace. As the newest innovation in finance, Intelligent Automation is one that organisations can’t afford to let pass by. It truly takes financial process automation to the next level. In addition to helping maintain a high-quality customer service, it also complements the existing skillset of finance professionals in the industry.

Marieke Saeij

While Robotic Process Automation (RPA) and Big Data are key innovations for the sector, IA can be likened to an additional layer that enhances existing technologies. By combining applications, this layer is capable of independently assessing situations and determining the appropriate process sequence. It can, for example, fully determine the risk of a specific customer, and can also predict at an early stage which invoices will be paid late, or even not at all, ensuring that finance professionals can then plan accordingly. The result is a reliable and predictable order-to-cash process.

 

The four steps to an IA-proof organisation

While the benefits of IA are numerous, implementing the technology can prove complex, although some are already treading the IA path without knowing it. In this instance it’s crucial to become aware and begin the purposeful process to full integration. Below are the four key steps to becoming fully IA-proof.

  1. Exploring the potential: Brainstorm where automation can be applied

Step one is to examine the extent to which automation can help your organisation. Blue sky thinking is the key here. What is the ideal relationship with the customer? What does the ideal order-to-cash process look like? In this phase, involving multiple departments from within the organisation is key, from management to operations. The finance professionals who have the most contact with customers are likely to have the strongest knowledge of which processes they would like to see automated. With no limits to ideas, it’s best to explore all the opportunities in the entire order-to-cash process and describe broadly the potential value to the organisation.

 

  1. Decipher which data and technology is needed

The second step is to map out which data and technology is required. Working with a specialist, either external or from the internal IT department, is beneficial at this stage to see where the opportunities lie. In many cases, off-the-shelf solutions are already readily available to help make the difference, so it pays to do the research and gain advice where possible.

 

  1. Firm up the strategy

With the plan mapped out, it’s time to fit the pieces of the puzzle together. Which technology and accompanying software is proving most valuable? It’s vital at this stage to analyse the results the organisation is achieving from deploying the right technology and software. It’s also important to outline any limitations and emphasising the potential risk of failure. This is the business case and the basis for the elevator pitch that will be presented to internal stakeholders.

 

  1. Draw up the roadmap and start benefitting from agility

The fourth and final step is prioritisation. The roadmap will describe step-by-step how to move from the undesired current situation to the desired end goal. In the first step, choosing a subproject that is relatively easy to achieve will help gain support from other departments within the business, and provide invaluable experience that can be applied to the more complex components that follow later. This agile approach facilitates a learn-by-doing mindset and allows the following steps to be tackled in a smarter and simpler way.

 

Effective preparation is half the battle

Exploring the potential of automation, mapping the required data and technology, establishing the strategy and laying out the roadmap are the four crucial steps to ensure the foundation for Intelligent Automation. Effective preparation and estimating which technology and accompanying software is needed will help to create a streamlined and error-free order-to-cash process. To ultimately save time and costs, empower finance professionals and maintain customer loyalty, the time for Intelligent Automation is now.

 

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