Engaging cardholders: It’s a digital issue

The more card issuers can do to digitally empower cardholders, the more likely the card will be used, building loyalty and connection.

By Wes Suter

The past 36 months have seen a change in how customers expect to interact not only with their financial institutions, but with the merchants from whom they purchase. Digital engagement with consumers has exploded, originally by necessity, but quickly because the channel has become an easy and highly convenient vehicle to interact in, so much so that we are simply not prepared to go back to the old, pre-pandemic ways.

For banks, it is becoming apparent that the competition for first-rate digital experiences is not necessarily from other financial institutions in their peer group. Rather it is the numerous experiences their customers and cardholders are having every single day via their smartphones, such as those mentioned above. That ability to complete varied transactions within hours or even minutes is increasingly causing consumers to turn to their financial services providers and ask, “How can I have that same easy, frictionless experience with you?”

There is a tremendous appetite for digital financial experiences. According to a recently-published Juniper Research report, the total number of digital wallet users is expected to exceed 5.2 billion globally in 2026, up from 3.4 billion in 2022, representing growth of more than 53 percent. The value of digital wallet transactions is forecast to exceed $12 trillion in 2026, from $7.5 trillion in 2022.

Five points to become a digital star

As banks consider what they should be focused on in terms of interactions that are important to the individual cardholder, here are five key factors:

1. Ensure rapid card replacement. Waiting days for a new or replacement physical debit card to be mailed out, received and activated does not satisfy the cardholder’s need for immediacy and the inconvenience this delay can cause presents a real risk of lost spend and damaged relationships for the issuer. The ability to access a new or replacement card electronically, allowing consumers to make in-store and online purchases immediately, is the ticket to a seamless experience. Cardholders can simply push the card to their digital wallet, promoting card loyalty and front-of-phone placement.

2. Encourage frequent card usage. For an issuer, the only thing worse than consumers not having their cards is them having them, but not using them. A text message or push notification that the new card is instantly available to carry out transactions with instructions on how to do so ensures they are actually using the digital card in all three commerce channels—in store, in app and online.

3. Communicate about easily available insights. Help the cardholders understand their spending information—at-the-ready insights into location or merchant category, as well as simple access to the name of the merchant, contact information and location via a map feature. With this collated data at their fingertips, cardholders have a comprehensive view of their spending patterns.

4. Allow cards to be used how and when the cardholder wants. An integrated mobile and digital experience gives cardholders the ability to be virtually self-sufficient They should be easily able to use card controls and alerting capabilities in order to proactively take the fight to would-be fraudsters. And add travel plans so that charges from another state or country are not declined due to an incorrect assumption that they are fraudulent. It should also be easy for cardholders to connect with their financial institution with a few taps, navigate statements and make one-off payments.

5. Engage the user with value-added features. The more value cardholders sees in pulling a particular card out of their digital wallets, the more likely they are to use it. Relevant, convenient features including rewards and special offers can keep cardholders highly engaged.

Cards on the table

The more the card issuer can do to digitally empower a cardholder, the more likely the card is to be used, and the more likely the portfolio is to grow in terms of spend. Additionally, there is the word-of-mouth marketing benefit of potentially attracting new customers who are similarly interested in engaging digital experiences. Not to mention the downstream benefits of lowering operating expenses in the call center, as users now have access to self-service journeys to a far greater degree than was possible previously.

In the past, only a select few financial institutions at the higher end of the asset spectrum would likely have the resources to execute a sophisticated digital strategy, but today, with the right partner smaller FIs can compete at scale. Payment ecosystems have changed rapidly over the course of the past several years, and increasingly the U.S. consumer is clearly stating: “I’m busy, do not make me work hard, give me every opportunity to manage my card digitally from the device that is always on my person or within easy reach my smartphone.”

Wes Suter is director, Ondot Product Solutions, a business unit of Fiserv.