FinTech doesn’t always have visible and measurable effects that the average consumer will notice. However, from a business perspective, fintech has had an immeasurable impact on the credit card industry.
Here are some notable examples of fintech at work.
1. Credit card comparison sites
Card comparison sites provide a unique perspective for businesses. They can see how their cards stack up against the competition, get insight into what users think about their products, and even earn valuable affiliate partnerships to grow their user base.
For example, creditcardGenius can compare over 170 credit cards in real time according to user preferences. Their algorithm considers over 126 characteristics of all credit cards in their database and compares them using unbiased math. This makes their recommendations detailed and personal.
2. Bonuses and cashback for credit card applications
These same comparison sites and other third parties sometimes have cash back bonus promotions for those who view credit cards. This is, of course, in addition to the credit card welcome bonuses. An example is the credit card refund offers called GeniusCash.
These third party incentives make the credit card application process more attractive to potential customers through multiple channels, adding a “proprietary” touch that is not often possible through their own website. And since much of the process is done through affiliate channels, the credit card company itself doesn’t have to take on as much marketing work.
The third-party site benefits from site visits and the card companies gain more customers. It is an attractive and lucrative tactic for both parties and for the clients as well.
3. Virtual credit cards
Canadians have been the subject of dramatic information breaches, and virtual credit cards are a tool consumers can use to protect themselves.
These can be assigned as one-time use, assigned a set spending limit, or be intended for use by a single merchant. For ease of use, they can be attached to a digital wallet like Google Pay or Apple Pay, both of which have their own additional levels of security.
Customers want peace of mind, which credit card companies have been able to offer them. And really, it seems like a natural step for companies operating in an ever-changing tech world.
4. Digital wallets
With digital wallets, consumers can leave their cards at home without worrying about theft or loss. Since the information stored in the phone is strongly encrypted, digital wallets offer better security than a physical credit card.
Again, this provides essential consumer peace of mind, and a peaceful consumer is a happy consumer. From a business perspective, portraying yourself as a company that values security and peace of mind is key to increasing subscriptions and, therefore, revenue.
Plus, the less labor and human resources it takes to cancel and process lost or stolen cards, the better.
5. Credit card companies only online
With no physical branches, online-only card companies offer a whole new experience to their customers. They aim to simplify the banking experience by using technology to help their customers save on costs and fees.
Neo Financial and MogoLounge are two such companies in Canada, and neither has a physical branch.
These companies have found a way to reduce the significant costs associated with branch offices, allowing them to offer more competitive prices and services. They’ve thought outside the box and leveraged the company’s online habits to work in their favor.
6. Apple card
Apple made a lucrative choice by entering the credit card business.
Although not yet available in Canada, the Apple Card offers unique and impressive features to enhance security and provide its US users with unrestricted spending, earning, and redemption possibilities.
When a purchase is made, the user’s cash back rewards are deposited into their Apple Cash and can be used at any time to pay for purchases of their choice. This freedom of choice and use is new and obviously attractive to consumers, because it is already a leading card for customer satisfaction.
7. Cryptographic credit cards
Several crypto credit cards are now available to Canadians, and the highly anticipated Shakepay Visa is coming soon. Credit cards for crypto are available as prepaid cards and typical credit cards that earn rewards.
As more companies – retail and otherwise – strive to accept crypto as a form of payment, the demand for accessibility of funds becomes more prevalent.
Crypto credit cards are there to meet this demand and this, in turn, creates more opportunities for these same businesses.
8. AI and chatbots
AI has improved predictive analytics on the backend to make fraudulent activity easier and faster to detect. And upstream, chatbots offer more immediate answers to questions, reassurance, and quick reactions to fraudulent activity. They can even suggest alternative rewards more suited to the user’s needs. These robots play an important role in acquiring, converting and retaining customers in a variety of ways.
While it’s still not perfect, and customers should still contact a call center representative for most issues, technology is improving and AI has helped credit card companies save money. ‘silver.
9. Rewards with special partnerships
Air Miles has been using this strategy for years, but it seems others are going even further and offering surprisingly high earning rates for cardholders shopping with their business partners. Brim Financial and Neo are two such companies that partner with various retailers to offer reward rates of up to 30% to their customers.
These types of partnerships are mutually beneficial and they increase loyalty from retailers and card companies, resulting in higher reviews. Deloitte reports that these partnerships represent 10% of the credit card market, but the article also indicates that stagnation is a problem.
10. Ease of transferring rewards to other programs
The pandemic has changed things. As travel was not an option for most, it lost its value as a points system for many credit card holders.
And companies have been forced to pay attention to it. They focused on changing partnerships and rewards systems to improve customer retention.
American Express and RBC offer great flexibility to Canadians who wish to redeem points. There’s a reason the Amex Cobalt Card continues to win consumer prizes, and that is largely because the value of flexible reward programs has grown.
About the Author: Melanie Pitman is a content specialist for creditcardGenius.ca, a credit card comparison engine, comparing over 126 features of nearly 200 Canadian credit cards. Their new cash back program, called GeniusCash, offers cash back to anyone who applies for and approved for featured credit cards.