Payment tracking helps consumers with their finances. It also generally helps them identify and eliminate excess spend, which may reduce interchange income. Nevertheless, providing such a service can increase a bank’s or credit union’s share of wallet.
How does that work?
Let’s explore a few ways that the two are related.
Customer and Member Benefits
The benefits to the consumer are almost immediate. Any form of payment tracking ultimately gives them more control over their finances. That control is necessary for many aspects of financial independence. It provides:
- A digital financial footprint that shows which card pays for which services and when.
- Easy payment management so that they can change payment methods or cards as needed.
- Convenient payment updates in the event of lost, canceled, or reissued cards; consumers can update their payment information quickly and in one location.
- More responsible spending habits such as canceling unused subscriptions and guaranteeing on-time payments.
Moreover, it makes navigating one’s monthly recurring spend—and all other spend—a little more transparent. Consumers want more understanding and control over their finances, and offering them that capability is a major differentiator.
On the other hand, making things more difficult and inconvenient for cardholders is a definite nonstarter. Your financial institution should not be the source of their frustrations!
Bank and Credit Union Benefits
The benefits of offering payment management don’t seem as immediately obvious as the benefits of receiving it. Nevertheless, the benefits are there.
Here are a few ways that offering payment tracking and subscription management ultimately help your financial institution:
- Customer and member loyalty are largely a product of convenience. If you make a consumer’s life more convenient, you have their continued business.
- Cardholders with a more visible and transparent digital footprint are less likely to mismanage their money or miss payments. Their credit scores, long-term financial viability, and likelihood of taking out loans increase.
- Consumer-facing technology is a major service channel now, and people are just as likely to develop a relationship with your app as with your tellers. If you can offer them functions and features usually reserved for big banks, then your service is likely to draw praise.
- The three bullets above establish trust with consumers and empower them to make better financial decisions. If you win their trust and give them the tools (and incentive), you can position your card at the top of their wallet.
- Finally, you can use the same technology to better understand your account holder base as a whole and find new opportunities to offer them a unique and positive experience. Tracking payments across your institution will benchmark current share of wallet, track changes in spending, and help identify where your account holders are most loyal.
Financial institutions have to ask themselves what their purpose is. Is it to squeeze every last drop of profit from their account holders? Or is it to provide such excellent and convenient service that they choose you as their primary financial institution (PFI)…
And choose your card to sit top of wallet.
Especially in the world of finance, some people tend to think of banking as a zero-sum game. That is, that there are winners and there are losers.
Yet when you empower your cardholders, you differentiate yourself. Providing payment tracking doesn’t just strengthen your customers and members—it also strengthens your institution.
That’s a win-win situation.