Today's world seems to be dominated by technology, particularly among younger generations that are fast rising in prominence. While financial service firms still compete with each other for market and wallet share, as an industry they struggle to draw customers' eyes away from Facebook or their iPhone.
However, the industry does not have to see the tech sector as a threat. Credit card issuers such as American Express and Discover have been leaders in finding ways to partner with tech companies, integrating their capabilities onto the websites and apps their clients are already using. Here, we highlight two of those partners: Amazon and Apple.
Amazon and Amex
One outside partner clearly gaining traction is Amazon, particularly in terms of credit card rewards. American Express has allowed Membership Rewards card holders to use their points while shopping on Amazon.com since 2010. This gives clients the convenience of taking their rewards points to one of the Web's most popular retailers with a vastly larger inventory of potential redemption options.
More recently, though, competitors have been closing this gap. Discover similarly partnered with Amazon rewards redemptions in 2011, and the Chase Ultimate Rewards and Citi ThankYou rewards programs followed suit in close succession in late 2012.
With those key players all on board with Amazon, rewards programs that rely solely on their own redemption sites are at a clear disadvantage.
While Amazon has been attracting partners in the financial services for years now, a newer player in the space is Apple Passbook. Introduced with iOS 6 in 2012, the native Passbook app allows users to store documents like tickets, gift cards, or coupons on their iPhone. While most partners are from industries such as travel, American Express and Discover have become the first financial institutions to enable Passbook integration.
In December 2012, Discover enhanced its mobile gift card redemptions with the option to add the card to Passbook, instead of receiving it by email or mail. This straightforward update offers one of the quickest, most convenient ways to convert cash back rewards into store credit and make a purchase. The whole process could be completed on an iPhone while browsing the store.
It pays to Discover, by mobile phone now.
American Express takes a different approach to Passbook, allowing clients to load account information such as balances and activity notifications within the Passbook app. This does not tie into spending as Discover's program does, but clients can keep up to date on their account through an app they may come to use more frequently than American Express' own mobile app.
With the tech sector advancing so quickly, it's not enough for firms to put up a Facebook profile or Twitter feed and go about business as usual. Financial service firms must continue to develop innovative ways to leverage online, mobile and social to reach their customers. Some approaches like redemptions on Amazon are close to becoming industry standards, while other areas such as mobile finance are wide open to new ideas.