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The COVID-19 pandemic has accelerated the shift toward digital-first consumer behavior, including in loyalty programs. Jamie Samaha, EVP of issuer loyalty at Mastercard, explains that redemption experience is crucial for cardholder engagement. He offers three tactics for issuers: simplify earning and burning rewards, leverage card-linked offers and partnerships, and enable instant, seamless redemption. Data shows cash-back redemptions rising toward 80%, e-gift cards growing, and consumers favoring instant rewards. By adopting a digital-first, frictionless redemption approach, issuers can drive loyalty and engagement.
Despite the pandemic accelerating digital banking, many traditional banks have not fully digitized. Customer demand for all-digital options is high, but banks struggle with compliance concerns, organizational resistance, scalability issues, and legacy IT systems. This article examines these obstacles and potential solutions, including advanced verification technologies, stakeholder buy-in, scalable tech solutions, and front-end upgrades alongside core system improvements.
The COVID-19 pandemic has led banks to temporarily close branches and limit hours, accelerating the adoption of digital banking. Experts suggest this will speed up branch consolidation and office downsizing as consumer habits shift permanently toward digital channels. Banks like PNC and U.S. Bank are reconsidering their physical footprints, while others like Bryn Mawr Bank and ConnectOne Bank are already reducing space. The pandemic presents an opportunity for banks to cut costs and adapt to new customer behaviors.
The COVID-19 pandemic led to the temporary closure or restricted operations of thousands of bank branches, with customers and employees gradually adapting to digital channels. Experts note that this 'forced mobility experiment' will accelerate banks' actions on the cost side, including branch consolidation and office space reduction. PNC, Bank of America, and others have already expressed or taken action, with KBW estimating that the number of bank branches in the U.S. will shrink by 20% to 30%, while the prevalence of remote work may also drive banks to reduce headquarters office space.
Payment solutions in the U.S. banking industry are experiencing a digital revolution, shifting from paper-based to digital processes. The ACH network continues to modernize, with real-time payment systems (RTP) and the FedNow service driving industry change, while security technologies such as account pre-verification are becoming crucial in preventing payment fraud. Banks need to balance supporting customers' digital transformation with maintaining traditional payment services.
The digital revolution is pushing U.S. banks to evolve their payment solutions, shifting from paper to digital processes with new real-time payments systems, overlay services, and modernized legacy rails. The ACH network's Same Day ACH feature and The Clearing House's RTP network are key developments, with the Federal Reserve's FedNow Service expected to launch in 2023 or 2024. Overlay services like Zelle help businesses migrate from checks to electronic payments. Security remains paramount, with fraud attempts rising; banks are using pre-validation tools and databases like Early Warning's National Shared Database to mitigate risk. The pandemic has accelerated digital adoption, and banks must balance new capabilities with traditional services while educating clients.
This article explores the challenges currently faced by international remittances and cross-border payments, including the lack of a global settlement network and outdated bank technology platforms. The author points out that blockchain technology, particularly distributed ledger technology, has the potential to eliminate these barriers, enabling instant, transparent, and low-cost global settlement.
In this opinion piece, Haohan Xu, CEO of Apifiny, examines the barriers to instant international settlement faced by banks and remittance companies, including the lack of a global settlement network and outdated technology. He notes that the COVID-19 pandemic has exacerbated remittance declines, with the World Bank projecting a 20% drop in 2020. Xu suggests that blockchain technology, with its ability to tokenize assets and enable real-time peer-to-peer settlement, could provide a solution. He points to DTCC's exploration of distributed ledger technology as an example and calls for banks to adopt blockchain-based networks to improve speed, reduce costs, and enhance customer satisfaction.
Community banks participated in the Paycheck Protection Program to help small businesses, including noncustomers, and are now implementing strategies to retain those new clients. Banks with less than $10 billion in assets made 44% of PPP loans as of June 30, according to the SBA. Institutions like First Resource Bank, Grand Rapids State Bank, Citizens Bank of Edmond, and Republic Bank are using follow-up campaigns, personal videos, social media, and in-person visits to build lasting relationships. Bankers believe the personal touch and access to decision-makers give community banks an edge over larger competitors, and hope the memory of help during the crisis will keep new customers loyal.
Community banks helped non-customers obtain forgivable loans through the Paycheck Protection Program (PPP) and are now actively implementing strategies to turn new customers into long-term small business clients. This article explores the follow-up measures, customer feedback, and industry impact of several community banks.