Consumers are getting more comfortable paying for things with their phones, and that has banks thinking more and more like marketers.
Armed with troves of data on what consumers buy, when and where, financial institutions have started sending coupons and offers from stores straight to customers' mobile devices.
Banks have a big advantage in this era of hyper-personalized marketing: They know every spending habit of every customer. For example, a fast-food chain can send a coupon to someone who actually bought a fast-food meal using his debit card in the past month, rather than one who dines once a week at an upscale restaurant.
"Consumers need a reason to use a digital wallet," said Jen Roberts, president of strategic alliance and loyalty solutions for JPMorgan Chase & Co., which is developing a digital-payments service that customers can use at retail stores, in apps and on the web.
The bank has signed up Starbucks Corp. and Shell Oil Co. gas stations to accept Chase Pay in their physical stores later this year. Coupons, rewards programs and loyalty points will play an important role as the digital-payments service develops, Roberts said.
"When you look at solutions that are out there, there's a reason why they haven't taken off to the degree they were expected to," she said. "If we don't do this, someone else will."
Banks are building up their marketing machines as they seek growth outside their traditional lending businesses while competing with Alphabet Inc.'s Google, Apple Inc., and Samsung Electronics Co., all of which have a head start in mobile-payment technology. The move to serve up coupons and offers might also help improve customer loyalty — particularly among millennials, who surveys show are more prone to switching banks than their elders.
Click Rates
Cardlytics, which partners with banks on "card-linked" offers that give customers cash back when they use their cards at participating stores, sees an 8 percent average click-through rate for offers online or via e-mail or mobile apps. About one third of those clicks translate into redeemed offers, the company says. By contrast, other digital ads' click-through rates typically hover around 1 percent.
