Shake-up in SA banking can pay off for customers. Truth featured in the Sunday Times Business News

Truth’s CEO, Amanda Cromhout featured in the Sunday Times Business News insert.

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As technological disruption and new entrants shake up SA’s banking sector, customer loyalty has become the prize for financial services companies.

Amanda Cromhout, CEO of Truth, a loyalty and customer relationship management consultancy, said loyalty strategies were increasingly important for banks.

It was becoming a requirement “that you have some element of a loyalty proposition because of the competitive environment, but it’s driving the right banking behavior so it’s not a negative thing”, Cromhout said.

A loyalty rewards programme could be beneficial for the banks’ customers who received discounts on products and services, such as flights and groceries, for their banking behaviour.

“For the bank, what’s very obvious, especially with the tiering system, is [that] it is incentivising customers to climb up the tiers to get better rewards and therefore, as they climb up the tiers, they have to do better banking as a customer of the bank,” she said.

Lester Davids, a trading desk analyst at Unum Capital, said prioritising customer experience had become increasingly important for banks, and customers were the winners.

“While behavioural science gives companies greater insights into consumers, it is the consumers that will be the ultimate beneficiaries as they would be spoilt for choice as companies vie for a share of their loyalty and spend.”

The increasing presence of technology companies in financial services, such as Pay- Pal, Square and Alipay, and the relative ease with which customers can switch banks, have made the sector even more competitive and intensified the need for banks to incentivise customers to remain.

New reward system

Nedbank, in response to the changes in the sector as well as the financial pressure consumers are facing, has developed a new reward system that goes beyond discounts, vouchers, points and cash for its clients.

This month it relaunched its new Greenbacks Money Management programme, which it started more than 10 years ago.

Dharmesh Bhana, executive head for Loyalty and Rewards at Nedbank, said: “We’ve looked at loyalty and rewards as a concept, we’ve looked at rewards which are really around points, discounts, vouchers — those kinds of things — and then we’ve also thought about loyalty as a separate concept. So we said, in this market that is so saturated, how do we differentiate ourselves?”

The new Greenbacks programme is made up of the Card Swiper that has a R22 monthly fee, Money Manager and Responsible Borrower packages.

Card Swiper encourages customers to use their cards rather than cash, Money Manager helps customers save on banking fees when they make transactions, and Responsible Borrower, which will be launched next month, is aimed at helping customers remain in control of their debt.

Those who keep up with their payments could be rewarded with their debt repayments covered for them in one quarter. Bhana said the bank is investing about R2bn in its digital strategy and some of that will go towards loyalty and rewards.

FNB frequently updates its eBucks Rewards programme, which was established 19 years ago.

Johan Moolman, eBucks Rewards CEO, said that “eBucks rules are revised on an annual basis. It is an ongoing necessity to revise our offerings and products to ensure that it is relevant to our members and for the programme to remain sustainable.”

Like FNB, Standard Bank and Absa also use a tier system, which means customers can earn more as they move up the tiers depending on which account they have, with the latter two banks charging a monthly fee for the reward programme.

Donate points

Fay-Elizabeth Foster, Standard Bank’s head of loyalty and rewards, said the bank launched its UCount programme six years ago and makes changes to it every year to en- sure that it remains relevant to customers and is competitive.

Customers can also donate points earned on the loyalty UCount programme to charity, a crowd-funding initiative, invest it or pay off their loans.

Capitec has taken a different approach with its tierless Live Better Programme that is accessible to all its customers at no cost.

Capitec offers its programme members discounts through its transport, food and groceries, education and health partners.

“Those are the things people need in their daily lives; our focus is not about expensive holidays or about luxury goods,” said Francois Viviers, marketing and communications executive.

He said the bank’s rewards include enabling members to pay lower interest on their credit and to earn more on their savings by behaving better.

Jay Vomacka, a portfolio manager at Aeon Investment Management, said behavioural science was affecting many industries, including banking, as power shifts to consumers. “Customers are becoming more conscious of elements such as ‘doing good’ or some environmental focus.

“The catch is that better data and more awareness of current trends allow one to be more relevant and price better, ending up with increased potential growth, increased margins, and more loyal customers. Hence, both consumers and companies will benefit from this,” Vomacka said.