3 Reasons Digital Transformation Matters for Card Issuers
Consumers increasingly have more payment options and greater access to tools that give them greater insight into their shopping and buying behaviors. In this rapidly changing environment, they’re expecting easier, more seamless ways to manage their finances.
These shifting expectations are creating a race for card issuers to digitally transform and offer the best digital customer experience. And research suggests issuers that focus on their customers will reap the rewards. A study by McKinsey & Company found that banks offering the best customer experiences see “stacked wins” of higher returns, faster growth and lower costs.
But beyond those benefits, there are many other compelling reasons issuers should invest in digital transformation. Here are three:
1. Gaining a competitive advantage by meeting consumers changing expectations
Research shows that consumers are increasingly seeking ways to better manage their finances, and they want their bank’s help—whether that’s by providing them with more insight into their purchase transactions or better control over their subscriptions.
In fact, 50% of people said they’d switch banks to get the features they want.
Narrowing in on the experiences and features consumers want is key to creating a unique offering—and one that attracts new customers and retains existing ones. Ethoca’s latest research shows what consumers want most from their digital banking experience, including features such as digital receipts and subscription controls.
Why it matters: If consumers are willing to switch banks over features, banks need to roll out the experiences consumers want most before their competitors do. Plus, digital transformation can be expensive. This means finding a reliable and seamless way to bring new features to life will be key to those who succeed in creating a competitive offering. Ethoca Consumer ClarityTM offers a versionless API that makes adding new features to the digital banking experience fast and seamless.
2. Improving issuers’ operations
Offering exceptional digital experiences can also improve issuers’ operations—reducing call volumes to the contact centers and improving how quickly customers can resolve their issue. Moreover, consumers today want more self-service options, enabling issuers to essentially reduce costs while delivering the user experience customers want.
A study featured in Harvard Business Review (HBR) found that an overwhelming majority of consumers now prefer to solve problems on their own, with 81% attempting to do so before they contact a live representative.
Self-service can also greatly reduce an issuer’s operating costs, with the HBR article noting that the costs of offering customers self-service is generally measured “in pennies,” while it costs companies upwards of $10 per call when supported by a customer support agent.
Why it matters: Offering customers self-service is essentially a win-win for issuers. So it only makes sense for companies to invest in tools that give customers the insights and access they need to answer their own questions and solve their own problems. This ultimately leads to operational excellence and cost savings.
3. Reducing fraud and disputes
Fraud and disputes lead to costly chargebacks—and those are only expected to keep rising.
Global card-not-present fraud losses are expected to reach USD $28.1 billion annually by 2026, a 40% increase over 2023, according Ethoca’s recent chargeback trends and outlook report. Meantime, global chargeback volume is growing at an unprecedented rate, with it projected to reach 337 million by 2026, a 42% increase over 2023, the report says.
There are several reasons for this expected growth in disputes and chargebacks, but ecommerce growth is likely a big factor—leading to more purchase confusion and first-party fraud, as well as more genuine fraud.
Why it matters: No matter the reason for chargebacks, issuers need to deploy tools that can help them prevent chargebacks before they happen. This includes tools that increase purchase clarity—reducing confusion—and those that provide issuers an opportunity to share real-time alerts when a dispute occurs, allowing merchants to take immediate steps that prevent that dispute from becoming a costly chargeback. Not only can this rein in their operational expenses, but it creates a safer payments ecosystem for everyone.
Leading the way
Issuers that embrace digital transformation—enhancing their customer experience while increasing operational efficiency to reducing costs—are best positioned to win in today’s competitive landscape.
Ethoca provides the tools, including Ethoca Alerts and Ethoca Consumer Clarity, that can help issuers easily and efficiently transform their digital experience and operations—helping them gain a competitive advantage. They make digital transformation for issuers easier and rewarding.