Mobile payments are not here yet, but Zions Bank, Salt Lake City, is preparing to quickly take advantage of the service once it arrives. The bank has launched a mobile cash rewards app that conditions customers to reach for their mobile phone for discounts or cash back whenever they enter a store.
Interview by Walt Albro, ABA Bank Marketing and Sales, June 2014
About 18 months ago, Zions Bank, Salt Lake City, introduced a mobile application that provides mobile cash rewards to customers who shop in local stores. Zions, which has an asset size of $19 billion, called the app a "cutting edge" program that was among the first offered by a bank in the United States.
The app contains two types of merchant-funded offers: "show your phone" coupons and cash back rewards. The mobile program, known as AmaZing Deals, features offers at hundreds of local and national restaurants, retail shops, hotels, golf courses, automotive service providers and more, stretching from Southern Utah to Northern Idaho.
Customers redeem mobile coupons by presenting their mobile phone at the point of sale. Additionally, cash back rewards are earned when a qualifying transaction is made using a Zions Bank Visa card at a participating merchant location.
Zions Bank has a reputation for being ahead of the curve in the area of applying technology to marketing. In 2005, for example, Zions introduced a merchant-funded rewards program that was the first of its kind. Today, many banks have similar program.
Since mobile phones are soaring in popularity, there has been much discussion about the development of a "mobile wallet" that would include such features as mobile payments. ABA Bank Marketing and Sales asked Zions about the reason for developing a mobile rewards app. Is this a precursor to a mobile payments app? Does Zions see other banks going in this direction in the future? And, what has been consumer reaction?
Walt Albro, editor of ABA Bank Marketing and Sales spoke with Rob Brough, executive vice president of marketing and communications at Zions. Below are excerpts from their conversation.
Why did Zions Bank develop a mobile rewards app?
Even though the mobile wallet industry has been around for a while, we're still very early in the process. There's so much yet to be decided: whether a mobile wallet will be cloudbased or near field communication (NFC)-based and what mPOS (mobile point of sale) will play, among other factors.
Some of the biggest companies in the world are fighting in this arena, with very little success to speak of. There is interest among consumers and merchants, but the wallets haven't hit the right chord to spur adoption yet. A lot still has to be determined. While there has been progress made, it has not been a huge leap.
We wanted to position ourselves in a way to be able to capitalize on whatever solution emerges, which Zions has a history of doing. We partnered with Access Development to build Zions Cash Rewards nearly eight years ago, and at the time it was one of the first card-linked offers program in the nation. That program continues to thrive because it's built on factors that are almost universally appealing: convenience, cash back and local merchants.
We shape it based on consumer spending, and the program continues to be a tremendous success.
With mobile payments, our plan is to take the same measured approach and guide our customers and merchants through the adoption process one step at a time.
This app generates commerce, which we see as a logical bridge between the basic functions and a full payment platform. Customers have their phones out, and they're reaching for their Zions' card to pay. When that payment moves onto the device, in whatever form it takes, they'll already be accustomed to looking to us for that solution.
How many other banks are offering mobile rewards today?
I don't see too many out there.
What are the advantages of a mobile rewards app to a bank?
Consumer interests are shifting onto their mobile devices. A Google report from a year ago claimed that eight in 10 smartphone users were pulling out their devices while in-store to research products and prices. A study by Javelin Strategy & Research found that consumers spent more than $20 billion using mobile devices in 2011. Our customers are moving in that direction, and we want to be there with them.
Cash rewards is an ideal program to build an app around, because it rewards the customer for using his or her Zions' card at participating merchants in our footprint. Most of the deals are in-store, which is still where the vast majority of consumer spending take place. Access, who built the app and manages the merchant relationships, shapes the program based on spending patterns, so there is constantly relevant value –- gives our customers a reason to constantly tap open the app and look for inspiration.
What does Zions hope to do with the app in the future? Is it a precursor to a payments app?
Those plans are in process. Ideally these elements will live within the same app -- banking functions, rewards and coupons, and payments. Social networking may have a place in there.
The industry has created some great technology in regard to mobile payments. As cool as the technology may be, cool technology alone isn't going to change consumer habits. At this stage, it's still more convenient for someone to pull out their card and pay. Adoption isn't going to happen until there is some sort of extra value, and that's where our focus is for the moment.
We're also being cautious to not place our resources in a system that isn't going to gain any traction among consumers. Whether we see cloud/app-based payments win out, or NFC makes a strong comeback, we're going to be in a comfortable position with our customers.
So it doesn't matter which form of digital wallet wins out?
No, mobile rewards are a precursor to any wallet solution no matter what it turns out to be. The benefit to us is the loyalty we obtain from our customer as a result of the rewards that are being offered. These rewards help to differentiate our bank.
How are you marketing the mobile rewards app?
Beginning with the debut of the AmaZing Deals app in November 2012, we've tried to make our customers aware of the app through multiple touch points. Our customers are automatically enrolled in the program when they sign up for a checking account, so the primary goal was to get them to download the app.
To date, we've promoted the app through emails, in-branch printed materials, statement inserts, advertisements in our monthly Community magazine, short message service, social media, and Web banners on the ZionsBank.com home page, as well as the AmaZing Deals website.
One of our successful distribution methods was in the form of business card-sized pass-along cards with quick explanations of the app and QR codes to download the apps. These were distributed through our branch network.
Since then, we've had some success with email marketing.
I understand that the mobile rewards program was originally called Zions Cash Rewards mobile app, but was changed to AmaZing Deals a few months ago. Why the name change?
This was done to align the program with our other card products, which are called the AmaZing Cards, and the card rewards product, which is called the AmaZing Rewards program. When we changed the name, we did some additional marketing, which resulted in the number of app downloads jumping up to five times the recent monthly average.
What percentage of checking customers is downloading the app?
The volume has been going up, month by month. In some months, we have had as many as 60 percent of new customers receive a reward through AmaZing Deals. But, in terms of the number of regular users - those who respond to offers monthly - it's probably about one out of five customers.
What advice would you give to another bank contemplating development of its own mobile rewards app?
I have a few tips:
- Focus on value. "If we build it, they will come" doesn't work. Consider the end user and "What's in it for them?" Great technology is necessary, but value is even more important. To determine value, you have to look from the user's vantage point. What value are you adding by creating this? If it's not giving them something different, why would you do it and why would consumers use it? Obviously, create value for the customer, and it will create value for you.
- Think locally. Most discretionary dollars are spent in-store, so focus your merchant partnerships on places of value within your footprint.
- Promote it. As great as the app may be, most consumers still need to be reminded to not just download, but to frequently engage with it. This means continuing to develop great value within the app, and then telling everyone about the great value through all of your marketing channels.
- Know your strengths and weaknesses. Our industry has a reputation for being rather hit-and-miss when it comes to mobile app development. Our partner in the Zions Cash Rewards program, Access Development, has built successful couponing apps, so we knew it was fully capable of applying that knowledge to meet our needs.