The final article in our series on the new phygital payments landscape powered by leading PayTech specialists G+D surveys the premium services market – and examines how physical payments methods merge with digital technologies to add value for premium customers around the world.
It’s a commonplace these days to hear that payments and retail banking are becoming more competitive.
Over the last ten years, digital-only banks and fintech companies have sprung up to provide an existential challenge to traditional banks – and many of these new service providers are specifically targeting the lucrative premium banking services sector.
That’s no surprise, given that the High Net Worth customers typically associated with premium services spend more, and more frequently, than any other segment.
Customers looking for premium services expect to enjoy the money they have earned, and place serious value on their time.
They expect financial services that deliver what they want, when they want it with a minimum of fuss or hassle.
By delivering phygital services that meet these expectations, banks can build relationships that are beneficial not just to their payments business, but across a wider range of banking products such as mortgages, loans and other areas.
Spending big, spending often
Research suggests[1] that customers using premium products are more likely to have multiple payment cards, and are more likely to use them with greater frequency than other categories of consumer.
47% of global premium customers hold two or three payment cards, and more than a third hold four or more.
Premium customers are also more likely to spend more, with half of those surveyed world-wide saying they use their credit cards on a daily basis, and just under a third (30%) saying they have spent more than $5000 on a single transaction in the past year.
“Premium customers are more likely to have multiple cards, spend more often – and spend a lot more.”
With more than 110 million people expected to join the global middle classes in 2024 alone[2], serving the premium market isn’t just lucrative – it’s also an expanding business segment.
Consumers in this segment are looking for payments products that let them enjoy their wealth and present themselves as affluent across the phygital spectrum, whether that’s online, at a restaurant or in-store.
The trend towards hyper-personalization, both online and the physical world, is one way banks can distinguish themselves when it comes to premium products.
This might mean, for instance, a physical payment card made out of metal or ceramic materials to denote wealth and status.
Online, these distinctive cards can be supported by an app that’s configured for the customer’s specific needs – from a tailored spending limit to balance and transaction information they select to a family card program with spending limits for kids.
Standing out: from communication to authentication
To succeed in the premium segment, banks need to deliver more in every engagement with the consumer.
From the outset, the delivery and activation of cards targeting premium customers should include distinctive branding and a high level of personalization both online, and in the physical delivery of the card. Activation processes should be highly personalized and involve as little friction as possible.
“Phygital services help banks to reduce complexity and friction for valued, high-spending premium clients.”
Reducing friction and complexity to show premium customers how valued and important they are is a principle that needs to be carried across the cardholder experience.
The instant delivery of PIN numbers via secure messaging to mobile devices is a great example of how phygital adds value for premium customers – no more days waiting for new PIN numbers to arrive. Likewise, the opportunity to set a personalized PIN online via an app will also be valued by premium customers who value convenience.
At check-out, these customers value authentication processes that reduce friction to a minimum.
In the phygital era, innovative new authentication routines such as Tap to Phone, in which a card is tapped against a mobile device to authenticate an online transaction, are enabling banks to deliver higher levels of service to premium customers via faster and simpler secure authentication.
At physical checkout, banks should be looking to simplify authentication routines for premium customers with one-click checkout based on information exchanges with the merchant during the transaction process.
Steps such as these will help banks to retain and build their relationships with high-spending premium customers not just in the payments business, but across the whole range of banking and financial services, including investment, insurance and lending products.
As the phygital era makes the provision of premium services easier and cheaper than at any time in banking history, banks can also more easily offer tiered services to customers based on their relationship history and value, helping to cement loyalty across a wider customer base.
Learn more about how G + D delivers premium payment experiences for valued customers across the transaction chain, from cards to authentication: Convego® Service Market – The Future of Card Issuance | G+D
[1] Altiant, “Views from the High Net Worth Consumer”
[2] Visual Capitalist, 19 October 2023: “113 million people to join the global middle class in 2024”
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