Open Banking changes the game for customer loyalty (and Westpac launched it in New Zealand today)

Updated: Aug 22, 2021

Image: BUCK

Westpac launches BUCK

Westpac pre-launched their new payment app BUCK today. It hits the market for any New Zealander in September and will be free forever. There's three features in BUCK for customers: sending money, requesting money, and splitting a bill.

Customers download the app (Android or Apple - download here) and link their bank accounts (ANZ, ASB, BNZ, The Co-operative Bank, Heartland Bank, Kiwibank, TSB and Westpac). “You start by linking your bank account to BUCK. The app finds the contacts in your address book who also use BUCK and shows you their handle and avatar. Customers can then send money to each other without using a bank account number".

Big movements in payment innovation : payment and loyalty merge

BUCK plans to become the Venmo, Paytm or Square Cash App of New Zealand. Close on their heels is Dosh which will launch QR code payments at merchants. We're soon also to see our first digital challenger in market when Revolut arrives. Along with BUCK Westpac also announced it will partner with Buy Now Pay Later leader Bundll from hummgroup. Bundll's done the first real Buy Now Pay Later customer loyalty deal in an offering with Virgin Australia's Frequent Flyer program Velocity. All of this is happening with the backdrop of payments regulation about to hit in New Zealand. Expect more. Australia's flybuys have launched their own payment in flypay and Woolworths Australia have launched Wpay.

Open Banking before it's open in New Zealand

Australia and the UK have Open Banking or what's more formally called the Consumer Data Right. Your bank history is yours and you can take it with you or share it with any other bank at any time. In Australia they're soon to let consumers do the same with their Telco history and their Power Company history.

A Consumer Data Right bill is only going to Parliament in New Zealand at the end of this year. BNZ has offered Open Banking access for some time so Westpac's not the first but this will be the first time bank data will get aggregated across mutiple banks. There's no requirement for non-Westpac banks to allow BUCK to access customer data now. It's a good sign for innovation. Westpac will use Akahu to effect this (they also took a stake in them this time last year through Redbird Ventures). Akahu enables a customer to share their data today from banks, telcos, Kiwisaver funds, power companies, Sky, AT Hop and almost anyone who bills them (full list here).

Open Banking for loyalty programs

The heart of a customer loyalty strategy is customer data. The Consumer Data Right gives customers the right to all of their historical transaction data and a simple, frictionless way to instantly share as much or as little of their data as they want with almost any other company.

This means loyalty programs no longer have to capture the transaction as it's executed and customers no longer need to flash a loyalty card at a retailer. They can just share all of their credit and debit card data from any bank with the retailer. The retailer can spot the transaction and award points or loyalty benefits after the fact.

There's several upsides:

  • Coverage: no transactions are missed (unless a customer pays with cash)

  • Cost: this method is significantly cheaper than the current card linking solutions

  • Competitors: the retailer can see what a customer spends elsewhere.

  • Partners: a retailer can add new partners to it's loyalty program (such as other retailers) without any need to add hardware at their POS.

Of course there's several challenges and most notable is that a customer must trust the retailer with all of this data.

The loyalty program opportunity - become the Nectar of New Zealand

The Nectar loyalty program in the UK recently launched Nectar Connect. Customers can connect all their bank accounts through Open Banking. Rich bonus Nectar points are earned on their shopping at a host of new merchants.

Image: Nectar UK

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