Loyalty Apps Leverage Open Banking to Help Consumers Save More, Spend Smarter

Despite a recent decrease in inflation rates, consumers remain cautious in their spending habits, wary of the economic uncertainties ahead.

In fact, the persistent concern over living costs continues to shape consumer behavior, driving a demand for financial management tools to help stretch their dollars further and optimize their spending.

In response to this ongoing need, companies are innovating with solutions such as the relaunch of the bank-powered rewards app Cheddar, now offering instant retail savings to aid consumers in navigating financial challenges amidst a cost-of-living crisis.

Leveraging open banking technology, the revamped app enables users to receive instant, automated cash back directly into their bank accounts from a selection of more than 150 retailers, including Amazon, Asda and Costa Coffee. This functionality enables consumers to access higher return rates, saving significantly on essential expenses like groceries and fuel.

The app also provides personalized recommendations based on users’ spending patterns, while giving retailers access to detailed spending data to facilitate the delivery of essential products tailored to their customers’ needs.

The advantages extend beyond cash back and savings. Additionally, Cheddar 2.0 enables users to split bills with anyone, regardless of their bank, eliminating the need for sharing bank account information with peers.

Commenting on the recent news, Luke Ladyman, COO and co-founder at Cheddar, said, “with the cost-of-living crisis eroding consumer purchasing power, people need a financial companion to help them spend smarter.”

As such, the new app “harnesses the benefits of open banking infrastructure and the latest artificial intelligence,” enabling consumers to leverage their spending data to strengthen their finances and access instant savings with nearly every purchase.

In an interview with PYMNTS last April, Ladyman highlighted how open banking technology is transforming the loyalty landscape by targeting two distinct consumer groups: affluent yet time-constrained individuals and Gen Z consumers who are big on personalized deals.

These demographics often find traditional cash-back sites cumbersome due to various pain points, such as the need to manually activate bonuses or endure lengthy payout periods exceeding 90 days.

Ladyman said that open banking addresses these pain points, allowing brands to deliver relevant, seamless and highly personalized cash-back solutions based on users’ actual spending behavior. These incentives are conveniently delivered directly to users’ inboxes or accessible within the Cheddar app, streamlining the entire process for a smoother experience.

“With years’ worth of spend data via open banking, we can see if somebody has spent [at Calvin Klein] within the last two years and serve them an offer accordingly,” Ladyman said at the time.

He further elaborated on the benefits of leveraging open banking data, which he said can help brands identify potential customers who have previously engaged with specific brands, allowing for targeted offers. This closed-loop system enables brands to adapt to evolving consumer habits, including changes in bills, mortgages and household income, by taking proactive measures to acquire new business.

Moreover, Ladyman emphasized the importance of measuring incrementality in loyalty programs. “Our platform is an incremental revenue-generated platform where you can go after customers and move them through the ranks, from non-loyal to loyal VIP and VVIP, by tracking their spending and how they evolve through those behaviors over time.”

Meanwhile, Blackhawk Network (BHN) has unveiled a convenient, flexible and fast way for businesses to dispense customer loyalty rewards.

Introduced earlier this year, the “Select Codes” offering by the branded payments provider facilitates a digital “code-to-catalog” system, allowing businesses to distribute codes to customers who in turn can exchange them for eGifts or virtual prepaid cards from a diverse range of brands. Alternatively, customers have the option to redeem their codes for one of BHN’s multibrand gift cards, like One4all.

In conclusion, as consumers continue to face financial challenges, the adoption of open banking technology offers promising opportunities to improve financial resilience and empower individuals to make more informed decisions. By leveraging data-driven insights and digital solutions, companies can better serve the evolving needs of consumers in an increasingly complex economic landscape.