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Financial institutions, payment companies resurrect daily deals

American Express, Bank of America and Sovereign Bank are all recent examples of financial institutions and payment companies using mobile to reward consumers with daily deals. The key to success for these companies though will be finding ways to make the deals more personalized, according to industry experts.

“The real secret sauce here is being able to personalize offers and bring in loyalty,” said Sheryl Kingstone, Toronto-based research director at Yankee Group.

“What the financial institutions are missing out on with local offers is that they have not nailed the mobile portion yet,” she said.

“Historically daily deals have been about low-priced options and training people to only look for deals, which is great if you’re trying to lure in a customer, but the goal is about how to engage with consumers.”

Mobile money
One of the main problems behind daily deal giants such as Groupon and LivingSocial is finding ways to keep deals relevant to users. Although the companies found initial success in the space, consumers also felt bombarded with offers that did not interest them.

With the amount of purchase data available from financial institutions and payment companies, brands and marketers have a strong opportunity to target consumers with offers and deals.

Bank of America is the most recent example. The bank recently rolled out its BankAmeriDeals program to reward card members with offers from brands including Aéropostale, The Body Shop and FedEx Office.

Clients who use either Bank of America’s online or mobile banking services can now find offers under the “Deals” button (see story).

Similarly, Capital One also recently revamped its mobile banking app to include offers from retailers such as Whole Foods and Starbucks.

Additionally, MasterCard recently partnered with shopkick to let users sync their credit cards and earn extra “kicks” – or points – when they shop through shopkick’s “Buy & Collect” program (see story).

Joint venture
Despite the uptick in the deal space from financial institutions and payment companies, the real opportunity for companies will come from partnering with brands and retailers that already have a group of consumers in a loyalty program, per Ms. Kingstone.

Using their data, financial institutions and payment companies can push deals and rewards back into a retailer’s loyalty programs, where brand affinity is high and consumers have a track record of spending large amounts of money.

Take Target for example.
By using a loyalty member’s financial information, the consumer could save money on products that they buy on a weekly basis.

According to data from Yankee Group, an average of 59 percent of Target’s shoppers has a smartphone, showing the opportunities to integrate offers into mobile initiatives such as a branded application.

Not only is this convenient for both a retailer and a finance company, it also helps clear up some of the consumer confusion around daily deals.

Yankee Group’s research also found that targeted promotions to a loyalty program can drive incremental opportunities by more than four percent.

“The data adds a trust factor from the banks, but they will still have to work to be more successful to put Groupon in its place,” Ms. Kingstone said.

American Express is piloting mobile deals in its iPhone app

Security concerns
Compared to the ways that Groupon and LivingSocial have traditionally distributed daily deals through emails and other marketing channels, financial institutions and payment companies are taking a different route to appeal to users.

Consumers are already using mobile and online banking platforms, making deals seem like they are dropped into the mix rather than being aggressively marketed to, according to Eben Jose, financial analyst at IBIS World, Santa Monica, CA.

Although financial institutions and payment companies are proving to have a leg up in the daily deal space, security is also a concern with how the companies plan to use the data.

“Banks are so large that they have to be careful about how they work with consumer information,” Mr. Jose said.

“It’s still new, but I think consumers are more responsive to deals coming through their banks because they are targeted about what you want to buy, so it will have higher response rates but there will be privacy concerns,” he said.

Final Take
Lauren Johnson is associate reporter on Mobile Commerce Daily, New York