In an earlier post, I proposed that banks could enhance transaction account products by partnering with fintechs or other technology companies that have a competitive advantage in delivering rich, consumer-centric experiences through digital channels. By integrating the solutions of a non-bank like Yelp, Samsung or Google, a bank can add context to card and checking account transactions that coincides with the overarching consumer activity – ultimately creating new value propositions and revenue streams built on consumer data.
The rumor of Amazon’s potential acquisition of Capital One in early February largely validated the new value created out of this type of bank-tech partnership. And though Capital One, Amazon and the non-banks listed above are all solid candidates for delivering a co-branded product, the most compelling duo for producing such a solution is American Express and Foursquare.
What Each Brings to the Table
Foursquare plus American Express may seem like a peculiar marriage at first. But, these technology and customer-focused companies based out of New York City may be able to foster the perfect partnership in retail banking. Let’s examine what each party brings to the table.
Amex boasts a large base of rewards-minded cardholders and business lines that span beyond consumer banking, such as travel services, offering valuable sets of travel data that can be tied to purchases. Card is Amex’s largest business line but, interestingly enough, the company lacks a presence in the checking account space – something that may actually work to its advantage in this case.
Being one of the first card issuers to launch real-time purchase notifications and merchant offers, American Express has made attempts to be a pioneer outside the traditional banking space. It was also one of the first to employ a chatbot via Facebook Messenger, with an AI-based customer service platform that many other banks are now looking to replicate. Best of all, Amex is part of the Plenti rewards program that includes a consortium of brand-name merchant partners.
Much like Amex, Foursquare is a pioneer in digital. However, Foursquare knows merchants’ physical presence arguably as well as Google Maps. In fact, Foursquare knows, not only the businesses in a community, but also a city’s neighborhoods, events taking place, tourist destinations and micro districts. To top it off, Foursquare has a separate app called “Swarm”, which is home to a highly-social user base that frequently checks in at Foursquare locations and posts reviews of their experiences.
With this stock of lifestyle data, Foursquare has unparalleled knowledge of where a given consumer might like to visit, eat or hang out on a given afternoon. Context is its middle name – knowing that the check-in at Soldier Field in Chicago was actually a beer connoisseur attending an annual festival and not a Chicago Bears fan going to a game. Just imagine the types of insights that Foursquare could procure with the addition of card transaction data from American Express.
How It Would Work
How might a co-branded solution work? A consumer would deposit initial funds directly to his Foursquare checking account (which is secured by American Express), with direct deposits made via an underlying Amex routing and account number. This checking account would be an evolution of the Bluebird depository and Serve prepaid products that Amex currently markets to underbanked consumer segments, but accessed through the Foursquare UI. Funds in this checking account would be used for standard banking activity, such as cash withdrawal (via a Serve debit card), bill pay for both utility bills and card balances, and instant transfers to savings and brokerage accounts offered by Amex.
The truly fascinating part of the product is what happens during the payment experience. Card transactions, made independent of form factor, would trigger real-time purchase notifications (i.e. digital receipts) with information about the purchase. But, in addition to basic merchant and transaction information, the consumer could see rewards points earned on the purchase as well as its budgetary impact.
Introducing Foursquare Checkouts
Swiping into the notification would route the consumer to his Foursquare app to view more information about category spending, coupons earned on the purchase and a summary of his loyalty and relationship with the merchant. Most importantly, the customer will have the option of having his payment proxy for a Foursquare check-in – in this case termed “checkout”. Users who publically share their checkouts on the social network, much like those on Venmo, would unlock rewards and earn additional points, discounts and other loyalty benefits at the respective merchant. This marketing-induced feature will apply to card-not-present (CNP) transactions as well.
To avoid privacy concerns, customers will always have the ability of opting-in or out of sharing. Done correctly, the gamification-based Checkouts feature will both validate and socialize a given consumer’s loyalty toward a brand. Merchants, especially those in the Plenti network, may offer major status benefits or preferential treatment to habitual Checkouts users, which would likely include: existing top-echelon customers, mayors of merchant locations and brand evangelists who share pictures of their experience.
All account activity would be summarized in an experience-focused UI that includes key insights on spending and loyalty, in addition to relevant merchant offers. Visualizations of monthly transportation spend could include a heat map of the consumer’s local area, depicting common routes and nearby stores that could be of interest during a future trip. A recent air fare booking, made via Amex’s travel portal or simply with an Amex card, could be accompanied by a snapshot of itinerary considerations.
To ensure paint a 360-degree view of their transactions and activity, customers would have the option of adding accounts from other banks, institutions and merchant loyalty programs. Immediately, Plenti and other rewards programs become embedded into the consumer’s shopping experience while their lifestyle and behavioral data is regurgitated back to them through a financial lens (e.g., average nightlife expenditures are 30% higher than the consumer’s peer group and are growing 5% month over month).
Down the Road
The Foursquare transaction account described above would create a captivating, activity-focused experience that would drive daily engagement and provide a 360-degree view of how their lifestyle translates into financial health. With that said, there are even greater opportunities to enrich the experience, largely by use of artificial intelligence (AI).
A chatbot built on AI could proactively let the consumer know how much he could be saving by taking the bus to work and which of his Amex cards is most rewarding when used at restaurants. The consumer could ask the bot for an approximation of how many free nights his Marriott rewards point balance translates to or how close he is to unlocking a reward at his favorite deli.
In addition to AI, Foursquare could capitalize on its market-leading geo-location capabilities to alert a consumer of nearby deals in real-time and warn him of his high spending on food in March prior to walking into Trader Joe’s. The spend time in given locations would be highly indicative of unique shopping behaviors and individual lifestyles (e.g., the many hours spent at Starbucks on a Sunday afternoon is very different than the Wednesday morning check-in, though each visit yielded the same transaction).
The prospect of an American Express-Foursquare partnership is an exciting, even if many of the details and branding need some sorting out (for one, Visa has already trademarked “Checkout”). The premise revolves around the fact that the two providers – with the help of technology like geo-location, AI, APIs and advanced analytics – can marry core competencies to “personify” the payment experience and its overarching consumer activity.