If the past year has taught us anything, it’s that merchants need to be nimble to meet the evolving needs and preferences of consumers. As digital commerce has proliferated, consumers increasingly expect to engage and purchase products from their favorite brands on channels of their choice. While digital sales have exploded, brick-and-mortar stores remain a preferred channel for making purchases and continue to play an important part in defining a brand’s experience.
Savvy merchants are focusing on the consumer journey, with many beginning to take advantage of next-generation technologies to create personalized programs that engage customers, advance them to the next stage in the purchasing cycle, and reward them for interacting with the brand.
To be successful, merchants need to learn a lot more about their customers than what they bought during their last visit. One strategy is to embed fintech into the merchant offering. By providing a debit card or lending options (i.e., Buy Now, Pay Later) to their customers, merchants can gain greater insight into buying patterns inside and outside the brand experience. This data allows merchants to better anticipate customers’ needs, making their purchase experience more rewarding.
That is what connected commerce is all about – anticipating and efficiently serving customers through each stage of the buying cycle and checkout process. The popularity of embedding fintech in the merchant brand experience also speaks volumes to the disruption taking place in traditional banking. Modern banking is more about facilitating than it is about being a destination, and the emergence of open banking or Banking-as-a-Service allows banks to enable connected commerce for other brands.
Merchant brands are fast becoming critical distribution and engagement channels for banks, helping them capture greater wallet share while decreasing disintermediation risk.
What is a Fintech Company?
A fintech, by definition, is a company that doesn't have a bank charter or a credit union charter but offers financial services to the public. Merchants can turn their brand into a fintech by taking advantage of innovative application program interface (API) technology. APIs allow merchants to connect different systems to facilitate a unique customer experience where one didn’t previously exist.
An example is when a customer needs to refuel their vehicle. Amazon, ExxonMobil, and Fiserv have joined to create a connected commerce solution that enables consumers to use a voice-enabled device to pay for gas. When customers pull up to the pump and say, “Alexa, pay for gas,” Alexa will confirm the station location, pump number, and then activate the pump with payment completed automatically after fueling. The goal is to dramatically simplify and improve the customer experience, which in turn strengthens brand loyalty.
Merchants, like Walmart, are taking this a step further with plans to launch a full banking enterprise. Walmart has offered certain financial services for decades, including in-store bill pay and money transfer services. Now the retailer is bringing together a full offering that includes credit card, debit card, prepaid card processing, financial planning and more. This venture has the potential to drive revenue and reach deeper into customer segments, such as the unbanked.
Perhaps the most valuable benefit of a connected commerce approach is the ability to create a 360-degree profile of customers. Merchants can gather data not only about what customers do when shopping in their store, but also transactions made elsewhere, revealing purchasing preferences. This data can be collected in a way that is highly respectful of customer privacy, while delivering invaluable insights for merchants to develop products, services and capabilities that customers want. It also enables merchants to find the best ways to monetize existing inventory and delight customers the next time they come to their store or website.
Banking-as-a-Service Facilitates Important Employee Benefits
Connected commerce solutions can also enable merchants to provide important benefits to employees. For example, a grocery business with college-aged employees who are working part-time while going to school can help these employees meet financial wellness goals. Employees can be offered financial tools that allow them to become more financially literate, pay off student loan debt, learn about investing strategies and build a nest-egg or rainy-day fund.
By offering these types of financial tools to employees, particularly younger, digitally native ones, merchants not only help support their employees’ financial health, but they also deliver an important job retention and new employee recruitment tool. In an economy where competition for applicants is increasingly at a premium, tools such as these can be a vital differentiator in the job market.
Digital payment tools can also prove invaluable for issuing payroll to employees in an efficient manner that serves both the employees and the merchant, thereby strengthening the employer/employee relationship.
The Importance of Choosing the Right Payment Processor
Merchants looking to introduce connected commerce will need to find the right payment processor to meet their needs. It may be tempting to choose one of the challenger banks (also known as neo-banks) because of their digitally native origins. And for opening checking accounts and issuing debit cards, these banks are just fine, but as merchants grow and expands offerings to customers, they may require a provider that can deliver additional services such as saving accounts, online bill pay, funds transfer, etc.
This is where things become more complicated. When adding these services, a merchant may feel compelled to cobble together different third-party solutions. This introduces a measure of integration risk. Also, providers that are not used to the high volumes associated with certain merchants may struggle to meet the needs of customers.
Another area where merchants can work with the right provider to meet customer needs is unsecured loans for those with lower FICO® scores. For subprime customers who don’t qualify for such loans, there is an opportunity to offer a credit card. In this way, customers may be able to gain access to much needed, but difficult to obtain credit, thus opening the door to greater purchasing power. Small business lending may also be an area that merchants see as a way to support an important segment of their customer base.
Overcoming the Biggest Obstacle: Getting Started
One of the biggest obstacles that businesses face in embracing connected commerce is knowing where to start. Often times, merchants see peers taking that first step, but remain unsure how to follow suit. Questions abound, such as where do I find the right people to support such an initiative; which provider’s solutions will meet my customers’ needs; how can I ensure integration success?
Savvy brands start by choosing a trusted partner that has deep segment experience across channels to help bridge relationships that bring the right technology, rich data, and key insights to the table to quickly scale for success. The right solution provider opens the door to a range of strategic relationships that can help merchants leapfrog the competition without having to be responsible for the underlying technology and touchpoints for every customer interaction.
Fiserv has proven itself as an industry-leader in connected commerce, with a track record of successfully helping merchants embed financial services into the customer experience. Fiserv has leveraged a comprehensive professional network, including sponsor banks and payment networks, ensuring connected commerce solutions are compliant with banking regulations and offer FDIC insurance on bank accounts.
Fiserv also harnesses API technology to bring together its technology stacks in the digital banking space, core banking space, and the payments space to deliver the best experience for a merchant’s customers. Merchants can take advantage of an extensive portfolio of connected commerce solutions from Fiserv, including small business and consumer lending, consumer banking options (such as checking and savings accounts), mobile app development, financial wellness, debit and credit processing, online bill payment, disbursements, and card loyalty platforms.
And the data that Fiserv captures during checkout delivers insights that inform engagement strategies across the entire customer journey. Understanding a customer’s preferred payment method, location, and purchasing channel creates a feedback loop that helps brands enhance their omnichannel commerce strategies. Identifying returning customers speeds the checkout process and improves net promoter scores.
Connected Commerce is an Opportunity That Can’t be Missed
Merchants looking to deliver a superior customer experience should consider connected commerce as a means to turn their brand into a fintech. By taking advantage of next-generation technologies to create personalized programs that engage customers, encourage purchases, and reward them for interacting with the brand, merchants can dramatically improve commerce.
The reality is that delivering financial services is no longer the sole domain of traditional providers. Working with a proven, experienced payment processor, like Fiserv, merchants can embed financial services into the customer journey, which can result in greater monetization of the relationship and revenue growth.
To learn more about this solution, connect with our sales team.
