Loyalty programs are not a new trend in the business and banking world but are an established marketing tool companies use to collect information, increase customer retention, and enhance customer relationships and loyalty. However, the concept of Loyalty-as-a-Service (LaaS) has been a relatively new development that has emerged parallel to the exponential growth of the FinTech industry.
Today, LaaS is evolving; methods businesses use to seamlessly integrate loyalty programs into their existing products and services, akin to other ‘as-a-Service’ developments, particularly throughout the FinTech industry.
What is Loyalty-as-a-Service (LaaS)?
Loyalty-as-a-Service (LaaS) is an evolving model that delivers loyalty programs for banking and financial institutions and businesses.
However, the differentiation that LaaS has is that instead of developing and managing their loyalty programs, companies can use LaaS providers to create, administer, and manage [their] loyalty programs for them.
LaaS providers proffer a variety of individualized incentives and services, from data analysis to customer engagement and program design to management. By utilizing LaaS, companies can focus on their core products or services while providing a [in] valuable loyalty program for their clients.
The current status of Loyalty-as-a-Service (LaaS) in FinTech
The FinTech industry has pioneered LaaS to build, maintain, and retain its customer base, creating and fostering customer loyalty. Furthermore, FinTechs use LaaS to incentivize their customer to use their goods and services.
This incentivization ranges from traditional rewards, such as cashback or point-based systems, to more creative and innovative programs that offer customized, tailored rewards to their customer’s behavior.
The benefits of Loyalty-as-a-Service (LaaS) in the FinTech industry
The FinTech industry has quickly adapted and adopted LaaS into its ecosystem. The industry has recognized the potential benefits the LaaS model can offer its network. Some of these key benefits include:
- Improved customer retention:
One of the primary benefits of LaaS is that it can help businesses improve their customer retention by offering rewards and incentives designed to encourage them to [continue] using their products and services, which has the potential to increase the company’s revenue over time.
- Improved customer engagement:
LaaS can help businesses improve [their] customer engagement by getting them to connect with their customers on a more personal level. They can achieve this through data analysis, resulting in invaluable personal information being gathered, analyzed, and customized. Companies can create more personal and intensive connections that foster loyalty over time by offering specific and personalized incentives and rewards.
- Enhanced customer experience:
Additionally, LaaS can help businesses enhance the ‘customer experience’ by providing a way that rewards customers for their [brand] loyalty. This process is similar to customer engagement, personalizing the customer experience and enhancing the business’s objective to know your client (KYC).
The challenges of Loyalty-as-a-Service (LaaS) in the FinTech industry
While there are many benefits that LaaS offers the FinTech industry, there are also some challenges that companies need to be aware of before moving forward. Some of the key challenges are as follows:
- Integration with existing systems:
One of the most significant challenges companies have in using LaaS is integration, more specifically, integrating loyalty programs into existing systems. Businesses must invest in software or technology to implement LaaS into their systems, which can be costly and time-consuming.
Installing and integrating LaaS programs can be expensive for small and medium-sized businesses (SMEs). Companies may need to invest in new staff and/ or technology or develop new marketing models to support and justify the financial and time-related commitment that LaaS demands to implement the program effectively and successfully.
Implementing LaaS can be a complex process, particularly for those businesses that may be unfamiliar with the concept of loyalty or with any corresponding and related loyalty programs. To implement LaaS effectively, companies may need to invest in both the software and consultancy and staff training.
The prospects of Loyalty-as-a-Service (LaaS) in the FinTech industry
Despite the aforementioned potential challenges of implementing LaaS in the FinTech industry, there is still significant potential for the development and growth of the system for them. As more businesses recognize and understand the benefits and potential of LaaS programs, there will be an increased adaption and adoption of this technology in the near future.
Some of the key FinTech trends expected in the future of LaaS in the industry include:
- Increased personalization:
As more and more businesses look for avenues to be more creative to customize their customer experience, there is increased personalization of LaaS, both for the company and the client. Companies may proffer more personalized, tailored rewards and incentives based on data gathered on their individualized behaviors and preferences.
- Integration with other technologies:
LaaS has the ability and capacity to become more integrated with other technologies, such as artificial intelligence (AI) or blockchain. This integration can help businesses create more effective, efficient, and sophisticated loyalty programs.
- Expansion into new industries:
While LaaS has primarily focused on FinTech, it can be expected that the program will expand into new sectors, such as retail and hospitality, in the near future.
In conclusion with Youtap
Although Loyalty-as-a-Service (LaaS) is not a new phenomenon, the concept is based on the precept of loyalty per se. The LaaS system is an essential strategy for companies to improve customer engagement and retention while developing innovations to add to the application.
Youtaps loyalty and rewards schemes help to elevate [your] customer loyalty and maximize your profits while maintaining [your] company’s relevance and innovation in an overcrowded marketplace. Their LaaS system integrates a loyalty platform into [your] network, providing a wide range of customer retention and loyalty schemes. Their products turn [your] customers into loyal customers, keeping them returning with tailored rewards programs that offer incentives about devices and loyalty.
Loyalty-as-a-Service (LaaS) is not a new idea, but one built upon, promoting products and services that make you stand out from the crowd, differentiated in a crowded marketplace.