Tug of War – The Struggle for Control and Influence of the Consumer

Bob Legters
Chief Data Officer of Banking and Payments
Posted on January 13, 2014


Ownership of the customer is an ongoing battle. The question remains, who “owns” the consumer? Is it the retailer that the consumer shops with, the manufacturer who provides the goods, or the financial institutions that empower access to consumers’ funds in various form factors? While this has been a looming question, never before in our history has there been such a visible struggle for leadership in the heart of the consumer. And though there are many viewpoints from both retailers and financial institutions, one thing that remains constant is that the consumer is in the middle of a feeding frenzy of marketing, messaging and influences.

The retailer has always been focused on increasing visits and cart-size and therefore has tried to make the register experience better for consumers. From accepting payment cards and offering store branded cards through the evolution of cobranded payment cards and new payment tenders, making payments convenient has always been the retailer’s focus. Take into account the rise of mobile technology, increased participation in evolving merchant-funded networks and other offers in the “deal space,” and it’s evident that retailers are scrambling to make the payment experience a greater part of the entire shopping and purchasing appeal to help with progressive targeting and marketing attempts to drive repeat visits and purchases. As a result, retailers are more involved in the payments space than ever before.

Similarly, financial institutions are taking advantage of the relationships they have and use this captive audience and distribution channel to drive influence through deals, offers and rewards.

Financial institutions are becoming more sophisticated and are aggressively exploring new ways to provide their consumers with additional value and relevancy. If you couple in the new technological advances, progressive offers and rewards, innovative digital currencies and greater focus on leveraging “big data,” there should be no surprise that financial institutions are making a stronger play for relevancy with the consumer.

So in this tug of war, are there really any winners? Or better yet, can there even be a winner? Merchants and financial institutions have shared goals when it comes to consumers and in many cases utilize very similar practices in acquiring and retaining customers. However, it is rare for one of them to have a complete 360 degree view of the consumer. This has opened the stage for partnership between retailers and financial institutions; but as we all know, it’s hard to be cooperative in a perfectly competitive market. Retailers aren’t typically known for partnerships amongst each other, and based on market dynamics, retailers don’t always have the best relationships with financial institutions either – especially as each seek out new revenue streams – particularly in the payments arena. But it’s not a hopeless effort for merchants and financial institutions to forge better partnerships with one another.

The good news is that retailers, large and small, already have relationships with banks, credit unions and other financial institutions of all sizes from treasury and processing services, various commercial arrangements and much more. Newly established relationships, such as merchant-funded rewards partnerships and other new opportunities, are slowly expanding too. Merchants and financial institutions also need each other and there are dependencies in our open market – one cannot thrive without the other. The bad news is that these efforts are still overshadowed by ongoing legislation and litigation surrounding payment-card usage and individual (versus collective) desire to “own” the consumer.

And despite fully leveraging the relationships already in place, there is still much confusion and confliction among both, who look at one another more so as “friendly foes.” These “friendly foes” also reside within the internal walls of both merchants and financial institutions, where in many cases the various cooperative partnerships are managed in silos by different parts of the business. So if we hope to sustain market momentum and capitalize on the changing landscape, we have to “cut the rope” and start a new game by more fully recognizing and leveraging the partnerships already in place.

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Bob Legters
Chief Data Officer of Banking and Payments

For the past two decades, Bob has focused on products and services support for clients. He has spent 17 of those years in a leadership role with groups ranging from 5 to 200 employees. Bob’s unique experience allows him to efficiently operate at a level that exceeds the normal executive role of understanding and recognizing client and consumer needs in the payments space.