The news: Issuers can use smart baskets to modernize their loyalty programs, increase cardholder engagement, and compete for additional spend at checkout, per a PYMNTS Intelligence and FIS report.

Smart basket tech uses real-time transaction, payment, and loyalty data to offer product-specific or category-wide deals and discounts at checkout instead of traditional offers that appear as account statements later. 

How we got here: Issuers need to shore up their reward programs. Less than half of issuers say that their current incentives drive loyalty, per PYMNTS. 

And incentives like statement credits don’t deliver instant gratification for consumers because they have to wait for the credit to appear on their statement.

Why this matters: Smart baskets give shoppers targeted rewards at checkout, automatically applied to their total without opting in before they start shopping. 

Surveyed issuers believe smart baskets will trounce traditional rewards across eight key performance metrics: 59% of issuers say that smart baskets could drive top-of-wallet loyalty, for example. 

Zoom out: More than 8 in 10 issuers said that they would adopt smart baskets if the tech were commercially available. Twenty-seven percent said they would do so quickly, while 57% said they would adopt the tech selectively in certain categories.

• However, 38% of institutions with more than $50 billion in assets said they wouldn’t roll out the offering without proven ROI, even though this group demonstrated the greatest interest in the tech, at 95%.
• 20% of institutions with $1 billion to $50 billion in assets would delay rollout until proven ROI, compared with 80% that would elect to adopt smart basket tech quickly or selectively. 
• The smallest issuers, with less than $1 billion in assets, and fintechs were the most willing to selectively adopt the technology, at 83% and 71%, respectively.

Implications for issuers: Rewards programs are the strongest differentiator for locking in loyalty from cardholders, and smart basket tech could help premium cards maintain their value while also delivering faster satisfaction. 

For major banks that are skittish about investing in the tech, trialling it with top spenders may have the best ROI.

This content is part of EMARKETER’s subscription Briefings, where we pair daily updates with data and analysis from forecasts and research reports. Our Briefings prepare you to start your day informed, to provide critical insights in an important meeting, and to understand the context of what’s happening in your industry. Non-clients can click here to get a demo of our full platform and coverage.