All Rewards Platforms Are Not Created Equal: Why Bank-Grade Capabilities Matter

With some of the biggest financial institutions in the world launching shopping rewards programs, it’s clear these loyalty incentives are becoming table-stakes in the field of value-added financial services. But not all loyalty/rewards platforms are created
equal when it comes to meeting the needs of sophisticated financial institutions. 

As financial services organizations consider partners to power their rewards programs and other value-added services, they need to look beyond those providers’ surface-level claims of being “enterprise-grade.” “Bank-grade” platforms take features and certifications
a step further, providing additional capabilities that meet the high standards of banks.

Enterprise-grade is really just the foundational level when it comes to the description of platforms banks may choose to partner with to deploy loyalty/rewards programs for their customers. Enterprise-grade typically means that the platform is robust, scalable,
and able to handle large volumes (whether that is customer activity, data, transactions, or any combination of those). 

It also indicates that the platform maintains a high caliber of excellence regarding its performance, functionality, and dependability, appropriateness for big organizations with large customer bases, demanding reliability needs, and crucial processes.

But any fintech looking to partner with a financial institution must take the additional step to ensure their enterprise-grade platform is also bank-grade. This would indicate, at minimum, the fintech partner follows the additional regulatory and compliance
mechanisms required of banks. Because ultimately, any fintech platform providing technology to a bank is accountable to the same regulations as that bank.

The key areas where bank-grade rewards platforms differentiate themselves are:

1. Customizability

Banks have unique ecosystems with multiple integration points and third-party tools. A one-size-fits-all platform won’t cut it. Bank-grade platforms provide customizable configurability such as:

– Flexible API integration with core banking systems

– Ability to embed bank-centric features (e.g. encouraging tender preference through certain payment capabilities like “pay with points,” 1-click checkout, payment method auto-fill, etc.)

– Modularity to integrate with the FI’s other preferred vendor tools (e.g. security, analytics, KYC, AML…)

2. Compliance

Banks live under the microscope of regulators, which requires that the bank’s prospective partner must proactively mitigate compliance risks such as: 

– Data transparency for auditing 

– Anonymization to avoid collecting PII

– Industry security certifications (e.g. PCI-DSS, SOC 2)

Bank-grade platforms embed compliance into their DNA with regimented protocols, advanced security, and auditable reports. This ensures banks avoid regulatory missteps or “leak” any customer data.

3. Reliability

Downtime or technical hiccups simply aren’t options for mission-critical bank systems. Bank-grade platforms guarantee reliability through:

– Redundant infrastructure

– Rigorous stress testing 

With so much at stake, banks need partners that assure always-on stability.

4. Trust

At the end of the day, banks live and die by customer trust.
Earning it back after lapses, such as the bank collapses of 2023, is hard. Rewards platform partners must demonstrate transparency and integrity:

– Proven security track records

– Long-term client relationships – particularly with other banks  

– Commitment to ethics and compliance

Banks stand by values like fairness and honesty. They need fintech partners who share that commitment to maintaining consumer trust. 

Beyond Enterprise-Grade

As financial institutions evaluate fintech partners, they must dig deeper than marketing buzzwords. For banks, off-the-shelf “enterprise grade” platforms aren’t enough. Banks need proven bank-grade partners ready to deliver secure, reliable, and configurable
rewards their customers can believe in. The partner platforms banks choose must match the trust and regulatory compliance they’ve worked so hard to build and maintain.

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• Source: https://www.finextra.com/blogposting/26340/all-rewards-platforms-are-not-created-equal-why-bank-grade-capabilities-matter?utm_medium=rssfinextra&utm_source=finextrablogs