Artificial Intelligence
HSBC is using AI to personalize its rewards program
- HSBC is using AI to predict how customers might redeem their credit card points so it can market its rewards offerings more actively and effectively
- Competition among rewards card issuers has heated up in the past two years and HSBC is looking to create more meaningful interactions in what historically has been difficult to navigate

HSBC wants to give its U.S. credit card customers a better shopping experience.
The London-based bank is working on creating a rewards program that reads customer data to predict how they might redeem their credit card points so it can market the offerings of a certain category — travel, merchandise, gift cards or cash — more actively.
It’s a little bit like online retailers that push certain products to consumers based on their preferences and previous activity.
The bank has partnered with Maritz Motivation Solutions, a provider of loyalty programs to U.S. and global companies whose technology suggests a redemption category to promote to each credit cardholder and calculates the percentage of customers likely to redeem in different categories.
More than 90 percent of credit general purpose card spending by consumers with superprime scores in 2016 was on a rewards card, according to Consumer Financial Protection Bureau’s Consumer Credit Card Market Report, published in December. HSBC banks “international and affluent” customers and operates 229 bank branches on the east and west coasts of the U.S., more than half of which are in New York. Most of its cards are tied to a rewards scheme, Meneguzzi said. But beyond the interchange, interest and annual fees HSBC makes on each card, competition among issuers in the rewards credit card market has increased significantly over the past two years and HSBC is looking to create more meaningful customer interactions in a business that historically has been difficult or simply arduous to navigate.
“Within the U.S., we just expanded our credit card portfolio and we want to grow, and grow our unsecured lending,” said Marcos Meneguzzi, head of cards and unsecured lending at HSBC. To do that, the bank has “to engage the customer and indulge them," he said.
The bank recently sent emails out to 75,000 cardholders based on these recommendations, and included a control group that was emailed a random category. Of those who received the email and redeemed rewards, 70 percent did so in the AI-recommended category and the number of opened emails increased 40 percent, HSBC reported last week.
The future -- at least the near future -- is personalization, and HSBC's targeted email experiment is just one of many ways the bank and its peers can use customer data to deliver personalized offerings, said Jesse Wolfersberger, senior director of decision sciences at Maritz. Last month Wells Fargo also launched a “predictive banking” feature that reads data to flag higher-than-normal automatic monthly payments or remind customers to transfer money between accounts to avoid an overdraft fee, for example. A month earlier, TD Bank acquired AI startup Layer 6 because the ability to anticipate the needs and preferences of individual customers, which doesn’t exist in banking today, will be a requirement in the future, Rizwan Khalfan, TD’s chief digital and payments officer, told Tearsheet at the time.
“The future of this is about being more tailored,” Wolfersberger said. “It’s not just that you know you want a Starbucks gift card, but that you know you want it at 4 p.m. on a Friday because that’s when you’re dragging.”
Meneguzzi likened the “unsophisticated” experience to a more evolved version of a catalog a customer used to receive in the mail, which wasn’t personalized and put the onus on the customer to come to the retailer. But banks know well today that in a digital world, customer attention will be snapped up by any other company —not necessarily and probably not even another bank — if they don’t actively approach the customer with some value first.
HSBC wants to study what people search and how it compares with their activity six months back, and ahead, so eventually it can predict the types of rewards customers like to redeem and even help navigate them there. It’s not too far removed from the idea of everpresent present offers — which some banks now make available to customers based on what they’ve shown to be their financial lives — only HSBC is experimenting with rewards rather than financial products.
“We have to predict what customers are more likely to redeem, using their behavior, and speak to the customer at that level,” Meneguzzi said. “They get thousands of offers in their inbox in any given month so we need to remain relevant to them."