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How RBC is using a blockchain to overhaul its loyalty program

While every major bank, from BNP Paribas to Goldman Sachs, is investing resources in blockchain technology to solve problems in back-office areas like clearing, securities insurance and over-the-counter derivatives processing, RBC is going a different way.

The bank is looking at the technology as a potential solution to its loyalty program, in which points earned on credit card purchases can take eight weeks to post, forcing customers to wait that long to spend them.

“We see loyalty as a great use case for blockchain to allow us to provide customers more real-time access to rewards points to provide an almost Starbucks-like experience,” said Eddy Ortiz, vp of solution acceleration and innovation.

It’s a markedly different route than its competitors: Blockchain technology is inherently a pretty behind-the-scenes phenomenon. And for most banks, even if they started using blockchains, their customers probably won’t really notice.

Using blockchain technology would lower the amount of time (to seconds) RBC takes to process and post payments and points data. If it can bring real-time exchange to the bank’s merchant partners and consumer clients, it could also start letting customers spend their points at the point of sale.

“It benefits us internally to be more efficient in some of our processes, but that efficiency can directly translate to something the consumer sees,” Ortiz said.

Because most financial institutions still haven’t fully grasped how blockchains can improve their businesses and are still trying to understand its inherent complexities (despite how fast and how far blockchain research for financial services has grown), it’s not surprising that only 19 percent of them say they’re investing in it this year. Plus, there are other innovations in the industry that might seem vague and perhaps a little hyped, but whose benefits are easier to realize. That’s the lens through which all banks are looking at blockchain, according to Steve Ehrlich, lead analyst for emerging technologies at Spitzberg Partners.

“It is hard to argue that consumer-facing blockchain-based applications like loyalty programs are going to move the needle for clients more effectively in the near term than a new biometric authentication technology or chatbot,” he said. “Innovation departments need to show they’re being responsible stewards with their funds because they are competing for the money with other departments within their firms year after year.”

But Ortiz is optimistic that by proving the use case and solving the real-time issue in its loyalty program, other companies could follow its lead. He did not specify when RBC will come out of test mode but said it would be powering its rewards with blockchain “soon.”

RBC is a member of the R3 CEV consortium and “actively working with at least five” smaller blockchain startups internally.

In October, RBC also invested in SecureKey’s $27 million funding round along with its Canadian peers Bank of Montreal, CIBC, Scotiabank, TD Bank and credit union network Desjardins. They are all working together to create a digital identity tool that would let consumers verify their personally identifiable information for services like new bank accounts, driver’s licenses or other utilities on a blockchain-based platform.

“Our learning has been about how we use the technology contractually with other technologies to still benefit from the blockchain use but also allow us to make client lives easier,” Ortiz said. “We have evolved significantly.”

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Wallaby optimizes loyalty points by making personalized credit card recommendations

Matthew Goldman, Wallaby

Wallaby bills itself as an intelligent every day spending assistant. The app, available on both iOS and Android, recommends which credit cards users should hold in their wallets to maximize loyalty point accumulation. It also makes recommendations as to which credit card a user should use on specific purchases.

Matthew Goldman, CEO of Wallaby, joins Tradestreaming to talk about how users are maximizing their loyalty points by using Wallaby, how credit cards can be used responsibly to save money and provide smart buyer protection, and where Wallaby is taking its product in 2016.

What is Wallaby? What’s the genesis story — where did the idea for the app come from?

Matthew Goldman, Wallby
CEO of Wallaby, Matthew Goldman

I’ve always traveled extensively for business – as much as four nights a week, every week. With all of the business travel, I became interested in optimizing my travel points and acquired a few cards. One day in early 2011, after landing at the Burbank airport following a business trip, I stopped at a gas station to fill my tank. I swiped my preferred card (SPG) and then the gas pump TV came on and advertised that if I had the Chase Freedom card, I would be able to earn 5% cash back. I did have the Chase Freedom card – it was in my wallet; I had forgotten about the rewards. I figured there had to be a better way to keep track.

How are people inefficient when it comes to maximizing their credit cards (examples)?

People are inefficient in many ways. From a rewards perspective, people often forget about changing categories, such as Chase Freedom and Discover it, which have different categories each quarter. People also forget about ongoing earnings. For instance, if rarely go to a drug store, but have a card with that drug store, you get bonus earnings.

In addition, people often don’t know the true value of a particular point. Wallaby calculates its actual value to understand that five Hilton Points may be worth less than three American Airlines miles and recommend cards based on that. People not only use their cards wrong, but they also rarely have the RIGHT cards in their wallet to begin with.

How does Wallaby make its users more efficient?

We understand your goals: maximizing rewards, minimizing interest, optimizing cash flow. We track your balances, spend limits, rewards and more. This way we can do the math for you and boil it down to a simple “just use this card” so you don’t have to track so many factors. It’s fast and simple and requires a one-time setup.wallaby-wallet-diagram

There’s been pushback on credit cards — why are they smart financial tools for consumers?

Credit cards are smart when you always pay on time and don’t use them to overspend. They provide incremental short-term cash when you really need it. When you don’t immediately need cash, they can save you money and provide protections. Cards enable you to be protected by warranty extensions, travel insurance, roadside assistance and more.  They also build credit, which is important to save you money on bigger purchases like auto loans and mortgages.

Can you really get more without spending more?

See above, but a card has many legal and product protections and amenities just for carrying it (free wifi, hotel status, etc.) that don’t require you to spend more money.

Where are you headed with the product? What does the future have in store for Wallaby?

This year we expanded our capabilities around more than just maximizing rewards or making the app smarter, to provide background alerts at the right time so you don’t even have to remember to open the app. Next year, we’re going to expand our capabilities around more financial services products and improve the ways we help you manage your loyalty points.