#526: Leaders in Customer Loyalty: Supplier Voices | How FIS is Helping Brands Build Loyalty in the Agentic World

Good afternoon, good morning, Ark Johnson from Loyalty 360. Hope everyone's happy, safe, and well. Thank you for joining us every Tuesday. This is the Industry Voices edition of our customer loyalty podcast, leaders in customer loyalty.

Today we're joined by Jake Harrison. He is the head of GoToMarket for Payments and Networks at FIS. Jake and his team recently uncovered some eye-popping data, finding that an estimated $4.9 million is wasted annually in payment friction alone.

It's a powerful wake-up call, a clarion call for those in customer loyalty and payments alike. In this episode, we're going to dive into how the trajectory of AI has dramatically shifted over the past 24 months, what's suddenly possible in commerce that wasn't even possible six months ago, and how a genetic commerce could fundamentally change how brands approach customer loyalty, payments, and personalization. We're also going to unpack the critical considerations brands must keep in mind to ensure AI truly serves the best interests of both consumers and businesses.

That's going to be quite interesting. Jake, thank you very much for taking the time to join us today. How are you? I'm doing good, Mark.

Thanks for having me. Glad to be here. Glad to have you here. Looking forward to discussion.

First off, FIS. For some of those who may not know what FIF is and what they do, can you give us a little background to the organization and kind of what you do and how you do it? Yeah, for sure. FIS has a number of businesses, but really at the core of it, we help power how money moves across banking and payments.

My focus specifically is how we bring loyalty and promotions closer to the moment of purchase, looking to enable brands to influence decisions with measurable outcomes and create better consumer experience and value when it matters the most. So super excited about what we're working on. Okay. You know, a lot of discussion right now around AI, especially within our audience, uh customer and multi-customer experience, uh, both, you know, the agency and supplier side and the brand side.

When you look at the trajectory of AI, you know, how has that changed over the past 24 months? And, you know, what's different uh now uh compared to a year or two ago and how should brands be looking at it? Yeah, it's a good question, Mark. Um, you know, we've at FIS, we've really moved from an AI that's that's analyzing and recommending um based on historical data uh to an AI that can act in real time.

Um and that's really what we're looking to do is bring that AI into commerce experiences that can be personalized and optimized in the moment. Um, not after the fact in looking at um you know purchase level data, but real time when you're, you know, when you're making those purchase decisions in an e-commerce perspective. Um, and and often even when you're looking at available promotional opportunities at brick and mortar uh point of checkout, really intending to change how loyalty is designed and delivered.

Okay. You know, Agenic AI, a genetic commerce, big discussions right now is it's going to disintermediate people and customer multi-customer experience uh on the supplier side, agency side. You know, when you look at a genic AI and a genetic commerce, can you just first off kind of explain what they are? Uh and you know, also, you know, how should brands be thinking about leveraging them?

You know, what should their interest be? Yeah. When I think about agentic AI just in general, right? That's a that's uh using agents to either create content or act on your behalf.

Uh and then when you you go specifically to commerce with that, that is do I have an agent that can actually acquire things for me to purchase things on my behalf? Um and you know, I think that one of the easiest places to look from an example perspective there, Mark, is is travel, right? When when you have something that uh that continuously changes in price, in value, you have a number of options, but you have a uh an intended outcome or goal using an agent to continuously view and uh and um be able to be aware of potential opportunities for you and to make you uh then aware of them as a reviewer and as a decider is really a uh clear use case for the agentic commerce.

Um and as as far as um you know how brands should be thinking about it, you know, we need to be thinking about um, you know, brands are going to need uh a loyalty engagement solution that's more immediate, that's more relevant, um, easy to execute. Um, because really the they're going to be competing not only for the consumer, but but based on the agent as well. And and the winning experience is the one that not only the consumer, but its assistant or its agent can confidently choose and apply in real time.

Okay. From an FIS perspective, uh, you know, you connect in commerce uh in a very unique way. You know, how can engine commerce change the way brands think about customer loyalty, about payments, about personalization? Yeah, it's going to um it's gonna be interesting.

They are the the brands are going to need to um really create uh more than more than just economic value. They're they're going to need to build loyalty between the consumer and the brand such that the the AI or the agent is um is truly acting on behalf of the consumer and not just based on you know pure commercial or ease of of uh shopping perspective. Um the brand often not selling direct to the consumer um is it's most critical for them to build uh to build strong relationship with the with the consumer themselves, but also be easy for the agent to operate with.

So working on kind of the the behalf, even with the behest of the customer, right, to their best benefit, right? That that there's some challenges right there, especially as I'm sure you fraught uh understand there there was some discussion among the big AI providers, right? Where they've taken some language out of their charters, right, where it's in the best benefit. Uh, you know, Altman, it was going to be nonprofit, and nonprofit can still be wildly popular, as we know.

Look at BC. But um, you know, they've taken that out of the charter as well. And, you know, this whole uh idea of a kind of altruistic AI, and there's kind of two factions, correct? So, you know, how do you know that the AI has the kind of your best interest involved as a consumer or as a brand potentially as well, correct?

Yeah, no, it's a fair question, Mark. Um, and honestly, I'm not sure that you do at this point, right? Uh that is a that is most definitely an evolving landscape. Um and and it's uh to your point, you use the term nonprofit and altruistic, right?

Um that's that is certainly an ideal state, but we're going to have to have a um a material amount of oversight, right, in in how we're managing and how we're leveraging and using um these AIs, both as consumers and as brands. Uh if I think about it from a from a brand perspective, it's gonna be um, you know, I I think that there's going to be a lot of um effectively pay for performance type of activity when you're thinking about where you're where you're channeling your funds, where you're channeling your promotions, where you're attempting to grow those relationships with consumers.

From a consumer perspective, um uh that that may be even more challenging just because of the the sheer breadth of consumers. Um, but I think if if I look at my own experience from a consumer perspective, Mark, I'm uh I'm going to um uh almost pull a uh you know trust but verify type of solution, right? Um I'm gonna ask not only my my AI to make recommendations for me uh and to load my shopping cart, perhaps, but I'm gonna check it and I'm going to um I'm gonna likely take you know baby steps towards using uh an AI agent to actually make purchases on my behalf, meaning it's gonna start with uh with identifying products, then identifying products and adding them to my cart, eventually with the goal of, hey, for certain things I'd get comfortable with AI just buy these things for me, or agent just buy these things for me when I've given you explicit enough direction.

But um, but it's gonna be a it's gonna be personal for sure. Yeah, it's interesting, right? I because I don't think many people actually do the amount of reading they need to do to understand what's going on uh with regard to AI and and kind of the challenges and just even some of the new models that were released recently, right? Where it has the partner events scared to death, right?

Because they are basically, and I think they invited a panel of what 500 brands to kind of test it right now. I think this is the new Claude models, and this is the number of challenge they have it. And you look how Europe's doing it, right? So there's there is a challenge of regulating it.

So it's it's it working in man's best interest and not regulating falling behind. And then you may have, you know, uh leaders in Washington or others who may not be uh altruistic. I'll use that word again, right? You have ulterior motives there as well, right or wrong.

Uh and it's just it's a really interesting time, uh, you know, as well, just kind of just what's going on in China and what's going on in Europe. And uh it definitely will be interesting to see how it kind of kind of shakes out coming up. It will. And it's and it's changing daily.

Okay. So you talked about a little bit, uh, you know, what does it mean to be chosen by the agent? What does it mean for a brand, marketer, uh, to compete? Or, you know, we have that discussion quite often in the customer loyalty interviews we have is you know, how do you get to be in that consideration set?

How are you chosen? And so in an agenic uh environment, how are you chosen? That's a good one that I need to think about for a minute, Mark. We can skip that one.

That was in the question. So we can we can No, no, no. I mean, I I think it's a good question. I just wanted to make sure I gave you a good thoughtful answer.

You want to come back to that one? Yeah, let's do that. I'll I'll go in the back of mine. Uh let me see here.

Um so Jake, your smart basket initiative is designed to deliver intelligent uh intelligence at checkout, correct? So for listeners, you know, what is a smart basket and how does it shift loyalty from you know earn and burn later to more immediate in the moment value? Sure. Yeah, you bet.

So so our smart basket solution, Mark, is is really designed um for search, shopping, checkout time decision that can apply best eligible value. So offers, rewards, tender choices automatically. Um and and I think that the it's it's built on some of FIS's underlying assets of of our um our loyalty solutions and our our UPC level data solutions, where we're we're receiving UPC level data real time at point of sale when an appropriate um when an appropriate payment device is provided.

Uh and using that um, you know, using that UPC level data, when we think about that in the moment value for the brand or for the provider of the the value, um, it's it really comes back to communication. So once once you know that product X is being purchased, um, and then it then allows you to communicate with that consumer to thank them for buying product X, for sharing with them that you gave them incremental value today because they provided because they purchased Product X.

Um so it's not just uh earn and burn the points, especially with the traditional lag of communication, but you're getting proof as the brand of the of the purchase near real time, and you're able to communicate near real time to um to attribute value to the organization that provided the value. Okay. I think Smart Basket also has uh two complementary approaches, correct? One that works broadly kind of across a merchant landscape or you know, the merchant landscape, and another that becomes a little more precise when you know item level data, SKU level data, UPC level data is available.

Can you talk about the two kind of complementary modes? Yeah, yeah, for sure. So um it it starts with our you know scalable, really fast-to-market transaction level signals that don't require the item data. So uh any corporate, any bank, um, any any user can incent reward and compensate targeted groups of customers broadly across basically any merchant that accepts uh your traditional Visa MasterCard plastics.

Um that is that's what you know is coming to market very soon for us, enabling uh enabling a deeper level of loyalty again with that near real-time uh communication. And then that deepens into the basket level precision, uh precision. Excuse me, Mark, um, where where we've got these integrated retailers that are sharing UPC level data, then I can turn around and provide that brand who just offered me as a consumer um more uh more real-time data to to run their promotion, um, to target and measure with super accurate specificity based on the things that were actually purchased and the demographics and the the people that actually purchased them.

So um it's a it is a uh kind of a one-to-punch of of additional loyalty capability in that space. Okay. I know you conducted some recent survey uh or surveys around uh kind of a genetic. And one of the things that I read in the press release is that about 4.

9 million is lost annually to payment uh friction uh you know in the process, right? So any kind of friction that's going to inhibit a payment transaction. What are a couple of ways that intelligent payment experiences can help address that? And we'd love to know a little bit more about you know the initial research as well.

Yeah, yeah. The uh we love the love the research that we just did with uh with payments.com. Um we thought they did a did a fantastic job kind of uh demonstrating researching and articulating the value kind of of what's going on in this space.

Um and and so when you think about payment friction costing you know businesses millions of dollars, loyalty's real win is making checkout just work, right? Uh removing some of that friction, removing some of the um the the disconnect from uh from your loyalty to your payments ecosystem, uh and really automatically applying eligible value. So in some instances, there's nothing to clip, there's nothing to forget, there's no reason to abandon your cart because it's all be it's all happening in the background based on your participation, based on the brand's participation, and based on the you know the issuing institution's participation.

That makes perfect sense. So you talk about this go ahead. No, you talked about a little bit too, kind of moving from that broader transactional approach, right, which is more disintermediated, more kind of not as informed, where there could be some friction potentially, to you know, offering more intelligent, uh, you know, that enables richer item level basket offers, personalization. Yeah.

You know, what new personalization opportunities are available? Yeah, totally fair. And and we're just on the we're just on the verge of really making moves into this space, uh, Mark. But but basket intelligence is just that, right?

It it's giving us the you it's giving us not just that you are at you know Walgreens or CVS or Target making a $37 and 15 cent transaction. It's giving us the the ability to look at the makeup, the consistency of that, um, of that purchase. And with that basket level intelligence, you can you can make your your promotional, your loyalty, uh, your brand awareness more product aware. You can fund precise incentives tied to specific items uh as opposed to broad level categories, and then you can measure with with greater confidence because all of it's happening and in your, you know, you have an ability, at least through our system, to be able to see real time the product level data and and to attribute the outcome through that communication in a really clean way.

Can you have an example of a brand funded offer or a brand leveraging this in a way that you know it's more powerful uh when it's applied at checkout and using some of these uh intelligent uh opportunities that that can you know help from a personalization perspective? Yeah, yeah, yeah. So I think um the a really simple example is just brand funded instant discount. Um so one dollar off product X.

You automatically apply that in the transaction, right? That is uh UPC level data is shared, recognize that consumer is buying this UPC and applying that discount directly for them. They didn't clip a coupon, they're not entering a code, and it's it's more powerful than a traditional offer for a few reasons. One, redemption goes up because there's zero, zero effort from the consumer, uh nothing to forget, fumble um at checkout.

Second, brand gets um, you know, because of the UPC level data, you're getting effectively receipt-backed proof that the offer um you know drove and participated in the sale. It's not it's not ambiguous, it's not um, it's not a uh a black hole of you know paper coupon data or um or anything like that. And then third, um when when that value shows up real time, I'm gonna hit on communication again, that goodwill can accrue to the brand and the retailer, right? When when you see that happening, you can communicate out that they've earned this um and and you've provided it.

You're building that relationship and that connectivity to the consumer who's remember the remembering the experience uh and not the intermediary. And then if as you think about that, that's part of the way that you you swap back to uh that consumer connectivity when they're going to start informing their agent of what to buy, they're they're remembering that experience that they've had with you as a brand. That makes perfect sense. So Smart Basket is quite unique.

It seems to kind of position financial institutions uh in a more direct uh line into the customer loyalty ecosystem, right? Uh, you know, how how do you see banks and card issuers evolving as partners to brands and merchants in this next era of commerce? Yeah, yeah, yeah. I think that um issuers, you know, they can become it can be powerful.

Um, it can be a a uh permissioned distribution layer for commerce. If you think about issuers today, Mark, like you every issuer is playing a role in commerce, but their role is pretty limited in in so much as they're giving you access to your funds. Um, but this is giving them an opportunity to to partner on a much deeper layer with a broad reach out to consumers, and that can help brands reach the addressable audiences that they're looking for. And that's a that's a critical element.

All of those other pieces kind of still fit the fit the mold of the UPC level data, the the specific uh feedback, but it's it's really getting issuers more engaged in commerce. Um, and and it makes sense because the card, where I said it there, the access point is already the connective tissue at the point of purchase. Um, so now let's let's scale that up and use it to drive some brand loyalty. And with this level of transactional intelligence uh and AI-driven personalization, you know, how are you thinking about data governance?

That's a big concern, right? Uh even last year within our association, the brands were they were concerned, right? Because they didn't have data governance, they didn't have kind of a uh an appropriate and accepted use of how kind of uh agreed upon how you're going to use AI, who has access to it, right? So there's some concern there, still a little bit of trepidation as well.

So, you know, how are you thinking? How should others be thinking about data governance privacy and that that that responsible AI development that we talked about before? Yeah, yeah, yeah. Um, first and foremost, then the easy answer is the bar has to be super high.

Um, it's uh it is critical because a breakdown in trust there sets things back a long ways. Um, so the bar has to be high, and and then responsible AI and loyalty means like permissioned data use from from the consumer themselves, strong governance, clear value exchange for the consumer. At the end of the day, one of the one of the scary things is that balance of of uh data and AI versus you know consumer privacy. And the personalization that we're working towards has to feel helpful.

And not invasive. And that if if you can find that right balance with a high bar of of responsibility and data governance, it can really enable um partners, the entire ecosystem to confidently participate. Excellent. And then last question for those who uh are in customer loyalty, those who are in customer experience or running the programs, developing the programs, you know, what should they be doing now?

What should they be considering now for you know this agenic commerce future? Is it partnerships, is it data readiness? Uh, you know, what are one or two things they should be should be thinking about? Yeah.

So number one, they should start planning for how to unseat incumbent brand affinity in an agentic world. As we talked about before, it's that it's the consumer connection. And once the consumer connection is made and an agent is shopping on my behalf, it's going to be it's going to be difficult to unseat um that brand because it's it's not a consumer making a decision anymore necessarily. It's an agent that has been programmed to operate on behalf of that consumer.

Um the agent's always going to search and and purchase a brand that I've told it to if I have a strong brand affinity. So you need to be working towards brand affinity today in order to enable that in the future. And then the second thing would be design for checkout execution, whether that's um whether that's uh you know e-commerce or brick and mortar. You've we've got to align with partners who can activate and measure value in the moment of payment and provide near real-time closed loop attribution uh and build offers that are easy to work with, easy to apply.

Um, because in the agentic world, frictionless plus provable uh is going to win. Yeah, absolutely. Well, Jake, thank you very much for taking the time to join us on uh the Leaders in Customer Multipodcast. Uh it was uh very interesting.

You're getting your perspective on the opportunity around uh genet commerce, the data, the the how AI can be leveraged, but more importantly, how brands and consumers both can work with these agents in a way that's truly unique, but also benefits both. I mean, I think we're in in very interesting times, and your perspective uh was very helpful because it this is a topic that many brands are concerned and interested in for sure. Yeah. Mark, thanks so much for having me.

Really enjoyed chatting with you today. Want to thank everyone for taking the time to join our Leaders and Customer Loyalty podcast today, the Industry Voices podcast. Look forward to having you with us every Tuesday. Uh, if you haven't already, please be sure to subscribe to the podcast and follow in the comments section below, Loyalty360 on YouTube and LinkedIn.

Links are also included below uh for the FIS and payments research project as well. Again, follow us, join us every Tuesday, and have a wonderful day.