PCM vol. 3 issue 5

SPECIAL FEATURE
photo by Nick Webb on Flickr
Using Blockchain to Innovate Loyalty Programs
The last two years we’ve seen a significant shift in
consumer expectations and behavior on payments
and the overall customer experience. Loyalty
programs have proven to be a great tool to enhance
the costumer journey across many different industries from
retail, travel to financial services. Keeping an overview of all
your loyalty points and the various redemption possibilities
can become a cumbersome process. We sat down with Safwan
Zaheer, Director & Head of FinTech at KPMG US and Member
Board of Directors at Loyyal who told us how Loyyal is taking on
the loyalty program challenge utilizing blockchain technology.
PCM: How do you use Blockchain for loyalty programs?
Safwan: Blockchain might represent technology that has
potential to give rise to the second era of ‘internet’ revolution,
where for the first 40-45 years we had “internet of information”,
i.e. internet we use today in our daily lives, which has been
great but it has a major weakness; you cannot store, move, or
transact anything of “value” without a powerful intermediary
and that’s what Blockchain solves. Blockchain automates most
intermediary functions that exist today by removing friction,
such as delays, costs, errors etc., making it easier and faster to
transfer anything of “value” between two parties.
If you think what a Bank does; everything it does is centered
on “value”, for e.g. banks account for value, store value, protect
value, lend value; and points are just another form of “value”
like money and currency. By automating the intermediary
functions that exist today in the loyalty industry, such as
third parties and broker vendors that manage loyalty points,
Bockchain has the potential to transform loyalty programs
as we know it today. One experience this will enable is:
Instantaneous issuance and redemption of rewards and points.
For example, you’ll be able to earn airline points as soon as
you board an aircraft and then use these points to pay for a
Lyft ride upon arrival at your destination.
PCM: Which problems does Loyyal solve in the marketplace
and how?
Safwan: Loyyal issues digital points using the Blockchain
ledger (Ethereum) and utilizes smart-contracts to enable
instantaneous issuance and redemption of digital points. It
removes friction around delay, cost, and poor integration with
other payment instruments, enabling financial institutions,
brands, and retailers to create “new experiences” for its
customers, such as the airline experience mentioned earlier.
PCM: What benefits does Blockchain have compared to
other technologies?
Safwan: The greatest benefit is that it automates intermediary
functions that are present in today’s financial institution
system. The intermediaries slow things down, increase
costs, , and place a huge tax on the underlying ecosystem
making the entire financial system inefficient. Other benefits
include enhanced security and greater transparency between
transacting parties.
PCM: What challenges do you see for companies adopting
BC based loyalty networks?
Safwan: Like with any new technology or innovation,
Blockchain, also faces significant challenges. The primary one
is adoption and market scale. The industry is still waiting to see
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