PCM vol. 3 issue 5

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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 24
SPECIAL FEATURE Safwan Zaheer Director, Financial Services Digital and Head of FinTech at KPMG (US) Safwan is a digital transformation and FinTech innovation executive with demonstrated track-record in building progressive new digital businesses and products that lead to significant market scale and help build new revenue streams. He has more than 18 years of global experience helping clients and former employers address strategic business needs through innovation, disruptive new technologies, and new business models. He is sought out to lead high-impact initiatives and represent company with external clients, often including the Board, CEOs, and executives. a proven and scalable solution that utilizes Blockchain. Other challenges include: evolving the right standard and platform, difficulty in regulating Blockchain, requiring licenses for crypto or tokens, legal risks, and perceived benefits vs. total cost. PCM: What do you think is most important aspect for financial institutions to do that they’re not doing related to loyalty? Safwan: I’d like to address the question more broadly, as it applies to any new technology or an innovation. Financial institutions need to embrace innovation and have a well laid out approach to innovation. Innovation is no longer an “option”, certainly not skunk-works, and rather table-stakes, if banks want to stay relevant and meet the needs of digital customers. PCM: Why did you join the Loyyal board and what is your role in it? Safwan: With any Board opportunity one needs to consider the value a Board member brings to table. In Loyyal, I saw an opportunity to help shape the direction of the company, help raise venture funds, and help in corporate development activities. I believe Loyyal is a disruptor that’s attempting to solve a 40 year old industry problem and I wanted to do my part in helping solve that problem. 25
Page 1 and 2: Vol 3. Issue 5 | May 2017 YOUR GATE
Page 3 and 4: Contents STORIES Amir Abdin Founder
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PCM vol. 3 issue 5

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