Retail Asia 2018 RA September.October 2018 (Online) | Page 38

RETAIL TECHNOLOGY
Loyalty systems built on
blockchain: The currency of
the future?
While integrated loyalty platforms are not necessarily new,
those built on blockchain are currently emerging from the
horizon. Hyoung Lae Kim, regional managing director,
Oracle Korea, shares why this development is worthy of
retailers’ attention.
B
lockchain is big news, but as
we are quickly finding out,
it’s not all about bitcoin.
Instead, innovative tech and
business leaders are now demonstrating
an enormous range of applications for
distributed ledger technology — from
tracking manufacturing assets and
orchestrating smoother, more transparent
supply chains to sharing medical records
so public health officials can prevent an
epidemic before it starts and to tracking
songs, photos and other creative assets
across the Internet so that artists can
better protect and profit from their
intellectual property.
But how about a loyalty point system
built on blockchain? After all, blockchain
is a fast and efficient way to integrate
and share information and it is secure
by design. This makes the distributed
ledger an inherently capable technology
through which to build the new
generation of loyalty programmes. And
indeed, with blockchain-enabled loyalty
systems now beginning to emerge, it is
fair to say that loyalty is poised to be the
currency of the future.
Plenty of people in Asia are keen
on joining loyalty programmes, but
that does not mean that they are
reaping the benefits. Consumers in this
region belong to an average 7.6 loyalty
programmes, which can cause serious
user fatigue. Overwhelmed with options,
members tend to lose track of which
programmes they belong to, how to
earn points and what they are able to
redeem. In fact, a recent report found
that 70% of consumers abandon loyalty
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Retail Asia September/October 2018
programmes when it takes a long time
— anywhere from six to nine months —
to redeem rewards.
An integrated loyalty point system
built on blockchain can make it easier
for consumers to earn points and redeem
rewards. With the ability to track
data assets far and wide, in real time,
blockchain can also help consumers
access instant redemptions and use their
points with a diverse array of retailers
or travel merchants around the globe.
And, perhaps most importantly, because
blockchain is secure by design, members’
personal data and virtual loyalty
“currency” will be protected.
Already, we are seeing exciting
examples of how blockchain can give
businesses a brand-new way to reward
loyalty. This new generation of loyalty
programme is secure and integrated;
capable of providing instant redemptions
and point exchanges on as single, easy-
to-use platform. Start-up company
Loyyal, for example, is examining how
blockchain and smart contracts could
enable a universal loyalty and rewards
system. Singapore Airlines, in response
to a backlog of miles not being used, has
launched its own loyalty points wallet
based on blockchain.
Another prime example of loyalty
becoming the new currency, thanks to
blockchain, is found in a new Global
Loyalty Network (GLN) from Hana
Financial Group in Korea. The company
has built an integrated platform which
helps global customers access loyalty
points-based deals and discounts
from a range of global retailers, travel
merchants and other institutions.
The GLN is built from innovative
cloud technologies which leverage
artificial intelligence, digital currency
and, of course, blockchain. Already,
24 companies are participating in the
GLN consortium, including Sumi
Trust Bank, Taishin Bank and Siam
Commercial Bank and discussions are
under way with another 15 banks and
20 retailers.
With an integrated loyalty platform
built on blockchain, members can
collect points and receive rewards
sooner — giving brands an innovative
way to drive customer engagement and
loyalty, and helping consumers get a
more tailored rewards experience when
they shop, bank, book travel and more.
Blockchain helps to cut out the delay
between purchase and redemption, so
that spending loyalty points feels a lot
more like spending cash. And, with
multiple parties able to record and
access transactions in real time, it will
be easier than ever before to validate
loyalty points on one integrated system,
across a range of brands.
As consumer expectations continue
to skyrocket, loyalty programmes
will have an increasingly important
role to play in differentiating brands.
By making the most of emerging
technologies like blockchain to
deliver tailored and engaging loyalty
programmes, businesses will have an
important advantage in winning over
discerning consumers and giving them
access to loyalty points, the currency of
the future. ra