Banks and Credit Card Issuers Continue to Undermine Daily Deals Providers
In an article for AdWeek, journalist Christopher Heine referred to the digital landscape as a “harshly competitive climate,” noting that “hundreds of daily deals upstarts have fallen by the wayside.” He attributes the difficulty not only to the sheer quantity of players attempting to get a piece of deals but also to the nature of who’s getting involved. As Media Logic did in “Will Merchant-Funded Offers Trump Generic Deal Sites and Apps?” Heine points to “giants such as American Express and Bank of America” as threats to even the big guys of daily deals: Groupon and Living Social. At one point, he goes so far as to say these banks are among those “innovating and attacking [the daily deals] business like hungry piranha.”
Banks have the competitive edge in part because of their access to vast amounts of purchasing data, which positions them to provide deals that are valuable, relevant and timely. Financial institutions also seem to have an edge due to a weak spot in the deals sites: according to a Forrester Research analyst quoted in the AdWeek article, “[The daily deals space] never provided tremendous value to merchants. And that was the fundamental flaw in the business model.”
We think financial institutions have a unique advantage over daily deals companies for another fundamental reason: banks and credit card issuers are already essential elements in point-of-sale payment. These financial institutions aren’t new to the frontlines… they’re seasoned competitors, adept at vying for transaction volume, skilled at wooing both consumers and merchants.
