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Travelling is becoming more popular and digital each year. According to a recent UNWTO survey, international tourist arrivals (overnight visitors) increased by 5% in 2023, reaching 1.4 billion travellers globally. As travel becomes more active, the role of digital banking is evolving accordingly to meet the needs of modern explorers. From seamless transactions to personalised financial services, digital banking is pushing the travel experience to a new level.
Did you know? According to a survey by Skift, more than 70% of travellers book their trips independently, without traditional travel agencies.
Not surprisingly, with the global online travel booking market projected to reach $1 trillion, banks are using the opportunity to integrate travel-related features into their offerings and attract more travellers under their wings. More independent traveling gives banks more opportunities to offer unique features to make planning (and by definition paying) easier. Banks such as JPMorgan Chase, Citibank, and American Express have already made significant increases in their travel-related offerings. For instance, JPMorgan Chase has built its own in-house travel business by acquiring a travel agency called Frosch and now offers extensive travel perks to its cardholders, such as VIP access to all airport lounges and exclusive travel deals. Citibank and American Express are also enhancing their travel rewards programs and travel insurance policies, aiming to capture a larger share of the travel market.
Banks like Revolut, Monzo, and Wise already offer specialised travel cards with benefits like lower foreign transaction fees and real-time spending notifications. Their services are mobile-first experiences that allow travellers to manage their finances anywhere in the world, which is a huge advantage.
Let's be honest, nobody wants to drag around a laptop on vacation; instead, clients rely on their smartphones for banking needs. With this in mind, mobile banking is becoming a key element, although there are still pitfalls on the way. This is where the easy and fast onboarding comes in.
Having the ability to quickly and seamlessly set up a new bank account through the phone is one of the key elements of modern digital banking. And since the devil is in the details, advanced digital features such as real-time spending notifications, fraud detection, and instant access to virtual cards are a good way to become a valuable partner to every traveller. Especially virtual cards, which can be created and disabled instantly, have become a very popular tool for making secure payments while on the go.
Peak travel season inherently brings added challenges in managing the surge of transactions and fraud risks. The more one travels, the greater the likelihood of issues like a blocked transaction due to perceived fraudulent activity. For travellers, this can be a major inconvenience, leaving them stranded without access to their funds. Traditional solutions like Western Union are often costly and slow with banks trying to adopt a more convenient “virtual” approach.
One traditional method for addressing this issue has been for customers to notify their banks before travelling abroad, which has become outdated to say the least. Leveraging enriched transaction data and geolocation from mobile apps can offer a more proactive solution. By analysing transaction patterns and using the smartphone's geolocation data, banks can accurately verify a user's location and intentions. This reduces the risk of mistakenly blocking legitimate transactions while still protecting against fraud.
With smart data, banks have many opportunities to support travellers at every stage of their journey, from browsing the internet and looking for best hotels to finally getting back home from the long trip:
During the planning phase, banks can add cashback rewards and premium programs that will attract more spending on travel. For example, cashback on flight bookings, hotel stays, and other related purchases will make users use their bank cards for all their travel expenses. Similarly, such premium programs as free travel insurance or access to exclusive travel deals will make services more likely to be used.
The initial stage is also a great place to use the bank's PFM platform packed with smart data that can help users budget for their trip. By providing insights into their spending habits and helping them set aside funds in dedicated travel pockets, banks can ensure that users are financially prepared for their journey.
At the airport, banks can enhance the travel experience by providing access to VIP lounges. Many premium travel cards already offer this perk, allowing travellers to relax and enjoy comfortable amenities before their flight. Additionally, banks can offer real-time notifications of spending, showing merchant names and categories. This feature helps travellers keep track of their purchases and stay within their budget even before they leave the airport.
Up-selling travel insurance at this stage is also beneficial. By identifying travel-related transactions, banks can prompt users to purchase or upgrade their travel insurance, ensuring they are covered for any eventualities during their trip.
Features Travelers Will Love
1. ATM Nearby: Navigate users to the nearest ATM with transparent fee information.
2. Clear Transaction History: Ensure global coverage for detailed merchant insights.
3. Upcoming Expenses Notifications: Identify recurring payments and subscriptions.
4. Budgeting Tools: Help users plan and track their travel spending.
5. Real-Time Notifications: Provide instant alerts on where and how much they are spending.
6. Split the Bill: Simplify group expenses by allowing users to split bills easily.
7. FX Savings Notifications: Inform users of their savings on foreign exchange rates.
8. Insurance Upsell: Identify travel-related spending and offer relevant insurance products.
9. Country-Based Spend Overview: Show spending breakdowns by country.
10. Post-Trip Spend Overview: Provide detailed summaries of travel expenses, leveraging open banking data.
Upon arrival at their destination, travellers often need quick access to cash. The "ATM Nearby" feature is invaluable here, guiding users to the nearest ATM with low fees. This is particularly useful in countries where cash is still widely used.
Travellers also benefit from clear transaction histories abroad. With global coverage, enriched transaction data enables banks to provide detailed merchant insights, ensuring that users can easily identify and categorise their spending. This is important for managing finances while travelling, where tracking expenses can get messy. Split the Bill can also be a handy feature, helping to simplify group expenses during the trip.
After the trip, offering post-trip spending overviews helps users manage their finances effectively. Everyone hates counting expenses, and banks can do the math for their clients, providing a detailed breakdown of their spending during the trip. This feature can also tie into budgeting tools that help users plan for future trips or adjust their financial strategies based on their travel spending patterns.
Country-based spending overviews are also helpful. For example, Revolut provides spending summaries by country, giving users insights into how much they spent in each location. This can be particularly useful for frequent travellers who need to track their expenses across multiple destinations.
The integration of enriched transaction data and mobile banking features is changing the way travellers manage their finances on the go. From planning with budgeting tools and cashback rewards to accessing VIP lounges at airports and tracking expenses abroad, it's obvious that smart data and smart banking now goes hand in hand.
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Michal Maliarov
Senior insider
