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Are Stored Value Accounts a Replacement or Complement to Traditional Banking?

(New York, NY) The rapid evolution of FinTech solutions continues to reshape consumer perceptions of banking, with stored value accounts (SVAs) emerging as a potential competitor to traditional banking accounts and cards. Auriemma Group’s latest issue of The Payments Reports uncovers positive sentiments around SVAs, underscoring their role in the financial ecosystem and raising questions about their long-term viability as a banking alternative.

SVAs offered by providers like PayPal and Venmo allow consumers to preload or receive funds and use them for a variety of transactions. Auriemma’s research shows that 61% of debit cardholders view SVAs as at least complementary to traditional banking, while 31% believe these accounts could replace at least some banking functions. Notably, 8% feel SVAs could entirely replace traditional banking services.

“Stored value accounts represent an important evolution in financial tools, but the collapse of Synapse underscores the risks of fintech intermediaries not covered by the FDIC,” says Jonathan O’Connor, Senior Manager of Research at Auriemma Group. “While stored value accounts offer benefits like lower fees and faster transactions, traditional banks deliver stability, security, and trust—advantages that consumers continue to value.”

What Can Traditional Banks Do?

SVAs are causing a modest stir among cardholders. Less than three-in-ten say they would be likely to use the option if offered by a FinTech provider. However, as SVAs grow in popularity, traditional banks can differentiate themselves by doubling down on their strengths and addressing evolving consumer needs. Auriemma’s research highlights several strategies banks can use to endear themselves to current and potential customers:

  1. Building Trust: Traditional banks should emphasize their strong track record of security—including FDIC backing—and fraud prevention. Providing clear, transparent policies and educating customers about safeguards can build trust that SVAs may not yet fully inspire.
  2. Enhanced Digital Experiences: Streamlining mobile and online banking interfaces can help banks compete with the tech-first approach of FinTechs. User-friendly apps with integrated budgeting tools, instant payments, and easy account management could make a significant difference.
  3. Personalized Financial Products: Banks can leverage their broad customer data to offer tailored financial products, such as personalized savings plans or rewards programs that align with individual spending habits.
  4. Bundled Offerings: By packaging SVAs with more traditional banking services—like high-yield savings accounts, credit cards, and loans—banks can create holistic financial solutions that FinTechs may struggle to match.

Opportunities for Growth

Most of those who have used a SVA with a FinTech provider say they would likely use more of that provider’s products, if available. This highlights the possibility of expansion SVAs create for those who use them. While largely benefiting FinTechs hoping to expand into other financial services, SVAs could also be a gateway for traditional banks hoping to deepen their relationship with new and existing customers.

“Traditional banks have the advantage of deep customer relationships, established financial stability, and the trust that comes with rigorous regulatory oversight. By leaning into these strengths and innovating alongside FinTechs, banks can remain central to their customers’ financial lives,” says O’Connor. “Our research shows that the future of banking will likely blend the reliability of traditional institutions with the agility and accessibility of modern FinTech solutions, creating a dynamic ecosystem that meets a diverse set of consumer needs.”

Survey Methodology

The Payments Report

This Auriemma Group study was conducted online within the US by an independent field service provider on behalf of Auriemma Group (Auriemma) in October 2024 among 804 adult debit cardholders. The number of interviews completed for both is sufficient to allow for statistical significance testing among sub-groups at the 95% confidence level ±5%, unless otherwise noted. The purpose of the research was not disclosed, nor did respondents know the criteria for qualifying.

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Flat Cashback Rewards Cards Outshine Tiered Rewards in Cardholder Appeal

(New York, NY) Cardholders consider many factors when applying for a new credit card, with those offering no annual fees and attractive rewards structures being the most influential. Auriemma Group’s latest issue of Cardbeat US confirms that offering compelling rewards significantly impacts cardholder decisions, with a clear preference for flat cashback structures over tiered options. The simplicity and predictability of flat cashback resonates strongly with today’s applicants.

When presented with two rewards card structures of roughly equal cashback value, 48% of credit cardholders prefer the flat cashback structure, while 43% lean toward the tiered structure. Although this difference may seem modest, it widens significantly when it comes to application likelihood. 70% of cardholders say they are likely to apply for a flat cashback card, compared to 58% who would apply for a tiered rewards card, if offered by a trusted issuer. These findings highlight the competitive edge of straightforward earning structures.

Cardholders also have high expectations of their credit cards, often looking for value that goes beyond standard offerings. Auriemma’s research found that while a 2.5% flat cashback rate is not common and typically comes with various conditions, many cardholders perceive this level of return as being in line with today’s industry standards. This expectation underscores the challenge for issuers to balance generous rewards with sustainable program structures, especially as preferences vary by demographic.

For instance, issuers aiming to attract Gen Z may find that tiered rewards structures hold unique appeal. This cohort shows a slight preference for tiered rewards, suggesting they may appreciate the potential for optimized earnings that this model offers. By aligning rewards with Gen Z’s preferences, issuers may improve acquisition among younger cardholders.

“While there are reasons to gravitate toward one rewards product over another, flat rewards require little work and mental math on the part of the cardholder,” says Jaclyn Holmes, Director of Research at Auriemma Group. “This makes it the smart option for those who don’t want to give their credit cards much thought, enabling more seamless and stress-free spending experiences.”

Flat rewards structures also hold a distinct advantage in day-to-day usage, with 46% of rewards cardholders reporting that their most frequently used card offers flat cashback. This shows that ease and versatility may make flat cashback cards the popular choice across spending categories, contributing to top-of-wallet status.

Flat cashback cards provide an accessible, simple way to earn, appealing to mass consumers and driving spending across various merchants. Issuers may find that a straightforward rewards model fosters ongoing card usage, as cardholders don’t need to track changing categories to maximize their rewards.

“Flat rewards offer a win-win for both cardholders and issuers,” says Holmes. “Cardholders can enjoy the effortlessness of earning, while issuers benefit from increased acquisition and engagement. As the credit card landscape evolves, prioritizing simplicity in rewards can be a powerful differentiator.”

Survey Methodology

Cardbeat US

This Auriemma Group study was conducted online within the US by an independent field service provider on behalf of Auriemma Group (Auriemma) in September 2024 among 801 adult credit cardholders. The number of interviews completed for both is sufficient to allow for statistical significance testing among sub-groups at the 95% confidence level ±5%, unless otherwise noted. The purpose of the research was not disclosed, nor did respondents know the criteria for qualifying.

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Rewards Marketplaces Offer Win-Win for Issuers, Brands & Savvy Cardholders

(New York, NY) Credit card reward marketplaces such as American Express Membership Rewards, Chase Ultimate Rewards, and Capital One Shopping are becoming a core feature for many credit cardholders. According to Auriemma Group’s latest Cardbeat US report, three-in-five credit cardholders have access to a rewards redemption marketplace, and nearly three-quarters redeem through them for travel bookings, merchandise, gift cards, and more. This method of redemption is even more popular among co-brand credit cardholders, presenting brands with a valuable opportunity to reach a broad audience through these rewards marketplaces.

Although credit cardholders have a variety of available redemption options, the research revealed that the majority redeem their points for the same type of reward every time (86%) and prefer to redeem in one specific category (71%). Most cardholders report saving their points or miles until they have enough for a large redemption.

“Cardholders view their credit card rewards as a means to an aspirational purchase” says Jaclyn Holmes, Director of Research at Auriemma Group. “Cardholders have become accustomed to having a variety of redemption choices and increasingly expect that their favored brands will be available wherever they shop.”

Cardholders are evenly split whether they want to redeem their rewards while shopping with a merchant or through their credit card issuer’s rewards marketplace. Over half believe credit card points are worth the same no matter how they’re redeemed, meaning access and availability largely drive redemption choices.

“While some cardholders passively earn and redeem the rewards they earn, others are more strategic than ever—not just in how they earn rewards, but in how they maximize their value through thoughtful redemption,” says Holmes. “This level of savvy doesn’t just influence their choice of card—it defines their experience with it, driving long-term loyalty and satisfaction.”

Rewards marketplaces are becoming a key driver of card usage as well, with 57% saying their rewards marketplace encourages them to spend more on the associated card. While cashback continues to be the category most redeemed, two-in-five marketplace users commonly redeem for T&E purchases.

As the landscape of rewards redemption continues to evolve, credit card issuers looking to enhance their marketplaces must ensure they are meeting the needs of their diverse cardholder base. The challenge will be to continue providing value and convenience in a way that keeps cardholders engaged and satisfied.

Auriemma Group’s research and partnerships teams are well-equipped to help issuers strategically enhance their card’s value proposition and optimize their rewards marketplace offerings. With deep industry insights and a collaborative approach, Auriemma Group provides the expertise needed to tailor rewards programs that align with cardholder preferences and drive long-term loyalty.

Survey Methodology

Cardbeat US

This Auriemma Group study was conducted online within the US by an independent field service provider on behalf of Auriemma Group (Auriemma) in June 2024 among 800 adult credit cardholders. The number of interviews completed for both is sufficient to allow for statistical significance testing among sub-groups at the 95% confidence level ±5%, unless otherwise noted. The purpose of the research was not disclosed, nor did respondents know the criteria for qualifying.

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What’s Next for AI in Banking: Better Chatbots or Something Else?

(London, UK): AI chatbots and Large Language Models (LLMs) such as ChatGPT have become commonplace in recent years to answer queries, whether that’s how to write a persuasive email or to request a replacement for a stolen card.  According to Auriemma Group’s latest UK Cardbeat study, credit cardholders tend to be comfortable using AI chatbots to carry out basic tasks with their card issuer, but express skepticism when faced with more complex servicing needs.

For some time, AI Chatbots have been a key priority for card issuers to deliver a more streamlined customer service experience. However, through research and Roundtable discussions, Auriemma has found that the banks are shifting their focus towards AI development and innovation to support more efficient behind-the-scenes operations.

The complexity and difficulty of delivering a positive customer journey could be driving much of this shift. Auriemma Group’s latest UK Cardbeat study found that 65% of credit cardholders feel that AI chatbots often provide irrelevant or unhelpful responses. And what’s more, 57% said they regularly need to speak with a live representative following an AI-initiated customer service interaction.

Cardholders appear to be doubtful that chatbots can meet their needs, as only 36% say they wish their primary bank invested more heavily into chatbots, and just 26% feel chatbots are generally able to fully resolve issues.

While consumers believe AI chatbots still have much to improve, banks are identifying opportunities for AI to transform their business operationally. Members of Auriemma Group’s UK Roundtables recently shared they are leveraging or developing AI tools to create new efficiencies across Fraud, Disputes, Complaints, Customer Service and Collections Departments.

In fraud, current activities include using AI to score fraud cases and designing unique fraud warnings for customers. Firms are hoping AI can soon add randomness to fraud questioning when collecting personal customer data during the identification and verification (ID&V) process. A key initiative in development is writing a final response letter for customers who have submitted a complaint. Auriemma is also seeing firms use AI to transcribe customer service and complaints calls, as well as write summarizing notes in collections.

“Many of our members are changing their AI strategy to look more closely at back-office operations,” says Nicole Toussaint, Senior Manager at Auriemma Roundtables UK. “AI chatbots are very complex and require significant investment from a build and oversight perspective, but also come with the risk of providing misinformation. However, leveraging AI in other processes can simply make an employee or agent’s job more efficient without removing the human element from it entirely.”

Consumers will likely see chatbots become more sophisticated, but this may be just the tip of the iceberg compared to the unseen AI-led streamlined processes on the backend.

Survey Methodology

Cardbeat UK

This Auriemma Research study was conducted online within the UK by an independent field service provider on behalf of Auriemma in December 2023, among 800 adult credit cardholders. The number of interviews completed on a monthly basis is sufficient to allow for statistical significance testing between sub-groups at the 95% confidence level ± 5%, unless otherwise noted. The purpose of the research was not disclosed nor did the respondents know the criteria for qualification.

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