“It is no longer building a product. It is no longer educating the public. It is now about deploying the product. It is really exciting.”
When a vendor gets this excited about the transition from theoretical to actual it is easy to discount the hype a little bit. With Loyyal, the blockchain-based loyalty infrastructure company, however, that level of excitement might prove justified. After all, Emirates Skywards is going live this month. The airline will process its earn and burn transactions with ride-hailing app Careem on Loyyal’s new, tokenized platform. That’s a huge win for the company and validates the excitement.
Loyyal has been running its platform in parallel with the legacy systems at Skywards for months now and the decision to go live was not taken lightly. The company had to prove its value in the loyalty lifecycle chain and it succeeding massively. Numbers like 80% transactional savings and massive cuts for partner on-boarding were tossed about. Increases in system security are also part of the value proposition. Company CEO Greg Simon offered up some insight into the Skywards implementation and looking forward from there in a conversation on the sidelines of the JetBlue Technology Ventures Blockchain in Travel conference last week in New York City.
The bookkeeping behind loyalty partnerships is an onerous, thankless, error-prone process that depends heavily on human interaction. It suffers from the associated costs and inability to scale. It is also slow. Reconciling accounts and managing payments often runs on a 30-day lag cycle or more. Switching to automated, real-time posting of transactions on a shared ledger (i.e. blockchain) based interface massively reduces the scope of manual processing, slashing costs and errors. It also makes for happier consumers as they see their points transactions post (near) instantly.
Simon explains, “On the legacy systems, each integration is unique; it can take weeks to months. With Loyyal there is a standardization. Provision a wallet and add the API calls to the check-out process, and you’re done. That standardization makes it almost an off-the-shelf opportunity.” Speeding the integration from months to minutes is a step-change move in the market. It also dramatically increases the number and types of businesses that can sign on with the loyalty programs, “Partners that were previously economically unfeasible to integrate now can be included because the costs have dropped.”
This drop in integration costs assumes that the partner is willing and able to integrate the real-time transaction handling into its processes; that’s not a sure thing. But for Careem, building up that integration to enable the instant transactions is seen as a competitive advantage, not just a neat feature. Emirates and Loyyal both expect other partners to follow on this path, especially given the reduced costs and administrative overhead. For older, slower moving partners that transition will not be an easy one. The reduced costs associated with the new platform are where Loyyal and Skywards hope to drive that transformation.
Increased Data Transparency
The new data model also helps both Careem (or other partners) and Emirates (or other programs) better control their budgets. Real-time transaction accounting means the ability to create real-time reporting. Everyone knows the volume of points being issued or redeemed and the associated costs without waiting for the month-end batch job.
Potential fraud cases can be identified more quickly, again because there is no delay in seeing the transaction data. Promotional offers can be A/B tested in real-time and adjusted to increase value.
In the public blockchain world that same level of transparency would be a competitive disadvantage. Because the full transaction ledger is shared the ability to keep commercial agreement details 100% private is limited. In the private, permissioned fabric that Loyyal uses that problem goes away. Data can be segmented to individual partnerships and secured to the appropriate user roles.
In some ways the fact that it is a blockchain-based solution is ancillary to the implementation’s success rather than the core factor. Simon acknowledges that transitioning from legacy batch processing to real-time transactions is where much of the cost savings comes from. And that’s not at all uniquely blockchain.
For the partner company integration team an API call to a tokenized wallet is the same as an API call to an endpoint on a traditional database platform. There is nothing special about blockchain that makes the standard interface uniue.
Access to the chain is limited and authenticated. There is no anonymity in this relationship. And the ability to produce real-time reporting and KPI dashboards specific to each partner account is hardly unique to a shared ledger implementation.
Simon isn’t worried about any of that. Indeed, that it can also be done on a legacy platform makes his sales job easier in many ways. No longer does Loyyal have to educate the world on what blockchain is and why his solution is not minting coins to enable money laundering. Instead he can focus on the fact that it is a solid, proven application that simply works. Loyyal enhances and extends the existing loyalty management platform rather than replacing it.
And there just happens to be some blockchain involved on the back end. That’s now a minor detail that no one really needs to worry about, not the defining characteristic of the solution.