Source: Blackhawk Network

Chris Ford, Senior Director, B2B, Looking back on predictions made for 2022, and casting new thoughts on what 2023 will bring.

With 2022 now complete, I can say without hesitation that 2023 couldn't come soon enough! Having lived through 2+ years of COVID-19 concerns, UK Plc is now faced with an unprecedented Cost of Living crisis, the likes of which very few, if any of us, have ever seen before.

Who would have thought back in Dec 2021 that Russia would invade Ukraine, that we would see 3 prime ministers in a single year and that the UK inflation rate would surpass 11%!

Predicting what is likely to happen in the future when things have changed almost daily during 2022 is challenging. Add to this that there are no previous precedents to base a set of assumptions on and we are firmly in the “crystal ball gazing” game.

What is a certainty is that UK Plc faces some extremely challenging times ahead and this will continue to affect us all. It is how we react as a nation and as employers, employees that will make the greatest difference.

In Dec 2021 I suggested that the following areas would be hugely important in 2022. Let’s see what happened:

A payments revolution: businesses adapting to continued consumer demand to pay digitally.

2022 showed continued growth in consumers using digital payment services. Many converted to these new processes because of the challenges COVID-19 presented, and it appears they have stuck with their new ways of paying for goods and services. According to The Business Research Company and their Digital Payments Global Market Report 2022, the global digital payments market is expected to grow from $83.27 billion in 2021 to $96.19 billion by the end of 2022 at a compound annual growth rate (CAGR) of 15.5%. Less than originally predicted back in 2021 but still significant as CAGR figure, underpinning the continued change in consumer behaviour.

Interestingly, since October 2022 in the UK, there has been a resurgence in the use of cash as a mechanism for consumers to budget more effectively. In November, The Bank of England reported a significant increase in the utilisation of ATM’s where cash was being withdrawn as stored value i.e. used as a budget control mechanism. Blackhawk Network have equally seen an uptake in the use of reloadable gift-cards to control spend, with self-use (for budget control reasons) becoming a key contributor to how a household manages their budgets on a weekly basis.

Fund disbursement : for people in need of a helping hand.

2022 has seen the continued rise in G2C initiatives (Government 2 Consumer) and Blackhawk Network are shaping this market on a global scale. We have established our Payments for Good division as a key pillar of our future B2B operations. Originally this was very focused at COVID support and relief, however during H2 2022 this has shifted towards the more general Cost of Living crisis and how government funds can help people that are really struggling. Our Alternative Payments portfolio, where no bank account is needed to move funds to an individual, has seen huge growth. In the UK, working with partners such as Crown Commercial Services, we are delighted to be recognised as one of a handful of suppliers who are trusted with distributing government money, making certain that funds are delivered to people that are in desperate need, across the UK.

Employee engagement and its importance for a long-term virtual or hybrid workforce.

We have seen three phases of employee behaviour during 2022.

At Blackhawk Network we’ve followed this sequence of phases carefully throughout the year. We responded with our free to use EXTRAS benefits platform, providing the perfect conduit for companies that wish to offer employees meaningful benefits but without the added challenges of seat fees. We’ve seen remarkable uptake in H2 2022 from both large and small businesses, where their employees actively comment that their employers seem more engaged with them as individuals and the support they need personally. Interestingly, as we head towards the end of the year, we are starting to see employees making really educated choices over using their benefits such as the bYond prepaid shopping card, gaining cashback from some of the country’s largest retailers and consuming discounted gift-cards from within EXTRAS Discounts for self-use to help their wages go further at Christmas. All without costing their employer anything!

1. The Great Resignation: employees actively seeking new roles as markets clammer to attract talent

2. The Silent Resignation: employees looking to balance their work-life aspirations by setting boundaries as to what they will do and what they won’t do

3. The Redress & Rebalance phase, a focus on employers to reconsider their ways of working, their operating models, and their ability to engage employees meaningfully.

Customer engagement and how brands would fight to retain their clients by increasing their value exchange.

We’ve seen market dynamics hugely affecting how businesses have reacted. The Utilities market has been decimated by the wholesale Energy price fluctuations. The Financial Services market have been challenged by new FCA regulations around Price Walking, limiting what they can offer new clients versus existing clients. The Automotive market, mainly due to chip shortages, have seen dramatic challenges linked to the availability of new car stock, whilst the 2nd hand market has exploded in terms of car pricing. The retail sector has seen footfall rising, falling, and rising again with a continued shift towards online and click and collect behaviours by consumers, making it almost impossible to plan for the future. The telecoms market has seen continued price wars between providers where the fight to retain and to acquire customers has never been so intense. The travel industry has been battered from all sides. COVID-19 travel bans and continued resourcing challenges have led to the largest compensation pay-outs in history driven by a new set of CAA regulations. What hasn’t changed however is the customers desire to be engaged relevantly and in a timely fashion.

Blackhawk Network have continually worked with their clients throughout 2022 to focus on the customer lifecycle (industry specific) and applying appropriate levels of value at various points in the customers stage of engagement that provides each recipient with Choice. Branded prepaid card offers have made a huge comeback in certain markets with customers being offered £100 to £300 cash equivalent promotions for taking out a new high value contract. Our choice based Select solution, which allows a recipient to swap their code into a voucher of their choice from the high street, has been used extensively across industries, again offering maximum choice to recipients rather than being prescriptive on what they can spend where. Our One4all, multi-store gift-card (branded and non-branded) has seen huge growth, a product that allows the recipient to choose where they spend their value.

In all cases the clients we serve have made the significant mental switch from discounting their products and services (a downward spiral) towards offering added value to their customers both digitally and physically.

In summary although not all areas did what was expected, in the main, digital payment adoption, alternative payment disbursements, employee and customer engagement initiatives, that were backed with choice options, all actually thrived.

So, what does 2023 have in store for Blackhawk Network and the markets we serve?

Based on 2022 I think it’s safe to say more of the same without doubt.

We will continue to focus on:

Employee Engagement - supporting businesses to continue to engage their most valuable assets in a meaningful and compassionate fashion. Blackhawk Network Extras will continue to be a focus as a free to use benefits platform and will be further enhanced with a range of new benefits in 2023.

Customer Engagement - supporting business to continue to acquire, retain, grow and develop their relationships with their clients, even if that means saying sorry in a relevant, personalised and timely fashion. Keep an eye on Blackhawk Network Resources to read our regular insights into promotions, incentives, rewards and compensation that have real impact.

Disbursements - in G2C (Government 2 Consumer), in B2B and in B2B2C, Blackhawk will continue to lead the way in using its Alternative Payment solutions to issue value to people that need it or legally deserve it. Thought leadership such as our Alternative Payments report for Public Sector, will become common place reports as we move through 2023, helping to explain how to get much needed funds to people across the UK.

In 2023 UK Plc will continue to come under intense pressure from a range of market conditions. Some it can control; some it can influence; but an awful lot are down to global factors that quite simply put, needs a bigger “crystal ball”.

Blackhawk Network will focus on the things it can influence the most, namely supporting businesses to engage their employees and customers effectively and efficiently plus support governments and local good causes with the need to get value to the people that desperately need a helping hand.

Chris Ford is our Senior Director, B2B. He is responsible for our future growth as a business in the UK and across Europe and leads a highly skilled team into 2023 with a vision to disburse meaningful value where it has the greatest impact.

Find out more about our Payments for Good division & Fund Disbursement solutions.

Payments Innovation Forum Ltd is registered in England and Wales under company number 05955151 at 86-90 Paul Street, London, EC2A 4NE.
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