Fractional Shares to Fight Inflation

Inflation may be easing, but there are still looming challenges to consumers’ purchasing power.

Customer loyalty gets put to the test as consumers continue to attempt to make their dollars stretch farther. The aftershocks of inflation persist and there are continued spending behavior changes due to the economic environment over the last year.

As a financial institution, it can be extra challenging to govern your own balance sheet and your account holders’ needs. When traditional rewards programs are put to the test for financial situations in an economy emerging from a higher-inflationary environment, they face the challenge of a points system that loses value in real terms.

How can you help your account holders to combat the inflationary headwinds that persist even as the economy simmers? Can you do this while strengthening your own balance sheet?

The next generation of account structures includes offering users the opportunity to go beyond the widely embraced cash back rewards style. With the cash back model in an inflationary environment, as the dollar loses value, so do those points. This causes account holders to hold a similar view of cash back as they would coupons, where it’s just a way to get a slightly better deal on their next purchase.

The risk-reward analysis of owning stocks heavily falls on the rewards side of the spectrum with a Fractional Shares Rewards Program financial institutions can embed into their own infrastructure. The Fractional Shares Rewards Program helps your account holders earn fractional shares while boosting interchange revenue and account holder loyalty. A new opportunity for spending to reap stock rewards in their checking account allows your clientele to dip their toes in the water when it comes to investing.

Stock Rewards are a win-win for both the account holder and the financial institution.

Investing can be intimidating for people to jump right into. As humans, we are all naturally risk-averse to some extent and no one loves the idea of losing money. The structural integrity of a stock rewards program that rewards transactions with fractional shares helps to give users the opportunity for capital gains without the risk of loss of initial capital.

A study conducted by NYU Stern School of Business and Bits of Stock found that offering stock rewards yields a 16x ROI for issuers, making it more than 50 times more effective than cash back. The same study found that customers increased spending frequency and amount by more than 20% with a card from which they can earn stock rewards.

Fractional rewards stand as a tangible way to set users up for success and expose them to returns in the equity markets in a time of stock market growth and persisting inflation.

So, even as inflationary headwinds ease up, you can still offer your clientele a way to earn shares of stock with growth potential that goes beyond cash back.