Dive Brief:

• IBM and Chinese banking card firm UnionPay's E-payment Research Institute previewed a collaborative project at Shanghai International Blockchain Week 2016 that enables consumers to exchange loyalty points between any of the banks they do business with, IBM said in a statement. 
• The joint effort will integrate online and offline channels using blockchain technology so China UnionPay card holders can go to a supermarket or mall equipped with intelligent point-of-sale devices and exchange points via scanning.
• While the test was done with branded bank cards, IBM expects that in the future, points from flight mileage, mobile phone bills, gas cards and food and beverage purchases will also be exchanged and swapped.

Dive Insight:

Loyalty programs are important for attracting and retaining customers across a number of industries. But from the consumer perspective, the need to manage points from multiple programs independently of one another is a cumbersome experience and one that detracts from the value of rewards. Using existing technology to integrate loyalty programs can be challenging and expensive, which is why the IBM’s and China UnionPay’s recently tested, permissioned network is being positioned as a significant breakthrough for loyalty rewards.

Digital technology has already started to enhance loyalty programs — card-linked offers that load digital coupons directly to a debit card and mobile applications for managing and redeeming rewards are popular with marketers and consumers.

IBM and China UnionPay hope to further the transformation of loyalty with blockchain technology, which was first popularized by Bitcoin and is now gaining acceptance with businesses outside of financial services because of how it eliminates the need for a middleman in digital transactions.

By making points easily exchangeable between businesses, customers may be more likely to use rewards — and therefore place greater value on their relationship with participating brands, industry research suggests. 

IBM said it is rapidly expanding its blockchain consulting services and capabilities, and is actively working with clients to understand what it will take to make blockchain ready for business.

The blockchain test is the latest sign that IBM is doubling down on next-generation consumer-facing technologies. The company has partnered with a number of marketers for AI-driven solutions using its Watson platform and recently named its first CMO, who is being tasked with building the brand with consumers.