Financial Institutions
Deepen bank loyalty with our insights that help customers save on everyday purchases
Winning the Basket—Part 1: Taking on Google, Apple, Facebook, and Amazon (GAFA)
The core value of card-linked offers, which is merchants bringing value to bank cardholders through funded cash-back offers, remains to this day but what has changed is the vast digital marketplace in which we compete.
Cardlytics and our network of banking partners created and then scaled the most influential, trustworthy, and value-focused platform to bring brands and consumers together. Over the last 12 years, our global monthly active users have grown to 178M, and our core value proposition of offering cash-back rewards to bank cardholders remains to this day. But what has changed is the vast digital marketplace in which we compete.
The digital media market is expected to reach a staggering $286B by 2026, creating an immediate opportunity for banks and their customers to capture more partner-funded value from brands. This growth is amplified by the shift in merchant preference for cash-back rewards as compared to investment in social media, according to a recent study by the Digital Commerce Alliance (DCA).
So how can our banking partners capture more partner-funded dollars and consumer spend in the face of this opportunity? The first key to success is driving demand.
Driving Demand: Tackling GAFA
Cash-back offers are so hot that even Google has gotten into the game with the launch of Google Pay Offers in 2020, in partnership with Rakuten. And speaking of Google, it’s just one part of the digital triopoly with which bank-offer programs compete for merchant media dollars.
Google and Amazon control a vast amount of shopping initiation, putting them in the advantageous position to win the basket. Fifty-three percent of U.S. ecommerce searches start with Google, and 40% of global consumers start a product search first on Amazon.
For banks to compete for the consumer mindshare and the payment at checkout, they need to start thinking like the digital giants. They need to drive demand, not wait for it.
Taking on GAFA by Driving Demand
The time for banks to act is now. First, with the deprecation of the cookie and regulatory pressures facing GAFA, banks have an advantage: they are already highly regulated. Second, consumers trust banks to manage their data, with 37% of consumers trusting banks the most. Finally, banks—and, by connection, Cardlytics—have precise transaction data, giving us the advantage on measurement and attribution merchants really want.
So how can banks drive demand? Here are four recommendations:
· Modernize their consumer UX to accommodate expanded advertising budgets such as brand and affiliate media dollars;
· Promote their card-linked offers and cash-back rewards program in card benefits, BAU (business as usual) communication, and dedicated email and mobile communications;
· Publish “beyond the tile” by creating live links to the card-linked offers and cash-back rewards programs throughout their experience and through connected commerce;
· Create more expanded partnerships with merchants in loyalty benefits and other value propositions throughout their organization.
Stay tuned for Part 2 of 4 of our Winning the Basket series. Next, we’ll discuss stimulating cash-back reward activation.
Purchase Intelligence Could be the Key to Helping Consumers Through the Cost-of-Living Crisis
While consumers are forced to juggle new demands on their finances, it creates a valuable opportunity for banks to utilise their platforms for good, building deeper relationships and positioning themselves as a resource for help.
Energy bills, food prices, national insurance, and inflation are all on the rise causing mounting financial pressures and concerns for consumers. As the cost of the weekly food shop goes through the roof and the price of filling up the car creeps, consumers are looking for better ways to manage their finances and find the best savings options possible, creating new opportunities for their banking relationships.
Our new data from a poll of over 2,000 UK consumers finds that almost three quarters (73%) plan to shop around more this year in search of the best deals. At the same time, over half (57%) are checking their banking apps more often now than they did a year ago.
While consumers are forced to juggle these new demands on their finances, it creates a valuable opportunity for banks to utilise their platforms for good, building deeper relationships and positioning themselves as a resource for help.
As banks have transitioned to online and mobile banking in recent years, the ‘face’ of banks is fading. Whilst digital banking has revolutionised the way banks can reach customers, whenever and wherever they are, it has made it increasingly difficult to build and maintain the same deep and highly personal relationships.
With inflationary pressures eating into earnings, consumers are increasingly looking to their banks for financial advice and resources. They’re particularly seeking personalised approaches that are tailored to their specific financial situations – from help with budgeting to advice on the best ways to maximise savings.
This cost-of-living crisis provides both a motivation and an opportunity for banks to reconnect with their customers. So how can they best help?
Banks have access to a wealth of purchase insights and by evaluating which brands are seeing the biggest rise in average transaction values, they can see exactly where customers are feeling cost pressures. Banks can then introduce personalized offers that can help address these, from discounts on petrol to cash back on the brands they visit the most, helping them play a key role in supporting their customers where it matters.
And it isn’t just about the positive savings impact for the consumer; there are clear benefits for the bank too.
Bank of America is one example that is truly leading the way - its Preferred Rewards Program has a clear tiered total benefits program for cross-product engagement, meaning that as a customer’s balance grows, so will the benefits a customer receives.
To realise the true value of loyalty programs, banks must adapt their mindset to view them not from the transactional lens of “purchase this and get something in return,” but from the perspective of providing support and creating a point of relevance in a customer’s life. The rising cost of living provides that sweet spot of relevancy for banks.
As the cost-of-living crisis continues to wage war on consumer’s purse strings, there’s a clear opportunity for banks to utilise the data they already have, showing their customers that they truly understand their individual financial pressures and can support them.
Rather than just powering transactions in the background, banks can – and should – utilise the purchase intelligence they have at their fingertips to play an active role in supporting consumers through the cost-of-living squeeze. The result for banks? More financially stable, engaged, and loyal customers.
Going Beyond Purchase Data: Mutual Loyalty at Cardlytics
As a data guy, I love purchase data. Because for me the data is a signal. A positive confirmation that something we want to happen, happened. In our world it drives conversions, and we are drowning with conversions, in a good way. I participated in a fireside chat at this year’s Loyalty Summit to talk more about purchase data as it relates to loyalty, customer relationship management (CRM), and Cardlytics. Here are some of the highlights from that chat.
Mutual Loyalty in a Closed Loop Program
Thirteen years ago, we created an industry that would benefit banks, brands, and their shared consumer. As an advertising platform within banks’ digital channels, we are able to capture anonymized customer spend data that helps us target the consumers brands want to reach. Ultimately, this drives loyalty for the bank and the brand. At Cardlytics, we call this “mutual loyalty.”
Here’s a simplified example of how this works… Most retailers know who comes into their store, but they don’t know what happens after they leave. They don’t know if they are getting their full share of a consumer’s category spend or only a fraction. By partnering with financial institutions, Cardlytics is able to understand the full view of the consumer, allowing a relevant offer to be delivered to a consumer that will ultimately grow the brand’s share of category. Brands get efficient use of marketing dollars while financial institutions get to deliver meaningful value that funded by the advertiser, to their customers.
It starts with a (data) signal
We also work with the banks to help create an experience of reward and delight. We know that customers log into their mobile app or online bank between 10 to 12 times a month to look at their balance, transaction history, etc. We inherently become another channel or extension of the CRM system for advertising partners, creating a full closed loop loyalty program. It’s a win, win, win - the advertiser reaches its intended audience to create a sale, the bank gets to delight its customer with cash back rewards from some of the top brands in the country, and the customer receives cash back into their account.
It’s a fast-moving space but we are excited for the success our banks, advertisers and end consumers are seeing through our program.
You can listen to my recent session at The Loyalty Summit- CRM.
How Cardlytics Drives Engagement for Neobanks
Download the Cardlytics case study and learn how to drive engagement and spend for neobanks.
Whether it’s saving the environment, women-focused investing, or supporting local businesses, neobanks offer something for everyone.
With hyper-focused audiences, neobanks (aka “challenger banks”) fill the dovetailing trends of lifestyle marketing and accelerated consumer adoption of online banking. One nationwide survey found that 80% of consumers nationwide now prefer online services over a visit to a physical bank location, and this preference is driving consumers towards these fintech firms.
Growth, Challenges, and Solutions
According to a PwC report, the global neobank market is expected to hit $394.6 billion by 2026, up from $18.6 billion in 2019. Despite the growth, they also face challenges similar to traditional banks like churn and digital engagement and unique hurdles such as fewer products and lack of in-person services.
By offering a card-linked cash back program, neobanks gain a partner that can address these challenges while providing innovative solutions to attract and retain customers with frictionless purchases from beloved brands.
How Do Cash Back Rewards Drive Engagement?
Cash back rewards programs engage with neobanks’ most enthusiastic customers: millennials and Gen Zers. A Cardlytics survey showed that these cohorts gravitate towards a more modern shopping experience with hassle-free rewards. Add to that the lifestyle or mission-focused component of many neobanks, and it becomes a winning combination. Niche customers such as millennials, micro, small and medium enterprises (MSMEs), and those having sporadic incomes and earnings embrace innovative technologies, especially cash back rewards that put money back into their wallets to use as they choose.
Neobanks are digital only, which adds to their appeal but also removes in-person opportunities to create stronger relationships with customers. To help minimize customer churn, they can offer products that promote customer loyalty while encouraging in-person purchases. Card-linked cash back rewards programs allow neobanks to create collections of retail brands that their customers love. About 75% of consumers say they favor companies that offer rewards. Despite being online, providing customers with an in-store experience through retailers is essential to long-term success.
Cardlytics Can Help Neobanks Better Serve Their Customers
Cardlytics’ SDK platform is highly customizable and uses behavioral analytics to drive personalized offers and to increase purchases. Financial institution partners see a 5.6x increase of average transactions per month from previously lapsed cardholders and a 200% increase in spend and transaction frequency from cardholders who previously transacted less than once a week. When multiplied by the number of neobank customers, a cash back rewards program can also become an additional driver of revenue.
The uptick in adoption of online banking has added urgency for neobanks to differentiate in the marketplace. Cash back programs are a streamlined, rewarding way for them to connect to customers while generating revenue. And with a leading digital marketing partner like Cardlytics, neobanks can quickly put money back into their customers’ pockets while strengthening their customer relationships.
Launch of My Wells Fargo Deals: Surpassing 150M Bank Customers Provides Significant New Opportunities for Advertisers
When Scott and I founded Cardlytics 12 years ago, we knew that bringing the banking industry and the advertising industry together was a unique idea. Building something that drives loyalty for banks, incremental sales for advertisers, and clear financial benefit to their mutual customers has been no small feat. Over the years, we have consistently expanded our relationships with the top banks, both in the U.S. and the UK, which has offered significant opportunities for advertisers as our reach has grown.
Today, I’m proud to formally announce another major accomplishment for our business with the launch of My Wells Fargo Deals in partnership with Wells Fargo bank.
Scaling the Rivals by Partnering with the Largest Banks
Partnering with the fourth largest bank in the U.S. further increases our platform’s scale to rival other major players in the advertising space.
Now with more than 150 million monthly active users, marketers have an even greater ability to reach engaged bank customers in a pristine, brand-safe environment through Cardlytics. We influence where a consumer makes a purchase and offer them tangible value in the form of a cash-back reward. So, brands and banks alike can feel good about driving sales in a way that builds a positive experience for millions of people.
Customer Rewards Resulting in Billions of Sales
We’ve saved consumers more than $500 million in rewards and are proud to extend this value to Wells Fargo’s customers. And with an even broader addressable audience for our advertising partners, we’ll continue to build on the $33 billion in measurable sales we’ve driven for them to date.
Congratulations to the team at Wells Fargo and our teams at Cardlytics for completing the launch of My Wells Fargo Deals in the midst of a global pandemic. It’s certainly an accomplishment to be celebrated.
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