Loyalty in Financial Services – Current State of Loyalty Programs across Banking and Payments

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The proliferation of loyalty schemes in recent years has generated a series of challenges. Ubiquity and complexity have diluted their impact, and while signup rates remain high, dormancy is an increasing issue for a significant proportion of schemes. The global pandemic has served as both an opportunity and a threat to loyalty schemes in general: schemes have been redefined to reflect the physical and financial restrictions currently in place.

This report analyzes the current state of loyalty programs across banking and payments, the value they offer customers and banks, as well as the numerous challenges facing these programs amid both the growing role of digital banking and payments and the COVID-19 pandemic.


– Overall, reward programs are not a priority when selecting a financial provider. Instead, transparency, simplicity, and service are the factors consumers are most likely to prioritize.

– The pandemic has seen many loyalty schemes reconfigured, rewarding customers for safely supporting brands and introducing benefits relating to day-to-day savings – which are especially appealing during recession.

– Neobanks are winning millennials via a combination of digital functionality, fresh branding sometimes built on themes (such as sustainability and wellbeing), and gamified loyalty programs that sync with the brand.

– Traditional banks are attempting to address this competition, launching their own de-branded neobanks and sometimes incentivizing use of their own apps as part of their broader reward program.

Reasons to Buy

– Gain insight into best practice cases studies from around the world and from related industries such as retail.

– Understand the challenges facing loyalty programs the world over.

– Learn about your competitors’ strategies in this space.

Hang Seng Bank
Commonwealth Bank of Australia
Axis Bank

Table of Contents

Table of Contents

1. Executive Summary

1.1 Loyalty programs have been challenged by the pandemic

1.2 Key findings

1.3 Critical success factors

2. Loyalty is Key for the Entire Market

2.1 All aspects of financial services use rewards and loyalty

2.2 There are seven types of payment reward program, each with its own variants

3. Loyalty Programs in 2020 Face Multiple Challenges

3.1 Loyalty schemes have grown from simple stamps into complex, personalized programs

3.2 Loyalty schemes have faced regulatory and legal scrutiny along with consumer dissatisfaction

3.3 In 2020 loyalty programs have adapted and evolved, keeping pace with unprecedented global change

4. Mobile Wallets are a Key Emerging Trend

4.1 Plastic cards dominate, but digital solutions are on the rise

4.2 Mobile wallets are favored by younger customers

4.3 Mobile wallets are a developing trend, but are already widespread in key markets

4.4 Despite high penetration levels, mobile wallets are still some way off being the preferred payment method

5. Rewards, Loyalty, and Customer Acquisition

5.1 The expectation of rewards is an entrenched part of consumers’ purchasing process

5.2 Age plays a role, but income has a greater impact on perception of rewards

5.3 Rewards are a valued element of the POS retail experience, but not the most important factor

5.4 Rewards are a key component of the mobile wallet experience

6. Loyalty Program Best Practice

6.1 Case study: M&S reworks longstanding loyalty program

6.2 Case study: yuu bundles existing schemes into a single customer contact point to compete with mobile

6.3 Case study: MoneyBack and adapting to COVID-19

7. Neobanks and Loyalty

7.1 Neobanks have considerable appeal to the important millennial market

7.2 Case study: Loyalty schemes linked to brand and consumer values

8. Traditional Banks and Loyalty

8.1 Traditional banks are using loyalty programs to incentivize ongoing digital channel use

9. Appendix

9.1 Abbreviations and acronyms

9.2 Methodology

9.3 Secondary sources

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