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


List of Tables

Table 1: Consumers in India are most likely to have used a mobile wallet in the past month

Table 2: Top 10 reasons for choosing a financial services provider

Table 3: Top reasons for choosing a provider by region

Table 4: Secondary reasons for choosing a provider by region

Table 5: For around one in six consumers, earning rewards is the most valued part of purchasing in-store

Table 6: Select rankings of importance of earning rewards to consumers by market

Table 7: Factors encouraging mobile wallet use by region

Table 8: Neobanks enjoy greater switching gains and higher customer advocacy levels than traditional banks

Table 9: Santander offer up to 3% cashback on regular household bills


List of Figures

Figure 1: Loyalty programs create a mutually beneficial loop of information and incentivization

Figure 2: Payment reward schemes differ in complexity and scope, but fall into seven broad categories

Figure 3: Simple stamps have evolved into an abundance of complex digital programs

Figure 4: The range of payment solutions has increased, decreasing bank visibility at the POS

Figure 5: There is a stark age divide in mobile wallet uptake

Figure 6: Mobile wallet penetration and regular usage is highest in Asia Pacific, the Middle East, and Africa

Figure 7: Cards and cash are favored payment mechanisms, but mobile wallets are notably more popular with younger consumers

Figure 8: Plastic cards dominate in-store, while mobile wallets are most popular with younger groups when purchasing content

Figure 9: Rewards are most frequently cited as most important by respondents in Asia Pacific

Figure 10: Priorities are broadly consistent by age

Figure 11: The importance of rewards increases in line with household income

Figure 12: Household income is strongly linked to the importance of earning rewards at the POS

Figure 13: Young individuals are most likely to use mobile wallets but less likely to value rewards as part of the process

Figure 14: A relaunch of a well-established scheme breathed new life into loyalty during the pandemic

Figure 15: M&S’s revised loyalty scheme is digital first

Figure 16: M&S clients are older and value rewards much more than the average UK consumer

Figure 17: Multiple brands are available from one portal to drive customer utility

Figure 18: yuu merchant partners cover multiple sectors across over 2,000 outlets

Figure 19: yuu’s promotional materials emphasize savings, treats, and sharing

Figure 20: Hang Seng has been making headway with millennials

Figure 21: MoneyBack is Hong Kong’s largest retail loyalty membership program, partnered with HSBC

Figure 22: Watson’s group includes 20 brands covering a broad range of sectors

Figure 23: Facemasks are offered as an incentive to shop with multiple merchants

Figure 24: MoneyBack’s partnerships give its loyalty points additional versatility

Figure 25: Neobanks are rewarding debit card spending with cashback and points

Figure 26: Flowe combines loyalty and environmental causes to generate engagement with the brand

Figure 27: Flowe promises to offset customers’ expenses to achieve zero carbon impact

Figure 28: Gems are collected in Flowe’s Arcadia loyalty program

Figure 29: MyRewards works with a range of the bank’s products

Figure 30: Accounts with fees are likely to attract a lower NPS

Figure 31: Blue Rewards are earned by holding various products alongside a Barclays account

Figure 32: Citi is a major credit card issuer with multiple products offering variants of its core loyalty program

Figure 33: Having a banking relationship with Citi increases ThankYou earning potential

Figure 34: Owning Citi’s financial products can earn customers an additional 1,600 ThankYou points per month, which can be redeemed against Citi’s own products

Figure 35: CommBank app users receive personalized cashback rewards to incentivize spending

Figure 36: Rewards for using foreign exchange services allows Axis to compete with the growing fintech presence in a key fee-earning segment

Figure 37: Axis customers are avid users of mobile wallets who prioritize rewards and digital service more than most

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