Gone are the days when people had better chances of crossing the 20-year mark in their relationship with their banks than with their spouses. According to new research, financial institutions typically lose 15% of their customers per year. Not to mention that each new customer generates only $150 in profit annually – but costs $200 to acquire and onboard.
Neobanks don’t seem to fare much better in the monetization department, either. A recent study by global strategy and marketing consultancy Simon-Kucher estimates that less than a handful of US-based challenger banks are breaking even, with most of them earning below $30 in annual revenues per customer while losing as much as $140.
A rapidly evolving loyalty market, however, might just be the answer to financial service providers’ crippling sales and customer churn woes.
That’s what Raiffeisen Bank Romania bet on when it joined forces with Finshape and UK-based loyalty platform developer Collinson over two years ago. The idea was to build a loyalty ecosystem with dozens of merchants offering users card-linked deals and perks tailored to their habits, tastes and needs. Much like its customers, the bank is now reaping the rewards.
Selling products is out – make customers want to buy instead
“Banking has changed tremendously. Granted, the products and services people and businesses are using are still the same. But the way they shop for them isn’t anything we’ve seen before,” explained Iryna Arzner, Head of Retail Customer Growth at Raiffeisen Bank International, or RBI Group for short. In a bid to tackle this change head-on, Arzner and her team have been on a mission since early 2018 to find tools and technologies that can help the 130-year-old bank group reconnect with people in the digital space.
In pursuit of these objectives, the Romanian branch set out on a bold journey: to create the most successful digital financial ecosystem nationwide to boost digital sales, customer loyalty and its net promoter score all at once. And do so through highly-targeted campaigns powered by real-time customer data analytics. According to the ambitious plan, the loyalty ecosystem was not only to become a new channel for selling banking products but also the single most extensive partnership network for both corporate and individual customers.
That’s how Raiffeisen Bank Romania’s Smart Market came to be.
Smart Market: a platform where customer needs meet custom solutions
Rolled out in May, the loyalty platform is now available to 1,100,000 of the bank’s customers through a stand-alone app for iOS and Android devices. Users can browse personalised offers from some fifty merchants, financial and non-financial alike, to get deals, cashback, loyalty points and more on anything from concert tickets to home insurance. Besides, merchants can actively target them with offers they can’t refuse – or at least they’re statistically unlikely to, based on their spending history, shopping habits and personal preferences.
Under the bonnet, the loyalty platform is powered by seamless integration between the four key stakeholders. The cloud infrastructure for data storage and analysis was provided by RBI International, Raiffeisen Bank Romania’s parent company. Collinson headed the development of the mobile application and loyalty capabilities, including real-time data processing and rewards calculation. Finshape makes sure that all this is fuelled by customer and transaction data that is enriched and categorised automatically and dynamically.
100,000 users, 87% satisfaction rate: the ecosystem in numbers and opinions
Since the app launch, some 100,000 customers have enrolled, projected to more than double by the end of 2023 and reach 400,000 over the next two years. Based on a recent internal survey among Smart Market customers, a whopping 86% of respondents said they highly appreciated the user experience offered by the application, with almost the same percentage (87%) stating they would strongly recommend it to family and friends.
On top of the merchants currently featured in the app, covering as many as fourteen product and service categories, such as travel, education, fashion, entertainment, food, health and travel, the bank expects another 70 to join by 2025. Other plans for the future include the rollout of gamified experiences and ESG features as well as the extension of the loyalty programme to SMEs and relevant business-to-business offerings like accounting, legal, cleaning or telecommunications services.