How Loyalty Rewards Program Can Drive Growth in FinTech?
How Loyalty Rewards Programs Can Drive Growth in FinTech?The term ‘fintech,’ an acronym for financial technology, was coined by noted American financial advisor Abraham Leon Bettinger in 1972. It denoted using digital technologies for a wide range of financial and wealth management services. Two decades later, the global fintech sector witnessed huge growth due to the boom of internet services and the digital tech revolution.
In such a scenario, designing and running sophisticated fintech loyalty programs can be immensely helpful to attract new customers and retain existing ones. This blog post discusses the various challenges faced by the global fintech sector and how well-designed loyalty programs can offset the challenges. It also discusses various suitable rewards that are perfect for the fintech sector.
Some Challenges Faced By The Fintech Industry (And How Loyalty Programs Can Help)
Being a relatively new sector, the global fintech industry faces some unique challenges. But the good news is it can overcome the challenges by leveraging well-designed loyalty programs. We’ve listed four major challenges faced by the fintech industry and the ways loyalty programs can offset them.
1. High Customer Acquisition Costs
The average customer acquisition cost (CAC) is one of the highest in the fintech sector. A study conducted by San Francisco-based marketing agency First Page Sage analyzed the average B2B CAC of twenty two sectors and found that the fintech sector had the highest CAC of USD 1,450.
2. High Customer Churn Rate
The fintech sector, being an extremely competitive space, has a high customer attrition rate as well. A study published in The Economic Times found that almost three quarters of new Fintech app users churn within seven days. The customer churn rate is also a useful metric to determine customer loyalty. A high churn rate is a sign of low retention.
3. Rise in Cyber-Attacks, Security Breaches, And Loyalty Fraud
The fintech sector is more vulnerable to cyberattacks, data security breaches, as well as loyalty fraud than many other sectors.
4. Lack of Tech Expertise
In the ever-changing world of finance, fintech companies must keep abreast with the latest trends and tech innovations in the domain. But some companies don’t have the right tech expertise to leverage emerging technologies to gain a competitive advantage.
Reward That Works Best For Fintech Companies
There are many types of rewards. Some work like magic in one sector but aren’t as effective in other. The same holds for the fintech sector, in which some of the most effective rewards are:
1. Tiered loyalty
In the fintech sector, tiered loyalty programs work extremely well. As customers increase their spending or banking transactions, they move up the tiers and get exclusive experiences, flexible rewards, and VIP treatment.
2. Gamified loyalty programs
As per a study conducted by Snipp, brands that leveraged gamification reported a 47 percent increase in engagement and a 22 percent increase in brand loyalty. In the fintech sector, gamification can be extremely effective to attract new customers and address various challenges. Gamification empowers customers to interact and engage more with loyalty programs.
3. Rewards for spending money
In this reward program, customers earn rewards as per their spending power. Customers who buy using the company’s credit card or payment app, earn rewards as well as various other benefits such as points, vouchers, and many other items.
4. Customer behaviour-based programs
Fintech loyalty programs can reward customers for various behaviours such as making a credit card payment, depositing cash, upgrading their services, trading in the stock market, buying more financial products, and participating in a survey.
5. New account activation programs
Fintech companies can also create loyalty programs to encourage the activation of new checking and savings accounts, as well as:
signing up for a direct deposit
maintaining a minimum account balance
downloading mobile app
This will attract more customers to open up accounts with the company and incentivize the creation of new accounts.
6. Referral programs
Referral programs are extremely powerful for fintech companies to spread the word about their financial products or solutions. In this way, companies reward their customers with points, offers, or cash for referring friends and family.
7. Points for custom events
Be it a new customer referral, making a repeat purchase, or signing up for the monthly newsletter, this reward program provides points for any custom behavior, event, or transaction.
Top Loyalty Programs in Fintech
Here are some of the best five examples of fintech reward programs to inspire you:
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