Expanding the Loyalty Universe in Financial Services

Financial institutions (FIs) face the multi-pronged challenge of retaining customers and acquiring new ones while growing revenue. To this end, forward-thinking FIs are looking to leverage advertising and affiliate budgets to subsidize loyalty rewards and increase customer satisfaction, while unlocking a new revenue stream, one that cuts the customer in on the action. This is done in the form of a reward or rebate. One tactic gaining traction is the adaptation of the first-party Retail Media Network (RMN) concept to create Financial Media Networks (FMNs) that leverage the massive amounts of first party and transaction data history to create better marketing outcomes for brands and savings opportunities for their customers.

What are Retail Media Networks?

RMNs are first party ad marketplaces that enable advertisers to spend ad dollars directly with retailers. The ads are shown on-site and in-store as users shop.

Offers and ads presented through retailers’ RMNs can be targeted using the retailers’ first-party data (including from their loyalty programs), which creates highly targeted opportunities for advertisers targeting specific consumer segments in a highly contextual environment.

McKinsey reported that 70% of advertisers report seeing better performance on their retail media spend versus that of other channels and traditional publishers. In fact, retail media is today’s fastest-growing ad channel, capturing an estimated 20% of all digital ad spending. It’s no wonder that Amazon, Home Depot, Walgreens, Target, Walmart, Best Buy, and dozens of others have invested in building RMNs.

Recognizing the potential, FIs are joining the party. They’re adapting these same strategies to create their own FMNs which leverage the vast amounts of transaction data and customer insights to create highly targeted, personalized and relevant ads in the form of shopping offers.

Chase has entered the chat…

The first mover in the FMN revolution is Chase, with their launch of Chase Media Solutions. This FMN allows advertisers to reach Chase’s 80 million customers with targeted cash-back offers delivered via the bank’s digital channels, including its app and website.

Advertisers can surgically target Chase customers with relevant products and offers to increase exposure and sales. Chase’s customers save money while the bank collects a tidy new income stream in the process. Everyone wins, except those losing ad dollars to first-party media networks.

Simultaneously, shopping rewards and offers are increasingly important for FIs like Chase as an income replacement tool. This year, we’ve seen a new Consumer Financial Protection Bureau rule to cap late fees which is now being challenged in court. Looking ahead there are potentially more regulations that could tighten interchange and reduce card fees.

Personalizing FMNs

The success of FMNs hinges on their ability to deliver value to consumers and advertisers. To achieve this, FIs should focus on:

1. Enrollment: First impressions are everything, especially in loyalty and rewards programs. Banks must prioritize the initial steps required to enroll in a rewards program and quickly realize value for customers. Reducing sign-up friction, boosting offers, sign-on bonuses, confirming savings amounts – all will play a pivotal role in retaining customers and increasing usage.

2. Smart marketing: Banks should use transaction-level data to market offers to users within contextual settings. For example, triggering in-line messaging about rewards within the customer’s transaction statement that alert customers they can save at a specific retailer the next time they shop. This drives greater engagement and down-funnel performance. Best of all, it unlocks incremental pixels that can be monetized. Even better, bank customers don’t view this type of offer as an ad, but a helpful tool that has their back.

3. Targeting & Attribution: Chase Media Solutions offers the ability for brands to target new customers who haven’t purchased from them in the past year, with the goal of reactivating lapsed customers. This is but one example of offering levers to reach audiences merchants care about. It also enables Chase to command richer commissions and budgets. In advertising, the more targeting the more expensive things get.

Crucial to all of this is tying each dollar generated back to the initial click, impression or activation. Since Chase not only sees the card swipe, but delivers the impression, they possess the holy trinity of ad tracking.

The Road Ahead for Financial Media Networks

As FMNs evolve, expect more sophisticated targeting and collaborations between top brands and major banks. However, to effectively navigate this terrain, banks must balance being both a valuable customer experience, as well as a useful and high-ROI advertiser media buying experience – all while operating within the confines of a highly regulated environment (which is not always conducive to either of those things.

It’s a promising new frontier in advertising. Blending the tactics of “traditional” retail media networks into the unique context of financial services, banks can create more engaging, personalized, and valuable experiences for their customers. Everyone wins.

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