Financial Services Rewards Programs: The Quest for Profitability
Report Summary
Financial Services Rewards Programs: The Quest for Profitability
Debit card rewards programs will fuel financial institution spending on rewards programs, but program profitability will elude many firms.
Boston, MA, December 16, 2009 – A new report from Aite Group, LLC looks at U.S. financial institutions' spending on rewards programs through 2013, the trends that will shape that spending, and the vendors that are competing for their share.
Nearly half of all consumers belong to a financial services rewards program, with 70% of all credit cardholders owning at least one rewards-based card. Rewards card ownership increases consumers' credit card usage and purchase consideration, and even improves marketers' ability to target customers. Loyalty program success has resulted in financial services firms' seriously considering adding loyalty programs to other financial products, including debit cards. Program profitability will continue to be a problem, however; only those that get it right will achieve monetary success with their offerings.
"The profitability of debit card rewards programs varies widely depending on penetration rates, activation rates, program costs and increases in spending levels," says Ron Shevlin, senior analyst with Aite Group and author of this report. "Increased penetration, adoption and spending rates will be critical determinants of profitability for retail banks' loyalty programs."
Companies mentioned in the report include Access Development, Affinion Loyalty Group, Affinity Solutions, Carlson Marketing, Consumer Benefits Services (CBSI), Epsilon, Fidelity National Information Services, First Data, Fiserv, Kobie Marketing, Mall Networks, TSYS, and Vesdia.
This 38-page Impact Report contains 26 figures. Clients of Aite Group's Retail Banking service can download the report.