Loyalty card & POS platform wins award on cost benefits
In The Banker magazine's Technology Awards 2004, the award for 'ROI of the Year' has been taken by the XLS loyalty/payments solution from the French payment technology firm, Welcome Real-time.
The aim of the The Banker's annual Technology Awards is to highlight for the financial industry those technologies that have made real contributions to shareholder value and customer service within financial institutions over the past 12 months.
According to Welcome, the XLS platform helps banks cut the cost of communicating with prospective and existing customers, while giving them a strategic tool to increase card uptake and usage.
How XLS works The system enables a bank to partner with any number of merchants, who can then offer their own marketing rewards to their best customers in real time, from the RFM (recency, frequency and monetary value) data collected through card transactions. Meanwhile, the bank can run its own loyalty points and/or cash back programme across any or all of its participating merchants.
Because the technology is fully automated and processing is done in real time, and because costs can be shared between the bank and its merchant partners, the cost of operating such loyalty programmes can be significantly reduced from traditional cost levels for points calculation, postage, telecommunications and reward redemption.
Consumer benefit drives ROI The cardholder - the consumer - also benefits from the scheme through greater rewards (due to lower operational costs), a more personalised reward programme, and a convenient redemption process. The main beneficiary therefore (and the real driver of improved ROI) is the cardholder.
Unlike co-branded cards and loyalty programmes in which a smaller number of suppliers are involved, the bank's ability to run individual or collective programmes across hundreds or thousands of merchants using XLS creates a genuine value proposition for cardholders. As Turkey's Mashreqbank notes, the value of bonuses awarded to its WOW Card holders can be anywhere between 2 and 20 years worth of annual fees.
Akbank shows the way Also from Turkey, Akbank provides a key case study of a bank leveraging its investment in EMV (Europay/Mastercard/Visa standard smart cards) using XLS. The Banker cites the performance figures achieved by Akbank's Axess Card:
- Cardholder acquisition: 1 million customers in the first 8 months;
- Cardholder growth: 42% cardholder growth in its third year - approximately twice as fast as the rest of the market;
- Cross selling: 59% of the bank's new customers arrive as a result of the Axess Card;
- Merchant network: Grew over 400% in 3 years (to reach 43,000 participating merchant outlets).
The latest Akbank figures also show that its Axess Card achieved a 193% increase in turnover volume in 2003.