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How can fintech banks benefit from card-linked loyalty programs? 

Posted on 9 February 2023
Read time 2 mins
Author Sophia 🌱

For many fintech banks, customer acquisition is key, but once you’ve got a customer signed up, account activation and loyalty are what make the difference between a profitable relationship with new customers and them potentially abandoning their account.

How can card-linking help fintech banks?

Card-linking enables banks to attach ‘offers’ to their debit or credit cards, attracting new customers and rewarding them for spending more while also providing them with a personalized, friction-free customer experience.

Since fintech consumers tend to be more tech-savvy and financially forward-thinking, this presents a unique opportunity for fintech banks to utilize card-linked offers (CLOs) to encourage account activation, increase participation in their loyalty programs and reduce churn of their existing customers. 

It’s a win-win all around; a customers' frictionless use of their everyday card can now earn them cashback and rewards, and the payment provider now has a competitive edge and a means of enticing their users to spend more.

Research by the CardLinx Association found card-linked offers to be the second most popular marketing tool amongst its members, ahead of search engine marketing


The problem with card-linking and CLOs for fintechs

Despite all of the benefits that card-linking can offer fintechs, there are still challenges.

Many of the world's most popular and top-tier brands are yet to adopt the technology, which can make the associated offers less appealing. It’s also common for card-linking offers to come with stringent restrictions - they may only benefit new customers, require a minimum purchase amount, or run for brief periods.

Card-linking can also be very costly, with associated SaaS fees for fintechs often running into the many tens of thousands. Using a third party also comes with a high price tag, making it too restrictive for many smaller fintechs to adopt.

While securing deals directly with retailers is also an option, this tends to be too time-consuming and adds the complexity of managing multiple supplier agreements into the mix.

Using gift cards for account activation and loyalty

Card-linking isn’t the only way for fintechs to attract, incentivize and reward their customers. Instead, fintechs can utilize the power of digital gift cards to create cost-neutral and even profitable personalized loyalty programs backed by more than 2000+ top-tier retailers and delivered digitally in a format their customers already know how to engage with.

Digital gift cards can also be used alongside existing card-linked initiatives, providing fintechs with a means of funding their cashback offers to make them profitable. 


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How do gift cards match up to card-linked offers?

Card-Linked Offers Gift Cards
Friction-free for the consumer - just activate and go
Easy to redeem, and everyone knows how to use them

Take up to 90 days to validate, depending on T&Cs
Top-tier retailers widely adopt digital gift cards
Come with restrictions and limitations, meaning not all customers are eligible for them
Can be redeemed in real-time, which makes it possible to distribute them as immediate rewards
Many are one-time offers and cannot be used with additional coupons or offers
Discounts are ‘baked in’ - they don’t fluctuate and change as card-linked offers do
Run in cycles with a lack of consistency. This can be off-putting for consumers and difficult for fintechs to track
Can be highly personalized, making it easier to attract, incentivize and reward specific customers


Unlocking the power of gift cards for loyalty, acquisition, and growth 

At Tillo, we understand how difficult it can be for fintechs to balance loyalty and acquisition, which is why we set out to solve both these business headaches in one using the power of digital gift cards.

With Tillo’s innovative platform, fintechs can make a single connection to the world’s largest global network of 2000+ brands, helping them to attract, incentivize and reward their customers simultaneously. 

Want to hear more? Get in touch with us today to discover Tillo.

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