2020 Foresight Report: Retail Bank Loyalty Programs
Albany, NY (PRWEB) July 31, 2014
Loyalty programs have emerged as one of the key marketing tools in the global retail banking industry. Retail banks offer a number of loyalty programs in developed economies, however many of these are commoditized. This has compelled banks to introduce innovative programs in order to remain both competitive and profitable.
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There is also an increased pressure on costs due to new regulatory trends in last five years. Loyalty programs are being viewed as an important revenue-driving tool and have been proven to reduce customer acquisition costs. Retail banking in emerging economies is still in its developmental stages, as illustrated by its relatively low loyalty program penetration rates.
Traditionally, banks and other card issuers have offered reward programs based on a customer income level and demographic profile. Banks are now segmenting customers based on their lifestyle choices and purchasing behavior. The use of analytical tools to better understand consumer spending patterns and offer personalized reward programs has increased in terms of adoption rates. The approach allows card issuers to launch customized rather than blanket programs to all customers.
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This approach also helps to target and isolate the most profitable customers and phase out the programs that do not offer significant value to a bank's overall business. Moreover, analytics are enabling banks to provide location-based, real-time discounts in collaboration with merchants. The successful implementation of analytic-based reward programs has become a key differentiating factor for banks.
- This report provides a comprehensive analysis of marketing strategies adopted by retail banks to offer loyalty programs in developed and developing economies.
- It details trends and drivers of retail bank loyalty programs.
- It details various benefits available to and challenges faced by retail banks while offering loyalty programs.
- It details the customer targeting strategies adopted by retail banks to offer their loyalty programs across the globe.
- It provides case studies on retail bank loyalty programs and marketing strategies implemented by various retail banks and their outcomes.
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Reasons to buy
- Understand the dynamics of the retail bank loyalty programs landscape across the key markets worldwide.
- Assess the current and future opportunities of loyalty programs in the retail banking industry.
- Gain insights into the loyalty program marketing strategies adopted by retail banks.
- Gain insight into various challenges faced by retail banks in offering loyalty programs and key marketing and product strategies across all the key markets.
The global economic slowdown adversely affected the banking industry of key markets across the globe. To improve their financial performance, banks implemented cost-saving initiatives. As part of such initiatives, banks launched loyalty programs through low-cost channels such as mobile platforms and social media sites.
Since the increase in spending on loyalty programs is directly proportional to the growth of the card payments channel, banks recorded a positive growth in card usage volumes. During the review period, Australia’s card spending recorded a CAGR of 10.64% during 2008–2012. The UK, the US and France also recorded respective CAGRs of 2.89%, 3.76% and 4.05%, despite high saturation levels and a financial crisis.
Banking penetration in developed cities is high and competition has increased between banks and other non-banking entities such as private card issuers, non-banking financial companies (NBFC), mobile operators and retail chains. This has resulted in an enhanced focus on innovation and loyalty programs specific to a niche group of consumers. They have gone beyond a simple discount or reward schemes to more sophisticated experience-based personalized offerings.
Banks incur costs when offering loyalty programs. To reduce these costs, they build coalitions with merchants and retailers to collectively share the operational, branding and marketing expenses. From the customer point of view, the coalition enables them to earn and redeem reward points across a network of merchants as well as be entitled to program-specific rewards.
Banks are extensively using analytical tools to record consumer buying behavior and customize their reward programs accordingly. This results in a higher return on investment on each promotional campaign.
Global ATM Market Report: 2014 Edition
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A decade before ATM machine was a mere cash dispenser but today ATMs have become the statement of technological advancements of the financial institutions. The ATM has evolved through the years into a strong business advantage for banks and allowed financial institutions to provide their customers with a convenient way, round the clock, to carry out varying transactions including withdrawal of funds, account deposits, and balance updates. The most recent additions include bill payment, travel booking, and mobile ATMs. Although ATM machines are convenient to use, there are disadvantages associated with them like theft risks, operational issues and fiscal planning issues.
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Countries like India, China and Brazil are witnessing huge opportunity in the ATM market. Other regions like the Middle East and Africa (MEA) is one of the fastest growing ATM market. The mature markets like the US and the UK have large ATM installed base but a very slow growth has been observed.
Insight Report: Best Practice In The Reward Credit Card Sector
Banks are increasingly using rewards and loyalty programs as a tool for maintaining relationships with top-end customers, as these relationships provide high potential for revenue generation.
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Financial institutions are putting forward premium experiences and offers to increase loyalty and develop deeper banking relationships. Rightly positioned, unique rewards act as a key differentiator in a highly commoditized financial services market. To remain profitable, banks have been making changes to their strategies and operational models which includes finding the optimum mix of funding options and reward offerings to achieve greater levels of customer loyalty and profitability. Both issuers and card schemes are partnering with airlines, hotels and popular brands to offer merchant-funded rewards. The strategy allows card issuers to improve the value of their reward credit cards without putting upward pressure on costs.
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