What's Next for Loyalty? We Are

We're not just building card rewards; we're building an engine that can reward any banking activity

At Kard, we’re building the leading rewards-as-a-service shop for modern banks and card issuers. That’s a broad mandate, but it’s easiest to understand if you think about the whole thing in personal terms. Put simply, you need a bank that lets you do commerce, and your bank wants to keep you around. This probably means offering a payment card at a minimum, plus worthwhile features like automatic bill pay or an easy-to-use app. But financial institutions really start to differentiate themselves with rewards programs. To what extent is your bank giving you worthwhile incentives for using your card? That “worthwhile incentive” is the core of Kard’s business model: We make it easier for card issuers to reward you for sticking around.

Banks and card issuers are building less and less of their own technology infrastructure as the fintech industry evolves to fill in the gaps. As such, Kard isn’t a card issuer; we build parts for card issuers. The first product we launched in the Kard stack is our card-linked offer (CLO) platform. Again, it’s easiest to understand it in personal terms. Your payment card probably gives you cashback or rewards points when you buy things; our CLO platform powers those kinds of rewards. This part of our business is strong; card issuers share their customers’ view that rewards are a minimum incentive for using a card, and the merchants who put offers on our platform see compelling returns on their advertising spend. We’re always expanding CLO and figuring out what else is possible from card-linked rewards. An interesting way we often think about it in house is that Kard connects the two largest parts of the economy: payment cards, where people keep their money, and merchants, where people spend their money. You can imagine that there’s a lot of room for us to innovate in that middle space.

As it turns out, we’re hearing the same thing from our customers. To oversimplify, regular card users want an easy-to-use, personalized experience, and card issuers provide that experience in as many touchpoints as possible. That means CLO is only the first step of building a program that creates truly loyal customers for a financial institution. Looking inward at the data we’ve collected so far, our CLO product does well in engaging customers who would otherwise be inactive on a card. But even running at maximum potential, a CLO program will only be able to offer rewards on about 15% your spending, and Kard’s long-term objective for our card issuer partners is to get as many customers as possible to use their card for over 50% of all their transactions. We refer to these customers as “primary accounts.”

So, how do we drive more primary accounts while only rewarding 15% of purchases? Right now, our CLO product provides great value that keeps customers coming back to use the card, and our next step is to launch another API-first product that allows banks to reward customers for actions outside of simple purchases. To that end, we’re building an engine that can recognize and reward regular banking activities like establishing a direct deposit, referring a friend, paying a bill, and more. Just like we do with our CLO offering, we want to provide enough flexibility for card issuers to form their own loyalty programs that give their customers the most relevant experience to the program they chose. The right loyalty program shows its benefits in a number of ways: 70% of customers say that rewards from financial institutions are a key factor when choosing where to bank, and 84% of customers say they’re more likely to stick with a brand that offers a loyalty program. Traditional banks have identified this as a worthwhile problem to solve, with a number of examples like American Express Rewards and Chase Ultimate Rewards programs. But we see a huge opportunity for neobanks, fintechs, and the rest of the card issuing community to offer loyalty programs at a fraction of the cost by leveraging Kard as their software provider, minimizing implementation and maintenance costs and allowing them to focus on their core business, while we focus on ours.

All of that to say…what’s next for Kard is the future of loyalty and rewards in fintech. As soon as we finish building it, we’ll let you know.