The co-branded credit card market is witnessing a meteoric rise. Valued at $12.34 billion last year, the market is projected to skyrocket at 9.61% to reach $25.72 billion by 2030. The surge is driven by the potential of co-branded credit cards to deliver innovative solutions, unlock new markets, and strengthen customer relationships.
Banks and fintechs collaborate strategically with distribution partners/brands to roll out co-branded credit cards. These partnerships give banks the leeway to focus on customer acquisition, retention, and experience while fintechs take care of the credit card issuance and operations.
Are co-branded credit cards the next big opportunity for banks?
We’ll analyze it in this blog. But before getting there, let’s look into the rise of co-branded credit cards.
Rise of Co-branded Credit Cards
Co-branded credit cards came into existence in the mid-80s when a leading airline partnered with a bank to issue a gold Mastercard. From then on, businesses across industries collaborated with banks to issue co-branded credit cards that rewarded customer loyalty.
Carrying the logos of the collaborating entities, these new-age credit cards combine features of a rewards card and store card. These hybrid cards grant users access to discounts and additional rewards such as points that can be utilized in subsequent purchases from the affiliated retailer or service.
Today the landscape of co-branded cards is expanding beyond traditional banks and retailers. Fintechs entering co-branded partnerships deliver immense benefits and opportunities to banks.
How Co-branded Credit Cards are an opportunity for banks?
Co-branded credit cards offer more than just financial transactions. Their benefits extend to brand loyalty, market expansion, greater revenue streams, and more.
Co-branded credit cards are practically loyalty cards that can incentivize customer spending, encourage repeat purchases, and foster loyal customers. Through co-branding partnerships, banks can focus on exclusive perks and rewards programs tailored to specific customer segments, while fintech partners handle the credit card processing, operations, and management. This strategic alignment sets banks apart from the competition and helps build trust and loyalty through hyper-personalized experiences.
Faster Reward Redemption
Co-branded partnerships help simplify and quicken rewards redemption. With seamless operation and optimized resource utilization, banks can rely on co-branded tie-ups to enhance customer experience and loyalty.
In co-branded partnerships, banks can leverage partners’ distribution strategy and network for enhancing market share and acquiring new customers. In growing markets, especially where credit penetration is relatively low, co-branded partnerships can help banks reach out to a wide range of customers in a shorter lifecycle. Banks can also experiment with new segments and support their co-brand partners in building credit products for specific use cases.
Greater Visibility & Reach
Co-branded credit cards are potent tools for banks to broaden their reach by leveraging partner brand networks. Through strategic collaboration, banks access the partner’s customer base to reach demographics beyond traditional channels. Featuring joint branding enhances visibility, attracts new customers, and boosts the bank’s market presence.
Co-branded partnerships provide banks with valuable transaction data that unveil customer spending patterns, preferences, and behaviors. Analyzing the data enables tailored marketing, promotions, and rewards. Integrating the insights gathered with partner loyalty programs enhances data-driven decisions that strengthen the bank’s ability to build lasting customer relationships.
Co-branded partnerships enable personalization of credit card rewards and discounts to customer preferences and spending patterns. This enhances customer experience and fosters a special connection between the bank and its customers.
Diverse Revenue Streams
Co-branded partnerships help banks diversify revenue streams. Beyond standard fees and interest charges, these collaborations open avenues to co-branded marketing and sponsorships. These enable income through joint advertising and revenue-sharing. This dynamic strategy creates financial stability, supports growth, and nurtures a mutually beneficial ecosystem.
Co-branded Partnership Live Examples
HDFC & Swiggy
HDFC joined hands with Swiggy to offer a co-branded credit card that caters to people’s culinary needs. Using the card, users can earn quick rewards and discounts on Swiggy orders and gain access to exclusive perks, such as invitations to food festivals and offers at premium restaurants and holistic dining experiences.
ICICI & Amazon
ICICI Amazon cobranding card partnership creates a haven for e-commerce enthusiasts. Their co-branded credit card unlocks a world of special discounts, cashback, and reward points for Amazon purchases. Customers can even gain access to exclusive prime benefits, early sales, and other online perks, enhancing their shopping journey with every click.
Kotak Bank & Myntra
Kotak Bank and Myntra collaborated to deliver a co-branded credit card tailored to customers’ fashion and lifestyle aspirations. Customers can enjoy tailored rewards, discounts, and early access to Myntra sales, allowing them to stay ahead of the curve.
Federal Bank & Scapia
Federal Bank and Scapia embarked on a journey to simplify customer travel. Their co-branded credit card offers exciting features like zero forex markup, unlimited domestic lounge access, and reward points for travel-related expenses. It’s the perfect companion for the modern traveler who prioritizes convenience and value with every mile.
HDFC & Apple
HDFC and Apple joined hands to present co-branded credit cards to tech enthusiasts. The card will feature exclusive discounts on Apple products and rewards for digital purchases and Apple services. This partnership seamlessly combines cutting-edge technology with financial expertise, ensuring that every tech purchase becomes a rewarding experience.
SBI & Reliance Retail
SBI Card and Reliance Retail collaborated to introduce the ‘Reliance SBI Card,’ a lifestyle-focused co-branded credit card that redefines the shopping experience. Catering to diverse spending needs, from mass to premium segments, this co-branded card promises a comprehensive and rewarding shopping experience for customers.
All the partnerships discussed above are samples of successful co-branded credit card collaborations between banks and fintechs.
However, choosing the right partner for a co-branded credit card solution is crucial to achieve success.
How to Choose the Right Partner for a Co-branded Credit Card Solution?
The key to surpassing customer expectations lies in choosing the perfect co-branding partner. To start off, ensure your partner’s cobranding goal aligns perfectly with your business objective and customer needs. Then, make sure your fintech partner satisfies all the considerations below.
- Preset operational model for issuing banks and co-brand/fintech partners.
- Regulatory-compliant platform ensuring seamless compliance for issuing banks.
- Developer-friendly credit card stack fostering innovation for co-brand entities.
- Faster Go-to-Market (GTM) with a pre-certified credit card platform.
- Standardized program operations and accounting practices for streamlined processes.
Fast-track your Co-branded Card Launch with M2P
- Launch a co-brand program in just one-third of the typical time.
- Streamline the onboarding process by integrating product details and conducting due diligence concurrently.
- Standardize reporting, accounting, and dispute management operations.
Ensure Secure Co-branded Operations
- Construct a secure and controlled platform for fintech operation by streamlining program operations, regulatory compliance, infrastructure, accounting, and KYC.
- Choosing from multiple infrastructure options that align seamlessly with your unique compliance policies. Opt for a setup that best suits your needs and risk management strategies.
- Building PCI-compliant Product SDKs, offering a regulated product that protects sensitive financial data.
- Auditing during co-brand partner onboarding becomes faster, as the framework is already set aligning to regulator and bank policies.
Co-branded credit cards are a win-win for both banks and merchant partners, where they create a synergy that goes beyond transactions. This powerful collaboration is not just an opportunity for banks; it’s a strategic gateway to a future where financial success, customer satisfaction, and inclusive growth converge.
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