While the financial services and travel industries intersected for years, in the 1980s, the financial services industry boomed and brought forward a bevy of new products aimed at travelers with increasingly disposable incomes – including new traveler loyalty and rewards programs and co-branded credit cards like the Continental TravelBank Gold MasterCard that launched in 1986. There is no question that the financial services industry (FS) and the travel industry have forged deep bonds over the last several decades, and while you might think it’s a relationship forged around the mutual benefits of international travel and cross-border spend, it actually goes a long way beyond just where people are spending their money. It extends into the how, what, when and why people are spending too.

Simply put, travelers are, and likely will remain, one of the most important demographics for banks and payment networks. And that’s why the two sectors coming together all those years ago forged a foundation that will help both recover from the economic impact of the COVID-19 pandemic.

Consumer trends are changing, and changing at a time when it’s never been so important for travel companies and banks alike to understand the behaviors of the traveler demographic. The pandemic hasn’t just physically asked these people to stay put – we’ve seen it change their mind-set too.

Redundancies and pay reductions, as well as general uncertainty about what could happen next week, mean people worldwide are far more cautious about spending right now. Just last week, the U.S.  Commerce Department released figures on U.S. consumer spending in December, reporting that spending fell to a seasonally adjusted 0.7 percent in December, the third straight monthly decline in spending. Moving into the first months of 2021, across sectors, brands will be facing strong competition to get their share of this smaller wallet, and standing out will require a combination of the strongest propositions, the most relevant offers, and an incredibly targeted engagement strategy.

So why is the FS and travel relationship so important in this landscape?     

Getting to Know You Better…Together
Well, success right now isn’t just about encouraging people to travel or spend, it means making sure that when they do so, they do with your company, or by using your credit card.

Smart, data-fuelled marketing is of the essence in today’s world. Aggressive, untargeted outreach won’t work in an extremely competitive landscape. Customers will be spending less but will be getting bombarded with more and more brand messages. The brands getting cut-through will be those that ensure every single interaction with their audience counts. That means relevance at scale; sending offers or propositions to customers that you know they’ll be interested in, based on their current behavior. But, of course, this kind of complex, data-fuelled marketing requires just that. Plenty of data. 

So, here’s where the close relationship between travel and financial services comes in. Just as the relationship was built on an understanding that both industries are targeting the same demographic years ago, successful FS and travel companies acknowledge the same today. And both know the more they can understand about these customers, the better. Years ago, the two industries embarked on loyalty programs with that in mind – think co-branded cards like the Citi AAdvantage card that let’s member ear points to be spent on travel. Offerings like these acknowledge that travelers are an important and highly profitable market for FS providers and payment networks, and that engagement with them is key. They turn customers from simply being ‘flyers’ or ‘cardholders’ and use the relationship to pool data that creates multi-dimensional program members, who can be interacted with based on their own preferences and behaviors.

Evolving the Relationship
As the earning and redemption possibilities for these programs evolve, so too does the relationship become stronger. As well as the traditional model, where customers are given ways to earn points that can be redeemed for travel, FS and travel companies are working with loyalty specialists to create even more diverse programs, giving members different ways to both earn and spend their points. This has been especially relevant over the past year to replace lost engagement for brands and has helped create crucial ‘lifeline’ ancillary revenue streams, even while travelers were unable to travel.
 
Take the new United Gateway Card offered by United Airlines and Chase, as an example. This new offering allows cardmembers to earn through everyday purchases, all with no annual fee. Many of the leading global airlines have pivoted to offer similar programs – and we’re sure to see even more programs broaden their propositions and follow suit soon. Allowing members to earn points if they use a certain credit card to pay for their weekly shopping, and then letting them spend those points at their favorite coffee shop as a reward provides another way to keep members engaged
 
Knowing You More Every Day
 
On the face of it, credit card programs like those offered by United Airlines and Chase keep members loyal when they are unable to fly, and they entice them to use one credit card over the others in their wallet for routine purchases, such as groceries or fuel. But there’s another benefit for the banks, payment networks and travel companies involved in them; they provide more opportunities to interact with travelers as they spend day-to-day – which they’ll still need to do, even when spending more cautiously. We know data is king, and these programs allow companies to keep understanding traveler spending habits and behaviours even at a time when they’re less likely to be booking flights.
 
Though that doesn’t mean they can’t be used to help power targeted outreach around holidays or other trips in the future. After all, it might not be worth sending a deal on flights to exotic climes for right now, but we know people will travel again. And travel rewards are in the top categories for redemption options when it comes to loyalty programs. We’re already seeing members of loyalty programs making longer-term travel bookings, and enjoying earning points in the process. These diversified loyalty programs still mean people can earn points for that, but while travel finds its feet again, they give FS and travel companies much-needed opportunities to engage and get cut-through with customers, making sure whatever offer is sent to the customer still resonates.    
 
A Relationship Built to Last
Just as in the 1980s, when more FS and travel organizations came together under the single insight that people with more money were those who could afford to travel, both still benefit from understanding the traveler demographic today.

Organizations from across the two industries need to keep working together to listen to customers, drive even more insights – and evolve their propositions accordingly. Consumer spending is low, and wallets may be smaller right now, meaning it’s vital to retain existing customers, but there is still an opportunity to attract new customers by coming together with loyalty programmes that use data to put customers at the heart of their initiatives.

So, yes, it’s been a long and fruitful relationship between the two sectors. But it’s a relationship worthy of time and investment – and we’re sure to see it get even stronger over the next few years as more and more companies realise that working together really is the best way to secure custom and drive loyalty.
 

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