Former Account Director at Cardlytics
Michael is the former Account Director at Cardlytics where he was responsible for managing both Santander and Lloyds. He was working with the banks on improving the UI, marketing the service with the banks, and managing the overall relationship to deliver value to FI’s. Michael was also involved in developing and pitching the Open Banking products to UK banks in 2019.Read moreView Profile Page
- The first banks that CDLX sign in a market have favourable terms and given the consolidated structure of banking, it's unclear how much leverage CDLX have to improve FI share paid to banks.
- Being a top priority for the bank is the biggest challenge for CDLX
- It seems like CDLX has a data advantage from the OSP integration with banks although it's not clear how open banking reduces this advantage over time.
- Open Banking risks and opportunities for CDLX and banks
- CDLX potential advantages in an open banking world
- Interesting insight into how the banks look at FI share and the cost-benefit trade off using CDLX.
Disclaimer: This interview is for informational purposes only and should not be relied upon as a basis for investment decisions. In Practise is an independent publisher and all opinions expressed by guests are solely their own opinions and do not reflect the opinion of In Practise.
Michael, can we have a short introduction to your role and responsibilities when you were at Cardlytics?
I was the account director, primarily working on the Santander account, but also with the other account directors, on many projects which impacted other banks. I also worked with some of the challenger banks they were looking to onboard at that time and some of the projects and startups in that space. My main role, outside of the relationship management with the bank, was around bringing on new products, ideas and revenue generating projects. I also looked at introducing new merchants and new ways of creating rewards, but also getting the banks to improve their rewards programs. I drove them to develop their U/I and U/X to the next generation of the program.
When Cardlytics tried to onboard or adopt a new bank, which person or team did they target within the bank?
That depends on the bank or the relationship and with any institutional sales, you are looking for a warm introduction. The more senior the better, so before we identify the team or person – and generally it is on the retail or tech side – you want someone at a senior level who either the company knows someone has a good relationship with or there is some way you can leverage that relationship. Generally speaking, you are looking for a head of retail bank or someone in the digital loyalty space. At Santander, it was slightly further up the chain. The higher up that corporate or exec sponsor is, the easier the onboarding process is.
Is it that strategic that it ever reaches the C-suite?
Is the CEO involved in driving adoption at the bank?
Yes, and it is really important when pitching the value of Cardlytics, that you find the exec sponsor. It is about landing that initial meeting or pitch with them, having that discussion and, once again, how warm that relationship is drives this, but then aligning the program or what Cardlytics can offer to their goals or targets. That is easy to do in a large corporation like that, because ultimately a bank wants sticky customers because that is how they drive revenue out of the customer. The head of customer loyalty or retail banking will be targeting on the number of accounts and products. The reward platform is almost seen as another product that the customer has, so it is easy to align with those goals, but it does get up to that C-suite level.
How did you pitch the value proposition of Cardlytics?
It is personalized loyalty in a digital age and loyalty programs are a dime a dozen. You can no longer walk into a bank branch and speak to your bank manager who knows your name and there is a warm fuzzy feeling. It simply does not happen because there are too many banks, too many people and too much going on. Cardlytics gives your customers a personalized experience based on their spend habits, which is a compelling proposition to a banker. It means their customer will get that experience where they think Santander or Lloyds know them and give them the stuff they want. That is the sales pitch.
Beyond that, depending on the size of the bank and where the sales process is at or where Cardlytics has penetration in the market, the second piece is that we offer this for free. There will be a revenue split and you will make money off this, so not only will you get more loyalty out of your customers, there will be a revenue stream on the other side. It almost sounds too good to be true.
Did you go through those calculations or was it fuzzier in terms of how you communicated the absolute dollar value of Cardlytics?
You want to keep it as fuzzy as long as possible, because you do not want to be pinned down on a revenue number early on in the piece, before you have set the benefit that the bank will get from it. That depends on the market penetration Cardlytics is trying to get into, as to when that conversation about the numbers happens. When they made the hop across the pond to the UK, trying to get into a brand-new market when you need the banks and retailers at the same time, was a real juggling act. The first bank who takes it up gets the biggest revenue share because they take the most risk and have the most bargaining power. As that moves on for the newer banks, I doubt they have that revenue conversation early on. The proposition would be, we give this to you for free.
So early banks have more bargaining power in the FI share they command?
The earliest adopter in a new market gets the best deal because they take all the risk. Large banks know they have the most bargaining power with everyone. Bank of America, Chase or Lloyds realized that if they came on, they presented a larger audience for the Cardlytics platform which means more advertisers which keeps the whole thing churning.
Does that bargaining power change over time?
Yes, as Cardlytics becomes more widely adopted in the market and has more retailers and banks, they no longer have that same bargaining power. Some of the bigger banks might be less susceptible to that bargaining power sliding, because they still have size, but over time it definitely decreases as they become more established in the market.
From the bank's point of view, do they do the calculation of, if X customer converts to X number of offers, they will retain longer which increases their lifetime value, or are they not that sophisticated in their calculations?
Cardlytics will absolutely pitch that, and we have numbers relating to the lifetime value of a customer, but when we use that in the pitch with the banks, we are looking at that more immediate revenue stream or what the customer is doing. It is about, if you get this many customers on the platform, they will get this much spend, which is a big one, being the primary card that the customer is using is huge. You will get this much spend going through the card and this much revenue off the back of it. We play out those long-term figures which impact the bank, which is around how sticky that customer is.