The consumer banking space is being redefined, with leading financial institutions like JPMorgan Chase, Capital One, and Citi extending their reach into the travel industry.
This expansion signifies a radical shift, with banks emerging as integral parts of the travel sector, intending to drive customer loyalty and expand their financial footprint.
Before exploring how travel is redefining customer loyalty benchmarks for banks, it’s important to discuss the necessity for banks to diversify their strategies to expand their share of wallet. Recently, there’s been a noticeable trend where consumers hold several bank accounts, including accounts with neo-banks that offer simpler user experiences for daily banking needs.
According to a recent Bain & Company survey, which included 29,805 participants across 11 countries and was conducted by Dynata, this fragmentation in the banking sector is becoming increasingly prevalent.
Leveraging Travel Services to Boost Customer Value
Banks are capitalizing on their expansive customer base to provide advanced travel services, offering compelling reasons for customers to plan their future journeys through their banking interfaces instead of conventional online travel agencies (OTAs). For instance, JPMorgan Chase anticipates its Chase Travel portal will generate over $15 billion by 2025.
This expected growth is supported by tactical acquisitions like the luxury and corporate travel agency Frosch and the travel loyalty enterprise CX Loyalty Group, which enable the bank to oversee the customer experience holistically and streamline its offerings’ economic aspects.
Furthermore, Capital One and Citi are also broadening their travel services. The former is rejuvenating its travel portal via a rich inventory from Hopper, and the latter is collaborating with Booking.com to overhaul its Citi Travel portal.
Banks are thus evolving into all-inclusive service providers, merging financial services with travel offerings to augment their overall customer value proposition.
Growth in Travel Market and Consumer Spending Patterns
Valued at $854 billion, the global travel industry is projected to escalate to $1,016 billion by 2027, despite economic upheavals such as escalating inflation, consumers’ interest in travel persists, with 64% planning to spend more on global travel in 2024 compared to 2023.
This invincible travel passion, despite a cost of living crisis, highlights the immense potential for banks and card networks to secure a larger fraction of travel expenditure, typically comprising over 20% of online spending.
Intensifying Loyalty through Customized Travel Rewards
Banks are leveraging this opportunity by amplifying their loyalty programs that entice customers to arrange, reserve, and manage their travel using the bank’s card as the chief mode of payment. These programs reward transactions while utilizing comprehensive transactional and intention data to customize marketing and reward-related correspondence. Such personalization enhances the customer’s loyalty experience throughout their entire booking journey, motivating ongoing engagement and increased spending.
Competitive Stance Against Online Travel Agencies
As banks advance their service propositions, they are simultaneously challenging conventional OTAs. Despite companies like Expedia and Booking Holdings being the driving force behind most banks’ travel services, the dynamics are altering.
Banks are progressively dominating the customer journey, limiting the direct interaction between OTAs and travelers.
Industry analysts underline how OTAs while benefiting from the volume and revenue propelled through these partnerships, might eventually nurture competitors that could shrink their market share.
The Future: Bank-Led Travel Services
As banks persist in widening their travel offerings, it could significantly impact consumer behavior. Integrated services might encourage customers to fulfill all their financial and travel requirements through a single platform.
This shift could offer customers a unified view of their finances and travel, providing convenience and potentially improved financial terms – an appealing proposition for any consumer.
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How Does Custom Travel Solutions Fit into All of This as a Strategic Travel Partner for Banks?
The fusion of travel and banking drives a novel path in customer engagement and loyalty. As banks persist in innovating and incorporating more comprehensive travel services into their offerings, they are increasing their financial presence and transforming the landscape of travel booking.
This evolution signifies a notable move toward a more integrated, customer-centric approach to financial and travel services. It promises a future where managing finances and booking travel are effortlessly intertwined, promoting convenience and loyalty.
Custom Travel Solutions offers a suite of travel benefits that financial institutions and banks can easily leverage for their existing member base and keep them engaged while progressively ensuring increased wallet share.
The member-only discounts on more than 3 Million hotels, villas, and apartments worldwide with up to 78% discount, 45,000 plus cruise itineraries, and other perks like tours, car rentals, expedited passport and visa processing, and so much more to choose from a catalog of 30 plus benefits are a definite win to add for a bank’s customer base.
Our seamless and swift integration with your existing technology allows these perks to be available to your members in no time.
Book a demo to understand how this works.
