Big revenue opportunity via online statements


The success of the Groupon IPO, the sad fate of Bank of America's debit card fee, the decline of traditional rewards programs and the Durbin Amendment in general makes this a good time to revisit the idea of monetizing online bank statements with newer technologies and concepts.

We've suggested before that banks would be wise to explore the possibility of running rewards-like programs via online customer statements. A recent survey from BillShrink has confirmed as much, finding that 94 percent of consumers who bank online would use a credit/debit card that offered them in-statement rewards and recommendations over a card that did not. That willingness has led to the rise of an active group of vendors rise up around this idea-the likes of Cardlytics, BillShrink, Access Development, Clovr Media, FMN Technologies and Segmint. Cardlytics, among the leaders, has experienced strong growth as of late. The firm works with banks to present offers via web sites, email, mobile sites and SMS and says it will reach 70 percent of all households by the first quarter of 2012.

As Forrester Research notes in a great report about banks and merchant-funded offers, these upstart vendors act as intermediaries between banks and merchants. The idea of course is to get targeted, highly relevant Groupon-like offers in front of consumers, generating fees for banks and vendors and sales for merchants.

If present trends continue, card issuers' annual revenue from merchant-funded incentive programs will more than quadruple over the next four years, amounting to $1.7 billion by 2015 from about $300 million presently, Aite Group predicts.  Still, that's not much in comparison the revenue being given up due to various regulations.   

Still, the promise is obvious and growth could outpace current predictions if banks get it right. While many have criticized the online coupon market for offers of questionable relevance, bank and card statements provide an obvious advantage. One key will be for banks to out their rich trove of customer data to work to come up with offers that people find compelling. That's how the original Groupon magic might be rekindled. At a time when Durbin Amendment, Regulation E and the CARD Act have clouded the revenue picture, banks have no choice but to pursue the opportunity. Many are wisely taking the plunge. -Jim