Loyalty is a powerful tool for fintech challengers to utilise but nobody can claim to be ‘the’ breakout success story yet. Perhaps Revolut will pull it off if it can only get around to launching its ‘Revcoin’.
Revolut, the global neobanking juggernaut and one of Europe’s most valuable fintech companies has long been known for its early bet on crypto. Its most recently rumoured iteration of this appetite for all things blockchain-based is the launch of its own native token focused on loyalty dubbed ‘Revcoin’.
The potential is huge. Perhaps it could even outflank the most successful loyalty scheme and use of customer data of the past 30 years: the Tesco Clubcard.
A total of 20 million people actively use their Tesco Clubcards in the UK alone, a figure likely higher than Revolut’s total global customer numbers of 15 million as of 2021. But with Revolut’s very rapid growth rate, the six year old company could be sitting on a much higher figure in five years' time.
Revolut’s well-publicised super app ambitions mean it is launching financial features faster than any other bank or fintech. At the last count, it had c.75 features in its app including insurance, stock trading and crypto brokerage, more than five times as many features as the likes of Santander, according to Optima.
In the same way that the supermarket consumption habits of nearly a third of the UK population are known by Tesco, Revolut could potentially use a similarly gigantic number of users’ own spending patterns to optimise these features and sell better and more lucrative financial products. This could be a very powerful revenue generator for a company increasingly focused on sustainable financials.
Revolut CEO Nik Storonsky said in an interview in The Block recently that ‘Revcoin’ will reward customers for their loyalty although gave no indication of a launch date or how it might work other than that it would likely function through crypto rails.
In an age of an ever-expanding number of finance and banking apps, fostering loyalty makes a huge amount of sense. Could the launch of Revolut’s own crypto be transformational for the company or just another token to add to the 20,000 others out there?
Every little helps
Let’s look at a bit of history first.
Launched in 1994, by then CEO of Tesco (now Sir) Terry Leahy, the card was revolutionary in how it gathered and utilised customer data and habits and pivotal in building the company into the largest UK supermarket chain.
The Clubcard scheme is run via a separate company named Dunnhumby, which also set it up and is now 90 per cent owned by Tesco. It helped the business gradually transform itself into a grocery market leader as the data insights became richer. Dunnhumby grew its own business too and now advises a wide variety of companies on customer loyalty.
When you use your Clubcard data on the product, timing, location and price are recorded. This then feeds directly to marketing, logistics, and ultimately its bottom line through plenty of number-crunching optimisation.
The user in return gets points which can be redeemed against purchases. In 2018 Tesco also expanded to discounts via a paid-for subscription-based ‘Clubcard Plus’.
In the Clubcard's first decade, Tesco saw its share price soar 500 per cent alongside tens of millions of pounds paid out in investor dividends as the cutting edge loyalty scheme paved the way for international expansion.
By following a similar trajectory, Revolut could move much further toward its ambitions of being the western answer to WeChat.
Conversations with Revolut insiders though are markedly cagey about the project. Although, as outgoing chief revenue office Alan Chang told me a few weeks back at The AltFi Festival of Finance 2022, Revolut now has a 100-strong team exclusively working on web3 and crypto.
Loyalty plus the use of data science is clearly a powerful tool. It was transformational for Tesco but fintech has been relatively slow to pursue the loyalty strategy, until recently.
Chase’s recent success, reaching 500,000 customers in just eight months, points to this. Chase offers generous interest rates on savings but also cashback on spending.
Revolt already has an arm dedicated to ‘perks’ as well as cashback on spending. One key difference with Revcoin, and why the crypto aspect of the idea is so powerful, is its mooted ability to be traded, all made possible via its basis on the Ethereum blockchain.
"It definitely won't be a stable coin," he said. "The goal is to make loyalty tradable," Storonsky told The Block.
While a launch may be some way off, Revolut’s immediate focus seems to be a UK banking license as well as near term profitability, the old fashioned loyalty scheme is clearly in need of an upgrade. Revcoin might just be it.