Collaborative incentive programs, such as Amex’s long-term partnership with Delta, are a major factor in consumer credit card decisions. According to GigaPoints/Ipsos vote, more than half of Americans say earning points makes them use their credit card more often. In a separate poll (according to Finder), about a third of respondents said they used a credit card solely to accumulate reward points.
But creating these programs can be challenging from a brand perspective. If write-offs (i.e., it is unlikely that the debt will be collected) increase, programs, especially if they operate on limited margins, may run into financial difficulties. Questions also typically arise as to whether programs should be managed jointly (eg by issuer and brand) and how profit-sharing arrangements should be structured.
To address some of the problems associated with credit card co-branding, Dan Duncan, co-founder of credit card issuer Mercury Financial, launched Concert, a startup that develops credit card programs for brands using “advanced data analytics”. While acknowledging that credit card issuance and loyalty programs are certainly not new, Duncan argues that Concerto’s approach is unique in that it uses technology, including machine learning, to measure and predict risk.
Concerto today announced it has raised $21.2 million in a funding round led by Matrix Partners with PayPal Ventures and GoldenTree Asset Management. GoldenTree also said it would form a joint venture with Concerto to fund a credit card worth at least $2 billion. receivables.
“Credit cards represent one of the best customer acquisition and satisfaction tools available to brands, but even if they overcome the hurdles often posed by banks, developing and running an effective card program requires significant time, resources and expertise,” Duncan told TechCrunch via Email the address. “For this reason, cards remain one of the biggest untapped opportunities… The Concerto platform breaks it all down to give businesses the tools and trust they need, as well as the ability to easily create and deploy customized, surprisingly innovative loyalty programs that people will love. “
To take a step back, co-branded credit cards, not to be confused with private label store cards, are sponsored by multiple parties: a brand, such as a retailer, and a bank or card network such as Visa, Discover, or MasterCard. The brand must partner with a financial institution to issue a joint card that ooften turns out to be an institution that already processes credit or debit card payments on behalf of the brand.
Consumers generally like co-branded cards. Nearly 53% of all U.S. cardholders had a card associated with a hotel, airline, or other type of trade or group in 2014, according to the Simmons National Consumer Survey, up from 46.4% in 2010. data. But Duncan says the programs can be a headache for brands.
“Some businesses don’t have access to the financial instruments or credit that larger companies enjoy — tools that would help them compete better in today’s economy,” Duncan said. “[L]Loyalty and co-branding programs conducted by banks were not optimized for the partner. Large banks usually put their own needs ahead of the needs of any partners through limited credit acceptance. This, in turn, prevents many businesses from using credit to finance company growth, which unnecessarily stops them.”
Expansion of access
Duncan’s first venture after leaving Citicorp and Chase, where he led credit card risk management, was Austin Logistics, a financial institution analytics software firm. Decades later, he founded CreditShop (later renamed Mercury Financial), which provides loans and credit cards to customers with traditionally lower credit scores.
With Concerto, Duncan aims to fight back against banks that he says don’t want to promote a partner brand above their own. “The industry as a whole just hasn’t been innovating to effectively serve business or consumer needs with cards,” Duncan said. “Technologies now exist that allow you to do this in very smart ways, if you have the motivation to apply them strategically.”
To this end, Concerto does not replace the brand’s relationship with a bank or card network. But the company is working with these institutions to build loan approval models using “several million” credit bureaus and app data points. (Research shown that these types of models are subject to bias, especially for minorities with less data in their credit history, but Concerto did not answer a question about steps that could be taken to mitigate bias.) In addition, Concerto makes extensive use of APIs that allow the use “card” functions and rewards within the brand’s apps and websites.
Demand is clearly there – Concerto says it is actively partnering with credit card partners in “a number of industries”, most notably Major League Baseball (MLB) baseball teams. Duncan says the Texas Rangers, Los Angeles Angels, Baltimore Orioles and Cincinnati Reds will release Mastercard-issued cards and programs in the near future, with access to “exclusive experiences and memorabilia” as well as “periodic contests and surprises.” Very optimistic, he believes Concerto will have 500,000 customers by the end of 2022.
“Our original baseball team partners are laying the groundwork for future programs. Baseball team programs have enabled us to develop and implement forward-thinking applications. For example, fans in a stadium can go from viewing a QR code on the jumbotron to a card in their digital wallet in seconds to use at the counter,” said Duncan. “What we have been doing so far has generated a lot of interest and we want to fully capitalize on it. Our funding allows us to ramp up accordingly.”
concert participants, card and Without a cardaccepted a similar client acquisitions model with success. Cardless, which creates programs and cards for brands, as well as lending, issuing and customer service, has launched programs with a number of sports organizations, including Cleveland Cavaliers, Manchester United and Miami Marlins.
Concerto trails Cardless in total capital raised ($21.2 million vs. $50 million). But Duncan says the goal is to “really scale up” and find new partners as soon as possible.
“We also have several new features, partnerships and programs, some of which will be revealed in the coming weeks,” Duncan added. “Companies want to incentivize and reward people to go out and do more – and people are ready. After such a long period of the pandemic, we want to help people enjoy many new experiences.
Credit: techcrunch.com /