The shift towards coalition loyalty programmes is driven by changing consumer expectations (Photo: Media India Group)
Indian retail banks are rewriting the rules for customer loyalty in a digital economy that is changing quickly. Point-based, single-brand reward systems are no longer adequate. Major Indian banks like HDFC Bank, ICICI Bank and Axis Bank are redefining retention strategies and changing the customer experience by forming integrated loyalty coalitions with top retail, travel and entertainment brands.
The shift towards coalition loyalty programmes is driven by changing consumer expectations and the growing importance of everyday relevance. According to a 2024 report by PwC India, 68 pc of Indian consumers prefer loyalty programmes that offer cross-brand redemption options, citing flexibility and choice as key motivators. Banks are responding by partnering with popular brands such as Amazon, Flipkart, MakeMyTrip and BookMyShow, allowing customers to earn and redeem points across a wide ecosystem.
“Significantly improved engagement and retention through wider reward options and everyday relevance, unlike single-brand schemes,” Komal Kejriwal, Wealth Manager, Stratmore Wealth, wealth management firm in Bengaluru, Karnataka, tells Media India Group.
“Customer lifestyle alignment, competitive differentiation, and shared tech infrastructure are key drivers for these partnerships,” Kejriwal adds.
A notable example is HDFC Bank’s SmartBuy platform, which integrates with top travel and e-commerce brands. Since expanding its coalition in 2023, SmartBuy has reported a 25–30 pc increase in monthly transactions, according to HDFC Bank’s annual report.
Customers can now redeem reward points for flights, hotel bookings, electronics and even groceries, broadening the program’s appeal and utility.
“Yes, SmartBuy saw a 25–30 pc increase in monthly transactions post integration with travel and e-commerce brands. Flexibility and choice across popular brands increase customer satisfaction and drive repeat usage of loyalty platforms,” says Kejriwal.
The shift has been received well by customers who feel that a consolidated loyalty programme with good offerings is better value for money.
“I used to accumulate reward points over time, but honestly, many of them went to waste because the redemption options were limited and did not really match my needs. Most of the time, the rewards were focussed on products like kitchen appliances or household items, which I already had or didn’t want to purchase again. It felt frustrating to see those points expire unused. However, since the bank expanded its loyalty programme to include partnerships with entertainment and e-commerce brands, my experience has completely changed. Now, I can redeem my points to book movie tickets, shop for the latest fashion, or even plan my travel, all things that align much better with my lifestyle and preferences,” Muskan Tiwari, an Advocate based in Jaipur, tells Media India Group.
The coalition model is not just about customer delight, it is also good for business. Banks report higher redemption rates, improved Net Promoter Scores (NPS), and increased customer lifetime value (CLV).
ICICI Bank’s Payback programme, for example, saw its redemption rate jump from 18 pc to 29 pc after expanding its brand partners in 2023.
According to Kejriwal, success is measured via KPIs like redemption rate, net promoter score (NPS), customer lifetime value and partner ROI.