Bank and airline partnerships evolve as more target the wealthy

At Money 20/20 Asia, Flora Hui, global head of banking and payment partnerships at Cathay Pacific, a premium airline, says many international banks have shifted their focus away from lending to wealth management.

This shift comes as there has been an emergence of worldwide wealth and changes in regulation mean wealth management services are providing the potential for higher profits, she notes.

“There have been some changes in regulation, especially in lending. For example, some markets have a cap on interchange fees banks can charge on merchants, or caps on interest rates on credit cards. All these factors mean lending businesses are getting more and more difficult for banks to make money,” she explains.

As banks increasingly target high-net-worth individuals, airlines are a natural partner because, despite making up just 0.5% of the global population, this group accounts for 36% of air travel spending, according to Hui.

Moving beyond co-branded credit cards

Traditionally, partnerships between banks and airlines centred on co-branded credit cards. However, Hui notes banks and airlines are broadening their strategies to meet the increased demand from customers for premium experiences.

Airlines are going beyond the usual perks like lounge access and priority boarding and check-in, says Hui. Instead, they are getting more creative and unique in their approach to provide customers with unique travel experiences. For example, Cathay partnered with Standard Chartered to provide a chartered flight exclusively for the bank’s priority customers.

Meanwhile, partnerships are also evolving to allow airlines to offer customers access to banking services, including account opening, investment products, and insurance.

“Through all these collaborations with banks, banks are able to offer something really suitable for this segment they are targeting,” Hui says.

Collaboration creates a “triple win”

Hui describes the new airline-bank partnerships as a “triple win strategy.” Customers benefit from both travel perks and exclusive banking services. Airlines see greater loyalty from high-net-worth individuals, which they can monetise. Banks, meanwhile, gain brand exposure through airline websites, apps, inflight products and airport touchpoints. They also get a new way to reach and retain their target audience, Hui says.

“It’s an opportunity for them [banks] to increase their revenue generation from selling their banking products, and at the same time, given these individuals are high-net worth, the risk of them opening up a product is relatively low,” she notes.