Australia’s largest retail bank has unveiled a new loyalty program tie-up with Virgin in an apparent snub to Qantas, and also expanded points accumulation beyond credit cards.
Under dramatic changes to Commonwealth Bank’s Yello program, which Qantas is already part of, customers will soon be able to earn points on home loans, savings accounts, insurance products and CommSec trading, then spend them on Virgin’s Velocity Frequent Flyer.
The bank seeks to recoup lost revenue from looming payments system reforms by the Reserve Bank of Australia, saying “the evolution of CommBank Yello comes as changes to interchange and surcharging . . . reshape the economics of card rewards programs”.
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Group executive of retail banking services, Angus Sullivan, said customers would be rewarded “across more of their relationship with the bank, not just how they spend”.
“More than nine million of our customers can earn points on the everyday banking they’re already doing . . . and redeem them on the things that matter, from groceries, utility bills and fuel through to a well-earned holiday,” Mr Sullivan on Tuesday said.
“We want to help customers turn banking with us into practical value.”
Comparison website Canstar says customers will need to make at least five transactions a month, among other criteria, and the rate at which they earn points will be based, at least in part, on how many different banking products they have.
The tie-up comes ahead of a ban on card use surcharges that have been highly lucrative for banks as consumers turn away from cash.
The RBA is also capping the interchange fees merchants are slugged every time a shopper buys something with a card, a move that alone is expected to deny banks $660 million in revenue per year.
Both changes come into effect on October 1, the same day the new partnership kicks in.
Banks pay airlines for the points, which are used as a lure for their services, and it has been reported Virgin offered CBA more attractive value for its Velocity points than Qantas did for its Frequent Flyer program points.
Canstar said the bank was focused on getting customers to consolidate more of their financial products, potentially making them less likely to shop around.
“The devil will be in the details,” data insights director Sally Tindall said.
“Earning points on a wider range of banking products might sound appealing, but . . . if the lure of more points is influencing your decision-making process and you end up spending more or opting for a less competitive rate, the maths could quickly work against you.
“Technology has made switching and managing accounts easier than ever. If keeping your money with the best providers for your finances simply means having an extra app or two on your phone, so be it.”
CommBank also announced the introduction of a new premium charge card with benefits centred on globetrotting and lifestyle, offering higher points-earning capability, travel insurance perks, no international transaction fees, airport lounge access and concierge support.
It also recently moved into selling travel through its own booking platform, offering flights, accommodation and car rental, with no official affiliation to any airline.
