UOB’s KrisFlyer interest-bearing current account is a first of its kind locally. Offering a rewards programme via KrisFlyer miles, the product has smashed launch targets and is winning market share in the crucial millennials segment, reports Douglas Blakey
UOB’s KrisFlyer account and debit card target globe-trotting millennials, but are also designed to be attractive to travellers of all ages. Rewarding customers with air miles for their credit card spending is not a new concept, but UOB is winning market share with a local market first rewarding debit cardholders.
Jacquelyn Tan, head of personal financial services at UOB Singapore, tells RBI: “Within the next decade, millennials’ spending habits will form the backbone of the future economy as they will become the largest segment of the local workforce.
“Millennial spending currently accounts for 20% of UOB’s total card spend, and one in three millennials in Singapore currently bank with UOB. We expect the number of our millennial customers to increase as we introduce more products and services that meet their lifestyle and banking needs.”
Overall spending by UOB debit cardholders rose by 40% in the period from 2014 to 2017. According to Tan, travel-related expenses account for 22% of all spending on UOB credit and debit cards. At launch, UOB aimed to open at least 200,000 KrisFlyer UOB Accounts within five years.
In terms of getting its marketing message over, in one sense UOB had a simple task. The offering is straightforward: customers earn KrisFlyer miles by maintaining a credit balance in their account, and also by spending money using the UOB debit card.
By way of a practical example, cardholders spending S$750 per month – a not-unrealistic target – would accumulate 3,600 miles. Maintaining an average balance of S$10,000 attracts another 6,000 miles per year.
After three years, the KrisFlyer balance would be around 30,000 miles, offering a wide range of possible travel destinations. Customers who maintain a monthly average balance of $20,000 in their account and spend $1,000 a month over 12 months earn 16,800 miles per year, or over 50,000 miles in three years, assuming the cardholder does not maintain a monthly average balance in excess of S$100,000.
Treble KrisFlyer points are awarded for average balances in the region of S$100,000- 350,000. For average balances in excess of S$350,000 – unlikely for the majority of millennials – the reward programme gives five bonus miles for every dollar spend. Initially, the KrisFlyer UOB account paid no interest, but now pays 0.05%, on a par with basic savings accounts in Singapore.
In January, UOB rolled out its multi-currency wallet MightyFX, enabling customers to trade in 10 foreign currencies without paying foreign currency conversion fees.
The currency transparency feature means customers are able to choose when they want to buy a foreign currency, and at a price point with which they are comfortable.
Mighty FX also means cardholders who have travelled abroad know exactly how much they are paying for ATM withdrawals, as it is drawn from their Mighty FX account at their preferred rate. As MightyFX is linked to the KrisFlyer UOB Account, any transactions or funds within the Mighty FX account also qualify for KrisFlyer miles.
UOB’s cardholders have access to all four airlines in the Singapore Airlines Group: Singapore Airlines, SilkAir, TigerAir and budget carrier Scoot. UOB also agreed a deal with Scoot to improve cardholders’ travel experience with a number of special privileges.
Customers purchasing a Scoot ticket using a KrisFlyer UOB debit card are entitled to an additional 5kg baggage allowance, and also receive priority boarding and complimentary seat selection. Innovative use of social media has helped UOB to create a buzz around the product. UOB sent four travel bloggers to kick-start an inspirational travel series where the KrisFlyer UOB account and debit card could be used by millennials. By any normal marketing metrics, the results were outstanding, with classleading engagement rates on Instagram.
As a result of the campaign, visits to the KrisFlyer UOB website visits increased by almost a third, month on month, during the campaign. UOB’s marketing team crafted visually stimulating advertisements that allowed the bank to share the card proposition in a creative and engaging manner.
With the natural inclination of users to swipe sideways on mobile, UOB used carousel advertising to share the card’s features. In total, UOB reached over 3.6 million users on social media during the campaign, more than 60% of the entire population of Singapore.
The results so far exceed UOB’s initial targets with encouraging billings growth, which reached S$5m in just the third month after launch.