Rewarding customer loyalty with tokenized bank loyalty program

| min read

The Brazilian neobank is implementing a new customer loyalty program to reward, retain, and attract customers. Nubank aims to move beyond the traditional point-based reward system and provide customers with tokenized benefits.

In today's competitive digital banking landscape, customer acquisition and retention have become increasingly challenging. Studies show that customer acquisition costs have risen by up to 60 percent in the past five years.

To address this, (digital) banks sometimes rely on loyalty programs to enhance customer loyalty and drive repeat business. These programs come in various forms, offering rewards and incentives to customers. Loyalty program memberships in the banking sector alone have grown by eight percent in the last year, indicating their effectiveness.

As blockchain, web3, and NFTs gain mainstream adoption, banks are exploring how these technologies can enhance existing loyalty programs. By leveraging web3 concepts, such as tokenization and blockchain ownership, banks can provide additional benefits to customers and differentiate themselves from traditional banks.

Nubank, one of the largest digital banking platforms in the world, introduced its own digital token earlier this year. The Brazilian neobank launched the Nucoin token by making it available to 2000 users first. This invitation was extended to the most active and engaged members of Nubank.

Created on the Polygon blockchain network, there are 100 billion Nucoins reserved for customers, who will be able to use Nucoins to enjoy discounts and a variety of rewards.

What are tokenized loyalty programs?

We explain tokenized loyalty programs in detail in our article “Web3 loyalty programs: How digital ownership will help build long-lasting customer relationships”.

In short, web3 loyalty programs encompass two main types: fungible token programs and non-fungible token (NFT) programs. Fungible token programs function similarly to traditional loyalty schemes, where customers receive transferable tokens that hold value but cannot be exchanged between users.

In contrast, NFT loyalty programs utilize unique tokens that possess distinct characteristics and value, rewarding loyalty through token leveling or specific behaviors. NFTs can be tradable assets that appreciate in value or collectibles that unlock various benefits. These diverse approaches enhance customer engagement and offer opportunities for loyalty rewards within the web3 ecosystem.

How customers can use Nubank’s new customer loyalty program

The bank will offer free tokens to customers based on their previous history with Nubank. Once customers receive their digital tokens, they can either freeze or trade them with other customers for cash. Users will level up if they opt to freeze tokens and gain access to further benefits, which include coinback rewards and lottery tickets.

In the first six months, customers can unlock up to 50 lottery tickets with their new tokens. Lottery prizes will be worth up to one million Brazilian real. And when customers use a Nubank debit or credit card, they will earn a certain number of Nucoins for every real spent. The same applies when they purchase any cryptocurrency through the bank app.

The bank plans to expand the system to enable customers to use Nucoins with external companies that join the network in the future. Nucoin will introduce more benefits in the future as the bank will further develop the program and the Nucoin ecosystem.

Nubank encourages its most engaged customers to share feedback regarding the tokenized loyalty program.

What are the potential benefits for companies and consumers?

Such programs may provide a host of benefits for both customers and companies.

Customers enjoy enhanced ownership and engagement as blockchain technology empowers them to control their rewards. The flexibility and choice offered by web3 loyalty programs enable seamless integration across digital and physical realms, fostering greater connectivity.

For companies, these programs prove cost-effective and efficient, reducing the reliance on intermediaries and streamlining processes through smart contracts. Moreover, web3 loyalty programs future-proof businesses by aligning with the evolving digital landscape and facilitating the expansion of features and benefits as the metaverse continues to evolve.

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