Unlocking the value of transaction data and digital banking Launching Card-Linked Marketing in Europe Mobey Forum 7 May 2014

Retail marketing budgets exceed Interchange and are growing Direct costs of sale for UK Retailers Sales Promotions & Loyalty Schemes have budgets 61% larger than interchange Retailer sales cost type Source: Ernst & Young analysis 2011 © 2014 Cardlytics. Proprietary and Confidential.

Banks have an advantage of rich purchase data and high reach channels Digital Users Low Reach millions millions # Purchase Transactions / Year billions Limited Purchase Data High Purchase Data © 2014 Cardlytics. Proprietary and Confidential.

But competition for this data is accelerating High Reach Wall Street Jounal – April 2014 Digital Users Low Reach millions millions # Purchase Transactions / Year billions Limited Purchase Data High Purchase Data © 2014 Cardlytics. Proprietary and Confidential.

But competition for this data is accelerating High Reach Forbes February 2014 Digital Users Low Reach millions millions # Purchase Transactions / Year billions Limited Purchase Data High Purchase Data © 2014 Cardlytics. Proprietary and Confidential.

But competition for this data is accelerating High Reach Digital Users Low Reach millions millions # Purchase Transactions / Year billions Limited Purchase Data High Purchase Data © 2014 Cardlytics. Proprietary and Confidential.

But competition for this data is accelerating High Reach Digital Users Low Reach millions millions # Purchase Transactions / Year billions Limited Purchase Data High Purchase Data © 2014 Cardlytics. Proprietary and Confidential.

Purchase data and digital channels at scale are the “holy grail” 1B+ High Reach Digital Users Low Reach millions millions # Purchase Transactions / Year billions Limited Purchase Data High Purchase Data © 2014 Cardlytics. Proprietary and Confidential.

Banks have a head start as the trusted custodian for transaction data Source: Alix Partners, Q4 2011 Research. Top Two box rating minus bottom box rating © 2014 Cardlytics. Proprietary and Confidential.

And exclusive control over ‘owned’ digital channels Offer Activations & Redemptions based on engagement channel Online Driven Behavior Mobile Driven Behavior Source: Cardlytics Data © 2014 Cardlytics. Proprietary and Confidential.

Case Study Lloyds Banking Group launch of Card-Linked Marketing 2013 © 2014 Cardlytics. Proprietary and Confidential.

Considerations before entering the UK Financial Institutions Customers Retailers, Service Providers, & Brands Approach to digital marketing Existing investments in loyalty schemes and voucher programmes Programme transferability from US to UK Scale & impact of implementation Perception of privacy – hype vs. reality Creating awareness of the programme and fitting into consumers behaviour © 2014 Cardlytics. Proprietary and Confidential.

Major milestones Decision (12-18 months prior to launch) Consumer Research Technical assessments Structure business case Partner options & strategy Design (6-12 months prior to launch) Technical designs Local modifications Early stage merchant sales “its coming” Manage expectations for senior bank executives Launch (0-6 months) Marketing plans agreed & start pre-launch Employee pilot (1+ settlement cycle) Accelerate merchant sales with “its launching” message © 2014 Cardlytics. Proprietary and Confidential.

Product Design is always challenging in banking TYPCIAL BANK APP Stuffthathappens by Eric Burke Source: stuffthathappens by Eric Burke © 2014 Cardlytics. Proprietary and Confidential.

However a simple decision process and willingness to listen led to ‘good UI’ © 2014 Cardlytics. Proprietary and Confidential.

Above the line marketing drove consumer (and retailer) awareness © 2014 Cardlytics. Proprietary and Confidential.

Followed with 1:1 marketing using digital re-targeting, e-mail and direct mail © 2014Cardlytics. Proprietary and Confidential.

And of course bank owned channels with interstitials on log in © 2014Cardlytics. Proprietary and Confidential.

Resulting in 3 launches in 2013 Largest Retail Bank in UK Halifax: September Lloyds Bank: October Bank of Scotland: December 10 Million unique online / mobile users Over 1 billion annual logins 3+ million unique mobile users £100 Billion in card spend http://www.visiblebanking.com/lloyds-banking-group-tops-1b-online-banking-logons-3m-mobile-banking-users-6872/ Sources: Lloyds Banking Group Press Releases,, Nilson © 2014 Cardlytics. Proprietary and Confidential.

What Happened Customer Rewards Merchant Growth Customer Engagement © 2014 Cardlytics. Proprietary and Confidential.

Customers earned £1 million in rewards at Halifax in 90 days © 2014 Cardlytics. Proprietary and Confidential.

18 original launch partners has more than doubled and is accelerating © 2014 Cardlytics. Proprietary and Confidential.

New partners and expanding budgets are growing available rewards Monthly Budget per Customer by category Source: Indexed to £1 at launch © 2014 Cardlytics. Proprietary and Confidential.

Ultimately leading to an increase in key retail bank metrics Payment Card Usage Increased online use Decreased attrition New customers for bank Net gain of 144,000 new customers in first 3 months of programme national rollout 4% increase in card usage after first redemption 19% decrease in attrition for debit portfolios 16% increase in online & mobile banking logins after first redemption Source: Cardlytics US data, Marketing Week 14 February 2014 © 2014Cardlytics. Proprietary and Confidential.

Lessons Learned Press Patience Teams © 2014 Cardlytics. Proprietary and Confidential.

Be ready for some negative coverage and get it out of the way early Article ran in the Daily Mail – January 2013 “Major high street bank plans to start hitting customers with targeted offers” Formal PR and public launch in August 2013 Daily Mail coverage: none This was an “old story” © 2014 Cardlytics. Proprietary and Confidential.

Be patient, merchant and consumer adoption takes 18-24 months to mature Fast followers Early adopter, once “live” Finite number of early adopters © 2014 Cardlytics. Proprietary and Confidential.

Invest more in the BAU teams & process Team Transition Marketing Services Culture Nimble, tech company versus large retail bank. Remember the logic of outsourcing Marketing Services is very different from Retail Banking Bank implementation team transitioned to BAU who didn’t have history of decisions and process to get to launch © 2014 Cardlytics. Proprietary and Confidential.

Questions Jason Brooks +44 7785.619.893 jbrooks@cardlytics.com © 2014 Cardlytics. Proprietary and Confidential.