Key Takeaways
- Customer loyalty is defined by three core pillars: (1) exclusivity, (2) repetitive behaviour, and (3) growing engagement. Most financial institutions (“FIs”) in Hong Kong and Singapore seek to drive loyalty via offering point-based rewards, typically via credit cards, using their own proprietary, native currency, as observed in 72% of issuers.
- Hong Kong and Singapore issuers have witnessed their customers’ share of offshore credit card payments climb from 24% in 2019 to 33% in 2025, reflecting a surge in post-pandemic travel. The number of departures by air more than tripled from 6.0 million in 2022 to 20.5 million in 2025, with overseas spending growing from USD 14.7 billion to USD 47.1 billion, buoyed by 1.3x larger average ticket sizes on offshore credit card transactions (vs. domestically).
- Taking note of this trend, the majority of Hong Kong and Singapore issuers have forged partnerships with airlines and hotels to offer customers the ability to make travel-based redemptions through one of two models:
- Points Transfer to Partners: Create a network of partner merchant brands to allow customers to convert and transfer their bank-native points to their chosen partner’s points ecosystem; and
- Direct Partner Currency Crediting: Carve out a dedicated partnership with a merchant brand to allow customers to directly earn in that partner’s native rewards currency.
- Notwithstanding these efforts, issuers’ loyalty rewards propositions suffer from three key pain points:
- Lack of Control: With the largest airlines commanding 56% market share in Singapore (i.e., Singapore Airlines) and 50% in Hong Kong (i.e., Cathay Pacific), issuers’ bargaining positions remain weak. The average issuer has a shallow network of just 3-4 partners; moreover, they have no real exclusivity or control over partners’ loyalty rewards, which can be de-valued;
- Poor Value Capture: Loyalty points operate within walled gardens that are not freely fungible or transferable, with 15-40% of rewards simply expiring unused. Even when they are used, issuers are missing out on valuable customer lifestyle data, given they are cut out of the customer journey before the redemption stage; and
- High Costs: Issuers in Hong Kong and Singapore spent an estimated USD 3.5 billion on loyalty rewards in 2025, a figure forecast to reach USD 5.0 billion by 2030. This is weighing on issuer cost-to-income ratios which, in Hong Kong, have risen from an average of 64% in 2021 to 75% in 2025.
- To address the pain points being experienced by FIs and their customers, adopting a native open loyalty model that is “open” to a critical mass of redemption partners and “native” to the issuer's own ecosystem may hold the answer.
- Such a model allows FIs to fulfil the end-to-end customer travel booking journey, from earning of reward points to redeeming them against their travel expenses natively, helping solve the three core issues plaguing existing loyalty programmes:
- Lack of Control:
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Instant Access to Network: Tap into an expansive pre-existing merchant partner base
Reduced Partner Concentration Risk: Enjoy a much more diverse network of partners to spread risk; and
Improved Bargaining Power: Rely on the open currency operator to better bargain with individual merchants. - Poor Value Capture:
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More Avenues for Points Utilisation: Improved customer utility;
End-to-End Ownership: Retain customers within a native journey; and
Treasure Trove of Accessible Data: Gain access to invaluable lifestyle and behavioural data on how customers are redeeming their points. - High Costs:
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No Minimum Purchase Requirement: Buy only the amount of points required;
Cost Outsourcing: Several categories of operating costs get shifted to the open currency network operator; and
Cross-selling of Value-added Services: Apply a mark-up to travel inventory booked via the native portal and cross-sell add-ons.
