The credit product helping this Northwest European bank grow customer lifetime value

Bridget Forrester


Bridget Forrester
Product Marketing Executive

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The cost of acquiring consumers is soaring. Industry insiders say it costs them around £16 to acquire every customer for consumer goods, and even more for competitive sectors such as cosmetics. Unsurprisingly, if shoppers only make one-off purchases and never come back, this bites into margins. 


So how can lenders help merchants make shoppers come back for repeat purchases? Lenders have been stepping up to the plate by introducing revolving credit products, including branded store cards and revolving credit accounts. The immediate impact on customer loyalty, and the bottomline has been surprising. 


A leading Northwest European bank recently launched its own embedded credit product using the Divido white label platform. This product lets shoppers apply for credit on merchant websites before visiting a physical store, giving them the confidence to know how much they can spend before getting to the checkout; and saving them the potential embarrassment of being declined in-store. 


Credit products are very sticky for consumers as they sign up for accounts with the lender, which leads to high customer lifetime value through repeat spend. This new credit product boosted recurring revenue for the lender and its merchant customers. It also quickly became a strong channel for the lender to grow new consumer accounts.


There are two types of credit products lenders can choose to deliver: 


Closed loop credit

This is the approach that this Divido client took. Consumers get pre-approved for a fixed amount of credit that they can spend with one merchant or across a closed group of merchants. In this case the merchant helps promote the credit product, especially if it carries the merchant’s brand. 


Payments from lenders to merchants can be handled by bank transfer, so lenders can charge merchants transaction fees in exchange for attractive plans, such as interest free products. Lenders can also create bespoke store cards for merchants to drive loyalty. Lenders can issue virtual merchant cards that do not use expensive card rails for payments.


Open loop credit

This is similar to traditional credit cards, but monthly repayment amounts are fixed and interest charged is generally lower. 


Consumers get pre-approved for a credit limit, which they can spend and repay as they wish. The credit limit stays open enabling customers to spend and repay, using the product indefinitely. Drawdowns are usually made over traditional card rails to merchants using virtual cards, enabling consumers to spend their credit almost anywhere; within reason.


Whichever solution lenders choose to launch, it can be technically very difficult to build a retail finance solution from scratch, and requires ongoing maintenance. 


With Divido’s white label solution, lenders–like this Northwest European bank– maintain control over the decision engine, credit accounts and drawdowns. While Divido manages the end-to-end application process. Divido also manages merchant integrations, enabling merchants to easily embed the lender’s finance options at any point of sale via ecommerce plugins or an API. And everything is fully lender branded.


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Want to find out how Divido’s white label solution can work for you? Book in a demo today.

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