Can Bink Investment Boost Barclays’ Card Business?

by Trefis Team
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Barclays PLC (NYSE:BCS) has invested $12.9 million in Bink, a startup that uses a technology platform – Payment Linked Loyalty – that allows customers to link payment cards to loyalty programs, enabling them to automatically collect loyalty points when they make a purchase with their linked payment card. The company is rolling out a service which will enable customers to collect points from different retailers’ loyalty schemes when they pay with their Barclays bank card. This deal will help to digitize customer engagement with loyalty programs, and customers will no longer have to carry any other plastic card for the retail loyalty schemes of which they are a member. Any loyalty points earned from a purchase will be added automatically when they pay using their Barclays card.

This investment could be beneficial for Barclays both in the short term as well as over the long run. The bank’s customer base should grow, which would likely improve growth in card balances, as well as payment volumes – thus boosting revenue and improving the company’s EPS. However, in the near term any impact will likely be minimal – and the longer-term effects will depend on Bink’s long-term success, which is always uncertain with startups. We have created an interactive dashboard on Barclays’ Partnership with Bink which outlines our forecasts for the bank. You can modify our forecasts to see the impact any changes would have on its earnings and valuation, and see all of our Financial Services company data here.

Impact On Barclays

We forecast Barclays’ UK card revenues and international card revenues to increase by approximately 2% in the coming years. We do not see any immediate impact on company’s card revenues due to its investment in Bink. However, the deal should help UK card revenues and international card revenues further grow over the next few years, albeit a moderate amount. Since Bink has a majority of its customer base in the UK, it is likely that the biggest benefit for Barclays will be at its UK operations, while a minor boost in international revenue could come from the U.S. and South Africa, where Bink was recently launched. That said, these potential increases may be partially offset by incremental marketing expenses on promotions and customer awareness, which could pressure margins.

Bink is partnering  with Microsoft to co-sell Bink’s Payment Linked Loyalty solution to global retailers, a strategy which should help Bink increase its presence among retailers and merchants. Barclays’ investment in Bink is a positive step towards further growing its customer base, and if Bink is successful over the next few years Barclays could benefit twofold – in addition to customer and card balance growth, the value of its investment in Bink would likely see substantial gains. Overall, however, Barclays’ investment in Bink is immaterial relative to its overall business, and so it should be viewed as a low-risk, moderate-reward move.

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