In the competitive digital banking space, challenger banks and fintech apps are increasingly using rewards and loyalty perks to attract and retain customers. These new players target customers who can easily switch providers, so they bundle multiple incentives – from generous cash-back deals to high-yield savings rates – into their products. This has become “table stakes” for many fintechs, forcing them to offer incentives to “create greater stickiness” and win market share from traditional banks.

Customers today expect not just basic banking, but relevance and personalization. Digital Bank rewards have shifted from a “nice-to-have” to a “business-critical survival strategy,” as users demand tailored rewards that fit seamlessly into their daily lives. To meet these expectations, digital banks are innovating rapidly in how they reward customers.

Why Loyalty Matters in Digital Banking

Fintech companies operate in an environment of low switching costs and high customer turnover. Unlike in the past, consumers (primarily Millennials and Gen Z) have little brand loyalty to legacy banks and will move their money if a better offer appears. Fintechs must assume customers will leave “just as quickly” as they arrive unless they provide immediate value. So, every fintech feels pressured to demonstrate value continuously through rewards.

Many reports find that a substantial majority of banking customers view innovative rewards as necessary. In one survey, over 60% of customers said it is “essential” for banks to develop new ways of rewarding loyalty. Similarly, after the pandemic, fintech app usage surged (one analysis found a 73% increase in app engagement after COVID-19), further raising the stakes for keeping those users active through loyalty incentives.

Traditional banks have been slower to adapt. Many legacy reward programs rely on points or flat cash-back on credit cards, often with low earn rates and hidden restrictions. Digital banks, by contrast, use mobile technology and data to make rewards more generous and transparent. They can automatically track spending and funnel real-time deals directly through their apps.

Today’s customers expect a banking experience that not only saves them money on fees but also rewards them in tangible ways for being active app users. In this context, fintech loyalty programs are not mere gimmicks – they are key engagement tools that keep customers logging in to the fintech’s app and spending on its platform.

Key Loyalty Features in Fintech Apps

Digital banks have developed a variety of loyalty tools to engage users. The most common include:

• Cashback on Purchases:

Many neobanks offer debit or credit cards that pay cash back on everyday spending. Chime’s new Chime+ program gives members 1.5% cash back on select spending categories (groceries, gas, restaurants) with its credit card, with rewards automatically tracked in the app. Varo Bank’s “Perks” program offers up to 15% cash back at dozens of retailers (Nike, Home Depot, Walgreens, etc.), automatically depositing rewards into customers’ accounts once a threshold is met.

Unlike typical bank points, these cash-back rewards are immediate and straightforward: customers see the value right in their banking app with no complex redemption process.

• High-Yield Savings:

Fintechs often boost engagement by offering interest rates far above the national average. Monzo’s premium Pro plan (in the US) provides 3.75% APY on savings – roughly ten times the 0.4% average – as long as the customer subscribes. SoFi, which launched its Checking and Savings account in 2022, similarly promises 3.75% APY for direct-deposit members (12× the national average).

These higher rates encourage users to keep money in their fintech accounts and feel rewarded for saving.

• Premium Membership Tiers:

Many digital banks offer paid or free premium tiers that bundle several perks. Chime’s Chime+ (free for direct-deposit users) packages together high interest, free overdrafts, and exclusive deals. Monzo’s Plus/Pro tiers (about $5–$10/month) include higher savings APY and special features like annual railcards or subscription discounts.

Even SoFi introduced a SoFi Plus membership that gives customers the bank’s highest APY plus extra cash-back rewards and discounted rates across its services. In each case, the tiered model makes customers feel they are getting VIP value and encourages them to stick around for the extra benefits.

• Fee and Overdraft Rewards:

Fintechs often waive fees as a loyalty perk. Chime, for example, offers fee-free overdraft protection (SpotMe) to all members and extends it to Chime+ customers at no cost. It also enables early access to direct-deposit paychecks (via MyPay) at no charge.

These features effectively reward users by removing penalties. Varo likewise advertises no monthly fees or minimums in its accounts and advertises early payday and high-interest savings as built-in perks of membership. By contrast, many legacy banks still charge sizeable overdraft fees; fintechs use the absence of fees as a selling point and a way to build goodwill.

• Partner Deals and Personalized Offers:

Neobanks leverage merchant partnerships to sweeten spending. Chime’s app includes Chime Deals, which automatically give members extra cash back at specific retailers (often topping 5-10% back) on everyday purchases like gas or groceries. Varo’s Perks and similar programs similarly push location- or category-based offers through the app, giving targeted savings on things the customer already buys.

Banks use transaction data to personalize deals. Varo plans to expand Perks with personalized offers based on customers’ spending patterns. These tailored rewards feel more relevant to customers and help keep them checking the app for new offers.

• Gamification and Engagement Tools:

To make banking more “fun and engaging,” some fintechs incorporate game mechanics. They may award badges for meeting savings goals, provide progress bars for budgeting challenges, or hold contests in the app. Game-like elements (points, levels, leaderboards) can drive behavior such as increasing savings or timely payments.

Apps might encourage users to round up purchases to the nearest dollar (with the spare change going to savings) and celebrate milestones when the goal is reached. These features leverage human psychology to boost usage: customers check the app not just for transactions, but to see their rewards grow. Importantly, fintechs have built their systems to support real-time tracking and feedback – something legacy banks are still struggling to do.

Chime+: A Case Study in Reward Bundling

Chime provides a clear example of a comprehensive fintech loyalty program. In early 2025, Chime introduced Chime+, a free premium tier for members who receive direct deposits. Chime+ bundles existing features with new rewards. Members keep the benefits they already like (fee-free checking, SpotMe overdraft up to $200, and early paycheck access) and gain fresh perks: 3.75% APY on savings, priority customer support, and new cash-back offers.

The most significant addition is the Chime Card, a secured credit card for Chime+ users that earns 1.5% cash back on selected categories. Unlike many credit cards, cash back is automatically tracked in the Chime app with no earnings cap. These combined perks make the app “even more rewarding” for loyal customers.

Varo Bank’s Perks Program

Varo Bank (an all-digital U.S. bank) launched a similar concept, Varo Perks, in 2021. This is a simple cashback rewards program built into Varo’s app. Customers earn cashback automatically when they use their Varo debit card at partner merchants. Varo offers up to 15% back on a rotating list of national and local retailers, including grocery stores, home stores, restaurants, and entertainment venues.

Once a user accumulates $5 in cash back, it is deposited directly into their account – there are no statements or point redemptions to manage. Importantly, Varo frames this as a way to bring “premium” rewards to everyday banking: its CEO noted that historically such cashback deals were “largely limited to holders of expensive credit cards,” but Perks makes rewards “straightforward and satisfying” for all Varo customers.

The Perks program complements Varo’s broader platform (which includes early paycheck access, high-yield savings, and transparent small-dollar loans) in service of its mission to help people “stretch their paychecks” and build better financial habits.

Other Digital Bank Rewards

Chime and Varo are just two examples. Globally, many challenger banks compete on loyalty:

• Monzo (UK/US) – Monzo offers paid “Plus” and “Pro” accounts with perks. In the U.S., Monzo Pro subscribers earn 3.75% APY on savings (vs 2.00% for base accounts) and receive cash-back rewards. In the UK, Monzo Plus provides 3.50% interest on pooled savings and freebies like a railcard or free cash deposits. These tiers bundle various benefits (insurance, budget tools, etc.) to reward loyal users.
• SoFi (US) – SoFi transformed from a lender into a digital bank offering checking, savings, credit cards and more. Its Checking & Savings launched with no monthly fees and a 3.75% APY for members who set up direct deposit. SoFi later rolled out SoFi Plus, a premium program combining the bank’s highest APY with extra cash-back rewards and other discounts across SoFi’s services. Members also enjoy modern features like early direct-deposit pay and transparent overdraft options – again, packaging multiple perks into one offering.
• Revolut and N26 (Europe) – These euro-based neobanks similarly mix rewards with service. Revolut’s top-tier (Metal) bundles travel insurance, airport lounge access, and a small cash-back percentage on card spending. N26 has introduced “Spaces” (sub-accounts for saving with interest or crypto rewards) and partner discounts. Giants like Cash App, Chime, SoFi, and Robinhood have expanded their offerings (savings, investing, lending, payments) to become full-service hubs for highly engaged users. This convergence shows that fintech firms increasingly compete by broadening their product suites and piling on perks to create primary relationships with customers.

What Traditional Banks Can Learn

The fintech wave offers clear lessons for incumbent banks. First, personalization and integration are essential. Customers no longer view rewards as generic giveaways; they expect relevant offers that fit their lifestyles. Today’s customers don’t want just rewards – they demand experiences “that fit seamlessly into their daily routines”. Banks should therefore use customer data (and, where allowed, open banking APIs) to tailor perks and deliver them through convenient channels like mobile apps.

Second, real-time digital delivery matters. Many legacy banks still run loyalty programs on outdated systems, making it hard to offer instant or personalized rewards. At the same time, fintechs have built their platforms to enable “dynamic, real-time engagement” – from instant cashback tracking to push notifications of new deals. Banks can bridge this gap by investing in modern technology stacks or partnering with fintech loyalty vendors.

Third, loyalty programs should be multi-dimensional, not one-dimensional. Fintechs combine several perks (fee waivers, high interest rates, cashback, and credit-building) into a single package to drive deeper engagement. Traditional banks could similarly bundle features. Tying higher savings interest to regular use of checking, or linking debit card spending to bonus ATM withdrawals or partner discounts. Transparency is key – customers should easily see how much they are earning.

Finally, banks should treat loyalty as a long-term relationship strategy, not just an advertising ploy. The most successful fintech programs create a sense of membership or community. Monzo’s paid plans, for instance, emphasize subscriber status and exclusive benefits, making customers feel like “insiders.” Visa sponsorships or co-branded cards in traditional banks rarely achieve the same effect because they lack the nimble, app-based user experience that digital banks provide.

Conclusion

The rise of fintech loyalty programs demonstrates that simple interest rate bumps or occasional bonuses are no longer sufficient. To keep customers engaged, banks must embed rewards into every product and touchpoint.

Generous cash-back deals, superior interest, and creative perks – all delivered through slick digital interfaces – are now driving loyalty in banking. Traditional banks that emulate these tactics (and tailor them to their broader customer bases) can enhance engagement and retain valuable relationships.

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