Loyalty programs are proliferating among banks as they compete to retain customers and gain wallet share. While these programs are a relatively recent development of the digital banking age, there’s much to be learned from other industries that have been mastering this space for decades — particularly the airline industry.

Banks can look to today’s airlines as examples of how to implement effective loyalty programs. Consider, for example, their efforts in personalization, partnerships and tiering.

Personalization requires data and customer input. Airlines may offer options for their rewards, programs that a customer can tailor to meet their preferences. Airlines have also invested heavily in research to connect their loyalty programs with other travel-related needs, such as hotels, rental cars and vacation packages. As an example, American Airlines partnered with companies like Hertz and Hyatt in 1981, allowing customers to earn miles through these partnerships. This model eventually expanded to include online shopping and dining rewards.

Likewise, banks have access to customers’ spending data, which can offer valuable insights into their habits and preferences, helping identify meaningful partnerships and promotions. For example, a bank might notice when customers frequently dine out and partner with popular restaurant chains to offer cashback rewards or exclusive discounts. Similarly, if customers travel often, the bank could collaborate with airlines or hotel chains to provide points, discounts or perks such as lounge access or free upgrades. In fact, 55 percent of Americans say loyalty and rewards influence which credit cards they use. Aligning promotions with customers’ interests drives engagement while also enhancing the value of the bank.

Community-focused partnerships present a unique opportunity to strengthen customer loyalty through local connections. Community banks can use spending data to identify brands that resonate with their customer base. For example, a bank might partner with a local grocery chain, aligning with customers’ everyday shopping habits. Alternatively, contributions to local charities can earn rewards or matching donations. This idea isn’t new — most major U.S. airlines allow passengers to donate their miles to charitable causes. For example, American

Airlines offers passengers the option to donate miles to organizations supporting social good, global health and well-being, military and veterans, and environmental causes. By focusing on such collaborations, banks can create more meaningful, community-oriented loyalty programs that deepen relationships with their members.

Tiering is another strategy banks can borrow from airlines to deepen customer engagement. Airlines use tiered loyalty programs to incentivize customers with progressive benefits, such as priority boarding, seating upgrades and access to exclusive lounges. Banks can adopt a similar approach by offering tiered credit card rewards tied to total spending. This approach resonates with customers, as 73 percent of Americans consider rewards-related factors — like earning points, redemption options and sign-up bonuses — when choosing a credit card. Higher spenders could earn increased cashback, travel perks or exclusive services, encouraging them to use the card more frequently. By implementing tiered rewards, banks not only reward loyalty but also drive ‘top-of-wallet’ behavior, ensuring their card becomes the preferred choice for transactions.

Above all, a program that’s easy to understand and use will drive both loyalty and engagement. The question becomes how to execute a simple yet strong plan. Many banks offer some semblance of loyalty, such as cashback or gift card rewards.

The most compelling loyalty programs for banks, however, go beyond traditional rewards. One of our financial institution clients enables consumers to use their rewards toward financial products and services, as well as credit card purchases. For example, consumers can apply their rewards to cover all or part of their insurance premiums, invest in savings products or make payments on loans. Additionally, they can use rewards to pay off purchases at restaurants, entertainment venues, travel expenses and more.

Airlines pioneered the use of loyalty programs, showcasing their value and setting the standard for consumer expectations well before the digital-first era. Thanks to their innovation, millions of consumers today earn rewards and enjoy benefits from the brands they trust. This represents a massive opportunity for banks to build stronger connections, drive engagement and create value through thoughtfully designed programs.

Beth McCoy is president of RewardOps, a CORA Group portfolio company. For information, contact Rewardops.com.