Q&A: Tangerine's Scott Lapstra Talks Innovation, Credit Card Success
With all the buzz surrounding the launch of Tangerine’s new credit card program, we’re thrilled to have its Head of Credit Cards, Scott Lapstra, with us for an in-depth Q&A!
True to its innovative roots, Tangerine’s inaugural credit card replaces complexity with simplicity, confusion with clarity, and manufactured failure with designed customer success.
The Tangerine Money-Back credit card has no annual fee, 2% cash back in up to 3 merchant categories of your choice, 4% cash back on those categories for the first 90 days, 1% on all other spend.
Lapstra tells us what makes the Tangerine Money-Back credit card so special, how it’s being used, who it’s good for and what’s next for Tangerine.
Q. Tell us about the Tangerine Money-Back credit card
A. Consumers are fatigued by the conditions and restrictions on how they can redeem their points.
We felt cashback was a transparent and straightforward loyalty program. But we wanted to tie it back into savings. So we developed a program with our clients that allowed them to choose the rewards categories where they would receive accelerated money back, which is a differentiator and also a pain point in the market.
We’ve actually won 3 awards since we launched the card, two industry awards, one consumer, including Product of the Year for Canada in 2016. Pretty exciting for us. It really highlights the success and innovation of the product.
Q. Who is the Tangerine Money-Back credit card designed for?
A. We’re targeting smart consumers who are looking for good value. It’s designed for somebody who has a good or excellent credit rating.
Q. Which features have been the most popular with cardholders?
A. Definitely the most popular feature of the card is the consumer’s ability to choose where they earn their 2% money back – hands down. People are extracting value from the product by choosing the three categories (as opposed to two categories if you get cash back as a statement credit).
Q. What have been the most popular cash back accelerator categories? Any surprises?
A. Not really. We have 10 categories but grocery, gas and restaurants, or grocery, gas and recurring bill payments come out on top. Not entirely surprised.
I thought that home renovations and a few others may have been more interesting categories to clients.
Q. I know it’s still early days, but have you seen people taking advantage of the unique opportunity to switch categories?
A. We haven’t had a great deal of people switching categories. I think people understand how they spend. So there’s not a lot of active switching going on. I think it speaks to the practical categories that we chose.
We will be looking to optimize those categories over time to help our clients. We have an optimizer tool on the webpage now. In the future we’ll be looking at categories that are underutilized and then looking to test in or swap out categories.
Q. How would you say the Tangerine credit card compares to other cash back and rewards cards?
A. When we looked at the marketplace we looked at cashback and quasi cashback cards to help benchmark our value proposition. We came out at the top of the market in the no fee category. In many cases we came out very high in the fee based cashback categories as well. It was by design. We were looking to give the highest value in the no fee category.
Q. How does the Tangerine credit card compare to the non-rewards features and benefits of other Canadian credit cards?
A. One of the secondary benefits of the card that has received favourable attention is our foreign exchange rate. The industry norm is a 2.5% foreign transaction fee, we charge 1.5%. We’ve received a lot of positive feedback.
Q. And what would you say is the third most popular feature of the card?
A. It’s redeeming into the savings account. It’s popular. 90% of our 75,000 clients are taking advantage of the ability to maximize their earn rate by depositing their money back into their savings accounts.
Our application process is so slick an existing client will have a card application completed and adjudicated in less than a couple of minutes. It’s unlike anything else in the industry as far as being easy and fast.
Q. Any insider tips, tricks or hacks on how cardholders can maximize rewards?
A. I think it would be for cardholders to watch their categories and look at their optimizer tool on the website. Just to make sure that over the long term, they’re spending in the categories where they get their 2%. That’s really the best way to get value from the program.
Q. Why does Tangerine have a credit card program?
A. Our customers had been asking Tangerine and ING for a credit card for years. As we try to re-position Tangerine as an everyday bank, beyond just savings, we responded to that need.
Ultimately, I think our customers knew that we would design something in keeping with the Tangerine brand promise to do something unique, challenge the market and give them great value.
Q. Are you only targeting Tangerine customers?
A. No we’re not. We’re also looking to grow the client base for Tangerine with this product. There is a real interest in our brand from younger and urban based Canadians.
Q. What’s the relevancy of points in a cashback world?
A. We intentionally designed a product that was not based on points. We wanted to do away with the complexity of points translating into value. We wanted to get away from that insecurity and offer a dollar for dollar translation of value.
I think that it kind of goes back to consumer dissatisfaction with loyalty programs in general. They’re complicated, hard to understand and extracting value is difficult. We wanted to do away with that.
Q. How’s the program done compared to expectation?
A. We’ve been thrilled with the success to date, from the acquisition numbers we’ve been driving in, to the media accolades we’ve picked up. The portfolio is performing well.
We have over 75,000 accounts now, so were somewhat ahead of where we thought we would be. We’re also learning a ton about our consumers and how they spend. That has also been interesting for us. It’s been a rich experience getting transactional data and learning about managing a credit card portfolio. By all expectations were thrilled with the success to date.
Q. The Tangerine MasterCard addressed a lot of the holes in the marketplace. Why wasn’t it done sooner, what prevents others from doing the same and will others be following in your track soon?
A. I think it wasn’t done sooner because our competitors aren’t as client focused. We try to provide better value back to our customers. It’s the essence of our brand and our operating model as a direct bank. We’re able to do that given a more efficient operating model and we did that again with credit card.
Q. What about the future excites you for the Tangerine MasterCard program?
A. For me the credit card is a platform for Tangerine to innovate on. For a bank that is focused on client experience and technology, the credit card gives us a road-map for technology innovation. Whether it’s things like Apple Pay, building out our own geo-location alert functionality, or building out two way fraud alerts for our clients.
We also see a future to launch a few other credit cards for our clients – targeting an affluent consumer who travels, a low interest rate card or a U.S. dollar card. It gives us the ability to serve the broader needs of our client base.
We wanted to thank Scott for taking the time to speak with us. In an industry in which product development is all too often focused on marketing offers designed to tease not please, Tangerine’s approach seems to deliberately and genuinely, put the customer first.
We’re hoping the more popular the Tangerine money-back credit card becomes, the better chance it has to force change on the industry. This card seems designed to help customers earn more, save more and redeem more – without any fine print hurdles in the way. Bravo.