PARTNERSHIPS BETWEEN RETAIL COMPANIES AND FINANCIAL INSTITUTIONS

The quest for the perpetuity of companies creates the need to maintain and improve profit margins. As covered in the article Corporate Governance: Strategic Planning, the preparation of Strategic Planning prioritizes carrying out projects that will contribute to achieving business goals. Nowadays, one of the most valuable assets for Retail Companies is information about the habits of their customer base. Technological advances and the change in consumer habits are the engines of the transformation of the way in which financial services are provided. In an environment dominated by traditional competitors, Fintechs are gaining a significant position in this market, mainly related to the area of innovative payment method solutions. The regulation of the payment market and the ease of opening accounts make the exploration of the relationship and brand trust gained by Companies an essential vehicle for offering financial products to end customers. The lean structure of Fintechs and the agile decision-making model confirm that partnerships take place more fluidly. Companies that sell directly to end consumers, that is, retailers such as Magazine Luiza, Lojas Renner, Livraria Saraiva and Raia Drograsil, have established brands and an intense relationship with the end customer. Due to these facts, they are exponents both in the exploration of their own initiatives and also through partnerships with Financial Institutions, to offer financial products, insurance and credit. There are several partnership models that can be designed in an exclusive way. Some of the main models, which generate good returns for companies with a large customer base and direct relationship with this base, are the creation of a card Private Label, Co-branded or the model of Referral.

• Private Label

A card that the non-financial company itself is the issuer, without a flag, used for purchases in its own stores, generally has attractive discounts on the purchase of specific products. The main goal is customer loyalty and deepening knowledge about the customer base. Because they do not have a flag, it is not possible to make purchases at other establishments. Based on a partnership, financial companies offer products such as installment payments for purchases with interest, insurance, and personal credit lines. The most common form of partnership compensation is Revenue Share of the credit products offered and Up Front Payment for the exclusivity in the operation.

• Co-Branded

Card issued by the Financial Institution, with its own flag in partnership with the non-financial institution, stamping the two marks on the plastic. The customer's appeal for membership is generated by some benefit, such as discounts and installments when buying a range of company products. It is also used for purchases on the company's network, but it can also be used for purchases at other establishments that accept the flag. They are also vehicles for the provision of credit and capillarity in the provision of services such as insurance and loans. The forms of revenue are varied, which may be a percentage of the card's interchange fee or the Profit Share of the credit and insurance products offered.

• Model of Referral (Indication)

It consists of a partnership with a compensation model for referring new clients from the base of the non-financial company to the financial company. Upon the addition of this new client, given the recommendation, the non-financial company is remunerated for the client's conversion effort. Access to customer databases and consumption patterns not only increases the proximity of the relationship between financial institutions and clients, but also contributes to assertiveness in the assessment of credit risk and in anti-fraud models. Thus, combining the relationship that the non-financial institution has with its client base, with the offer of financial products from financial institutions, it makes it possible to establish a healthy partnership that results in the increase of alternative revenues of the non-financial institution and the reduction of the acquisition cost and default of financial institutions' clients.ARTICLE WRITTEN BY LEO PEREIRA — ASSOCIATE OF FC PARTNERSGo to our site: http://www.fcpartners.com.br