As the media, FinTechs and the banking sector reel from high-profile bank meltdowns, it’s shining a light on the credit union and community banking sectors, and how some companies are working with these financial institutions (FIs) to create value for customers in novel ways.
In a conversation with PYMNTS, CEO David Metz of ad-tech platform Prizeout discussed how he’s less dazzled by the glittering realm of VC banks and more interested in leveraging community connections of this other class of FIs to bring merchants and consumers together.
Invoking the classic film “It’s A Wonderful Life” for context, Metz said, “I’ve gone out to dinner with [credit union executives] and while we’re having dinner with CEOs, people walk by and say, ‘Hi, thank you, my son’s graduating college,’ and the CEOs are like ‘Of course, have them send a resume.’ That doesn’t happen with big banks. Having community interaction is so important.”
It’s especially important to the Prizeout platform, which works with credit unions (CUs) and community banks, to give members and account holders added buying power at a critical time while driving more local commerce, ultimately benefitting local businesses, consumers and FIs.
The way it works is that instead of going to, say, The Home Depot or the local coffee shop and using their cards, consumers select a merchant from the Prizeout marketplace menu found on participating bank/CU apps and websites where they wish to shop and how much they intend to spend. Prizeout adds 10% to 12% to the consumer’s funds, and it instantly goes back to the consumer as a virtual card via email.
Some redeem via QR code; others use a PIN/code combination. For the CU or community bank, there’s a revenue-sharing component from Prizeout, the merchant gets a customer ready to shop and the consumer gets up to 12% more money to spend when they go to the store.
“Basically, merchants are funding the entire ecosystem. They’re viewing Prizeout the same way they do Facebook and Google,” Metz said. “But instead of spending all that money with Facebook and Google, we’re saying give a portion to the consumer. That’s a great way to get them to pick your brand. Then we’re going to give the partner, for example, the credit unions, a higher rev share than they make on interchange.”
While consumers are thrilled with the extra money, it’s a boon to retailers of every kind in specific geographic areas, as CU members and community bank account holders are likely to spend that money locally — a point that underpins Prizeout’s focus on local FIs.
Prizeout integrates directly with core banking systems, Metz said, so it has access to members’ purchase preferences. When members click Prizeout, “they’re presented with 26 to 50 different digital gift cards. We have thousands of merchants. All those merchants engage in a real-time auction. You have the big merchants saying, ‘I want my gift card in front of them’ because they want consumer acquisition and they’re willing to try to outbid [others] the same way they do on Facebook and Google to get that digital gift card in front of that person.”
This makes Prizeout a kind of customer acquisition engine if a CU member has never shopped with a merchant before, only the customer acquisition cost (CAC) is far below average.
After Apple and Google ended the use of web cookies for ad targeting back in 2020, Metz said merchants run online ads just hoping a click leads to a purchase. His platform flips the script.
“With Prizeout, we are the impression — the click in the sale,” he said. “If the consumer buys an Allbirds digital gift card and it’s a first-time user, the consumer gets the digital gift card plus the bonus value, and we send the money to the merchant. The sale’s done. We just provided the sale. It’s now up to the consumer to go to Allbirds and use the code to buy. AllBirds knows 100% that Prizeout fulfilled the sale. Google and Facebook have nothing to do with the sale.”
He added, “People say 50% of impressions or clicks are fraud. For us, they’re getting a 100% risk-free [customer] acquisition.”
While Prizeout is sometimes mistakenly likened to a gift card platform, Metz said it’s more of a “me card” platform from the CU member perspective.
“We hate the word gift card because no one’s gifting them,” he said. “They’re self-cards.”
Metz said over 50% of Prizeout users consume the entire balance of the card in the first four hours after receiving it: “I have to fill up my tank of gas. If I get the gift card on Prizeout, I get 10% more. Or, I have to go to Home Depot tomorrow. If I get it on Prizeout, I’m getting bonus value. So, instead of using their debit or credit card, they’re buying the gift card first, then making the purchase because they’re getting that additional purchasing power.”
As to why the company is obsessed with local businesses and the FIs that cater to them, Metz explained that it goes directly to the value prop of the Prizeout platform.
“We are, at our core, an ad tech company. We connect merchants to customers,” he said.
And while Amazon may not need this kind of service due to its ubiquity, “there may be a pizza shop in Gary, Indiana, and that pizza shop uses a national bank. Unless that bank has hundreds of thousands of customers in Gary, Indiana, as well, it would be very hard to connect with those customers. But the community banks and the credit unions geographically have a large base of users and a large base of small businesses.”
In other words, by working with community financial institutions, Prizeout can assure merchants that “we know within a 20-mile radius there are 60,000 people that we can connect Joe’s Pizza shop with. The big banks can’t. Going after the community banks and the credit unions makes much more sense for us from an ad tech standpoint,” he said.
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