Probing if Nationwide's cash incentives have been the trick to triumph in their financial realm, as discussed on This Money Podcast.
In the ever-evolving world of banking, Nationwide Building Society has made a significant mark with its customer-focused incentives. The latest episode of the popular "This is Money Podcast" delved into the society's success, discussing topics such as personal tax avoidance, the return of two-year fixed rate mortgages, the potential for the UK stock market to shine, and Nationwide's use of cash bonuses.
One of the standout points in the discussion was Nationwide's dual strategy for customer rewards. This approach includes a £200 switch reward exclusively for existing Nationwide customers who switch their primary current account from another bank to Nationwide (FlexPlus, FlexDirect, or FlexAccount), designed to deepen engagement by rewarding those who already have other products like savings or mortgages with Nationwide.
In addition to this, over 4 million existing members who use Nationwide for everyday banking and hold at least one additional qualifying product receive a £100 automatic payment, known as the Fairer Share payment. This is part of Nationwide's mutual model, sharing profits with members rather than external shareholders. The scheme has been maintained for three consecutive years, reflecting Nationwide’s significant returns and mutual ethos.
Comparatively, other banks such as First Direct offer a £175 switching bonus plus a £25 bonus, totaling £200 for new switchers, which is comparable to Nationwide's £200 switch reward. NatWest, on the other hand, charges a £2 monthly fee but offers £5 monthly cashback if conditions are met, effectively £36 per year in net cashback plus interest via a linked saver account.
Nationwide’s approach is notable for its dual strategy: rewarding both new switchers with a substantial upfront bonus and existing loyal customers with a fair-share profit payment. This reflects Nationwide’s mutual status prioritizing member value over shareholder returns, which is less common among rival commercial banks.
The profit increase is due to Nationwide's highest ever year for growth in mortgage lending and current account balances. The society posted pre-tax profits of £2.3billion in the year to April, an increase from £1.77billion the previous year. Fairer Share has contributed to Nationwide's strong position in the current account market.
However, some unhappy members are questioning whether they should complain about not receiving the payment. It's important to note that not all Nationwide members will receive a Fairer Share payment, as the criteria have remained the same for three years.
The "This is Money Podcast" is published weekly and available on various platforms like Apple Podcasts, Spotify, Amazon Music, etc. For those interested in participating in the debate, information on how to listen to the latest episode can be found on the "This is Money Podcast" page.
This follows a recent £50 Virgin Money takeover payout and the uncertainty about the future of low fixed rate mortgage borrowers. As for the speculation about purchasing a Delorean time machine to buy Nvidia shares, there's no confirmation on that front.
In conclusion, Nationwide's customer incentives are competitive with rival banks but stand out because of the ongoing loyalty payment and the focus on rewarding existing members as part of its mutual building society model, unlike many commercial banks that focus mainly on switch bonuses or cashback programs.
- In terms of business strategies, Nationwide Building Society stands out by offering both new and existing customers incentives such as mortgages and personal-finance products, with a £200 switch reward for new customers and a £100 Fairer Share payment for loyal customers who hold at least one additional qualifying product.
- The success of Nationwide, as discussed in the "This is Money Podcast," can be attributed to its dual approach to financing, prioritizing member value through a mutual model, which includes sharing profits with members, rather than focusing solely on personal-finance products like mortgages for new customers or cashback programs for commercial banks.
