Westpac pours $44m into cashback rewards operator ShopBack

Westpac has taken a stake in an online shopping rewards operator as it looks to boost customer engagement and attract a younger demographic.

Westpac’s investment in ShopBack adds to the more than $US300m in total funding the start-up has raised to date. Picture: Brendon Thorne/Getty Images

Westpac has invested $US30m ($44m) in online shopping rewards operator ShopBack as it looks to boost customer engagement and attract a younger demographic.

The investment is understood to be part of a larger funding round by the Singapore-based ShopBack and sees Westpac nab about a 3 per cent stake in the start-up as it works toward a public listing.

The lender’s move into the rewards space comes after its big four peers also ventured into the loyalty market in recent years: Commonwealth Bank took a 23 per cent stake in Australian start-up Little Birdie in May 2021 and followed this up with the launch of its deal discovery app Cheddar later in the year, while ANZ Bank acquired cashback operator Cashrewards just a year ago.

The ShopBack partnership forms part of Westpac’s digital-first strategy and its goal to engage with younger customers, Westpac managing director for consumer finance Steve Rubenstein said.

“This is an exciting step in providing our customers with access to exclusive online deals and helping them get more for their money at a time when budgeting is high on the agenda,” Mr Rubenstein said.

“We know the ShopBack partnership will appeal to younger Australians who are savvy with managing their money and want more offers from their bank.

“Our credit and debit card customers can be rewarded with cashback for shopping at their favourite online stores across fashion, technology, food, travel, and more,” he said.

Founded in 2014, ShopBack serves more than 35 million customers in the Asia pacific region and has partnered with the likes of Amazon, Booking.com, eBay, Target, ASOS and Uber, among others.

While the cash rewards app has been operating in Australia since 2018, with more than two million Australians registered with the rewards program, Westpac customers will get the benefit of exclusive offers and deals by using their Westpac credit or debit card, Mr Rubenstein said.

For now, access to the exclusive offers will be through ShopBack’s website or app, but Westpac will likely look to bring the cashback feature across to its own app in time.

The push by the major lenders into the rewards space is a deliberate move to enhance digital engagement and “stickiness” among Millennials and the older cohort of Generation Z, who are much more likely to switch banks than older generational groups.

It also comes as digital transactions boom post Covid and as an increasingly challenging economic environment sees consumers hunt around for better deals.

CBA pumped $30m into digital shopping hub Little Birdie last year, before it had even gone live, and then just a few months later launched deal discovery and cashback operator Cheddar through its venture-scaling arm X15ventures. The bank is also currently trialling its own rewards program, CommBank Yello.

ANZ customers, meanwhile, have been able to access the lender’s cashback offers feature in the bank’s app since early November, again increasing customer engagement, a year after it acquired Cashrewards for $100m.

Westpac’s investment in ShopBack adds to the more than $US300m in total funding the start-up has raised to date as it works toward a 2024 initial public offering.

Other ShopBack investors include SoftBank Ventures Asia, Rakuten Capital and Singapore’s 65 Equity Partners Holdings.