Invest your points? A new kind of loyalty program

Japan loves to save money. Households have a reputation for stockpiling large amounts of cash away for a rainy day – the World Bank puts the country’s gross savings figure at some 145 trillion yen, the equivalent of USD1.3 trillion – while corporate Japan keeps so much cash that the Bank of Japan recently took the drastic measure of slashing interest rates into the negative in order to encourage investment. Attention is now focused on whether Japan’s younger generations will inherit their parents’ financial habits, or perhaps develop an appetite for investing in the stock market or other assets.

Financial innovator Rakuten Securities has developed a new service aimed at making it easier for first-time investors to try their hand at the stock market. Rakuten members can now use their Rakuten Super Points instead of cash to purchase investment products.

Rakuten Super Points have been described as the “glue” that holds the ecosystem of Rakuten services together. Rakuten’s signature loyalty program can be found across all aspects of life in Japan, allowing Rakuten members to earn or spend points (at a rate of one yen per point) when doing everything from shopping online to completing credit card transactions, paying phone bills or making wedding venue reservations. The program has proved so popular that the number of points issued since its inception in 2002 recently surpassed one trillion.

Rakuten Securities announced the new points investment initiative in August 2017 in an industry first.

“Our main target is people who have never invested before,” explains Rakuten Securities’ Yuji Kusunoki. “We were looking for good ways to help Rakuten members understand the importance of investing and feel more comfortable investing.”

Rakuten Securities believes that lowering the risk for potential investors is key to capturing the interest of the next generation. “Many people hesitate to start investing because of the difficulty and uncertainty associated with it,” Kusunoki says. “Through this service, we want to eliminate this ‘fear of investment’ that many beginners have.”

Rakuten Super Points offer an easy way for users to test the waters before committing hard cash toward future investments. Investment funds can even be purchased partially with points and partially with cash, from as little as 100 yen (US$0.89) – also an industry first.

The initiative isn’t the only way Rakuten Securities is addressing the needs of young investors. In mid-2016, the company launched Raku-Wrap, a robo-advisory service targeting people looking to invest small amounts of money without the costs and complications of human asset managers.

“We need to support customers who are just starting to plan for the future,” says Kusunoki. “We need to help young people and beginners take that first step into the world of investing.”

As the connected generation heads toward financial maturity, this strategy could prove to be a winner for Rakuten Securities customers.