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Travel startup OneTwoTrip‘s gamble in Russia and Europe may tempt companies to test similar products worldwide.
The Moscow-based travel startup has developed what a product it calls a “travel-as-a-service” solution — a name that plays off the popularity of software-as-a-service businesses that sell access to cloud-based tools and enterprise applications via a subscription model. The product, under the Forma.travel brand, is essentially a white-label travel agency.
OneTwoTrip said it has signed up more than 40 banks and fintechs with significant customer bases in Russia and Europe, including Rosbank (controlled by Societe Generale group) Austria’s Raiffeisen Bank, and Italy’s Unicredit, and the fintech Home Credit based in the Czech Republic.
Cumulatively these banks and fintechs have issued more than 50 million travel debit and credit cards. They have loyalty programs, incentivizing customers to use their cards for transactions to accumulate points that can be redeemed for various products and services, including travel.
OneTwoTrip’s Forma service is something the banks can integrate into their websites and apps for the redemption of loyalty points on travel.
For banks, the benefit is monetizing their existing customer bases and avoiding having to do the legwork of making technical and commercial connections to travel companies or handling customer service issues. OneTwoTrip’s customer service teams handling any consumer questions or problems, such as in the case of trip cancellations.
OneTwoTrip’s Forma.travel product also lets banks, telecoms, and other companies sell travel to their customers, letting consumers earn cashback in their loyalty programs or and pay in installments. Companies earn a commission on each trip purchased via the Forma.travel system, which the companies can either keep as a profit or give to their customers as cashback reward.
The startup has been offering the service for four years and it has become a third of its revenue. Before the pandemic, OneTwoTrip had annual sales of $500 million but it declined to disclose more recent figures. It claimed to have had 25 percent compound annual growth in gross merchandise value and 32 percent growth in net revenue between 2017 and 2019.
Banks and Travel Do More Together
Banks, fintech, and travel companies have been cutting more deals with each other lately.
Some banks have gone their own way in similar, parallel efforts without OneTwoTrip. Revolut, a global neo bank or fintech based in London, said it plans to launch a travel offering.
In the past year, Capital One acquired Freebird, a business-to-business startup, and has been building out the sale of some travel services, with a planned launch of Capital One Travel, powered by Hopper, later this year. The banking giant led a March $170 million funding round in the travel agency Hopper.
Several years ago a fintech in Russia called Tinkoff created an online travel agency on its own.
Mastercard, Unicredit, and Raiffeisen have integrated various travel platforms into their businesses, and American Express has famously built its own in-house.
The concept of white-labeled travel agency sales isn’t new, though OneTwoTrip said it has put a few modern spins on it. For years, airlines and other companies have outsourced the sales of vacation packages, rental cars, and other travel to third-party companies. Banks and airlines have let customers redeem loyalty points across brands with the help of tech from companies like Points.com.
What’s new is that many banks and fintechs are turning their apps into superapps to encourage consumers to use them for more than just banking. OneTwoTrip says its solution simplifies the vendor outsourcing and commercial challenges for these companies. Rather than an affiliate model, OneTwoTrip is the merchant of record and has agents on hand to resolve any problems that might happen to trips, such as a need for a consumer to rebook for different dates.
Michael Sokolov, OneTwoTrip’s managing director touts his offering because it lets a bank offer cashback to customers who buy travel through them as a marketing incentive to promote the bank’s brand.
OneTwoTrip said it had raised $30 million in primary proceeds from venture capital and private equity funding. One key backer has been East-West Digital News, a Swedish venture firm previously known as Vostok New Ventures. The startup now has 319 full-time employees and contractors.
The intersection of finance and travel seems to be heating up. Last week Booking Holdings revealed a new Fintech unit that aims to enable travelers to avoid bank and credit card companies’ foreign exchange fees. Expect more deals in these overlapping sectors as the pandemic eases.
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