JPMorgan is working with fintech startup Affinity Capital Exchange to create a new class of financial assets based around the trading of loyalty point portfolios.
Affinity Capital's technology turns rewards programmes into a standardised, exchangeable currency that can be traded by fund managers and used as collateral to raise capital. The new asset class - dubbed 'Reserve Points' - is broken down and sold on to investors over the Affinity Capital Exchange marketplace.
Under the programme, airlines, hotels, and other big loyalty operators will be able to realise the value of their portfolios to raise capital from lenders, institutional investors, and operating partners.
In January 2020, industry analysts1 pegged the combined value of the top 100 airline loyalty programs at approximately $200bn.
“We are always looking for innovative ways to help our clients think strategically about their businesses and create value,” says Jim Casey, global co-head of Investment Banking, JPMorgan. “With ACE, we have the potential to provide our clients and their operating partners a unique opportunity to generate value together, while also enabling access to a wider investor base.”