Deutsche inks deal with Lufthansa

Deutsche Bank, Germany’s largest lender, has successfully secured a significant co-branded credit card contract in Europe, marking a crucial step towards expanding its payments business. Starting in 2025, Deutsche Bank will oversee Lufthansa’s popular frequent flyer loyalty program, Miles & More, as the exclusive operator of the German credit card business. This partnership is expected to double the bank’s annual volume of credit card transactions.

In recent years, Deutsche Bank has prioritised digital payments and cash management as key strategic areas. Recognising the stability, low-risk nature, and reduced regulatory capital requirements of the payments sector, the bank views it as a means to balance its investment banking activities, which are more capital-intensive and subject to greater volatility, such as bond trading.

Ole Matthiessen, the Head of Cash Management at Deutsche Bank, expressed his excitement about the deal, which also involves Mastercard as the technology and network provider. He mentioned that the agreement would lead to a 25% increase in the number of credit cards issued by the bank.

Industry experts estimate that the contract will generate annual revenues of approximately €100 million for Deutsche Bank. Although the bank declined to comment on the specific revenue figures, the importance of the deal was underscored by the direct involvement of CEO Christian Swing in the bidding process.

Members of the Miles & More program are typically affluent frequent flyers, with a significant portion, around 20%, being Deutsche Bank customers. These customers tend to spend five times more than the average German credit card user, according to Johann Philip Bruns, the Managing Director at Miles & More.

Under the program, Miles & More charges an annual fee of up to €138 to credit card users. In return, customers earn 1 mile for every €2 spent on the card, while the issuing bank receives a percentage of each transaction. Miles & More members can redeem their miles for Lufthansa flights or a wide range of products, including wine and designer furniture.

Deutsche Bank replaces DKB, the retail online bank owned by state-backed lender BayernLB, as the longstanding partner of the Miles & More program. DKB, which also manages co-branded credit cards for Porsche and Hilton, will experience a significant decline in its annual credit card transaction volume of €13 billion, with Deutsche Bank taking over. DKB stated that it “unfortunately” lost the bidding process but affirmed that co-branded credit cards will remain a major source of revenue for the bank.

Peter Robejsek, President of Mastercard in Germany, revealed that Miles & More accounts for 20% of the company’s credit card revenue in the country. Mastercard, a long-term partner of Deutsche Bank, will also replace Visa as the credit card provider for Postbank, a leading German retail lender.