Dive Brief:
- Wells Fargo is preparing to launch its Active Cash card July 1 — an offering that will give users 2% cash back on all spending, a 0% annual percentage rate on purchases and balance transfers for 15 months, and a $200 sign-up bonus after customers use the card for $1,000 in purchases within three months.
- Absent from the card is the bank’s stagecoach logo. The card will have a red plastic rim, meant to make it stand out as users view their wallet from above. "We know we need to refresh our brand," Krista Phillips, the bank’s head of credit card marketing, products, loyalty and digital marketing, told Bloomberg. "It’s very deliberate."
- The bank for months has been weighing the viability of its various business units. Wells Fargo sold its asset-management unit in February for $2.1 billion, for example. CEO Charlie Scharf, however, has intimate familiarity with the card business; he served as Visa’s chief executive from 2012 to 2016.
Dive Insight:
The new card aims to compete against the Double Cash offering from Citi, the world’s top card issuer. That product also offers 2% back, but half of that comes at purchase and the other half is available as the user pays items off. Wells Fargo is also set to launch a low-interest-rate card in the coming months and a new rewards card line next year, Bloomberg reported.
The moves may help to rebalance the San Francisco-based lender’s card efforts. The bank ranks as the second-most prolific issuer of debit cards, according to the Nilson Report, but is eighth in credit cards.
"Wells Fargo has definitely punched below its weight in the credit-card space," Phillips told Bloomberg. "We have the opportunity to be a competitive player in the space, and everybody from the top to the staff understands what that looks like."
It entails tripling Wells Fargo’s spend on a credit-card marketing campaign that includes pitches during the opening and closing ceremonies of this summer’s Olympics in Tokyo, Phillips said.
The bank is also eyeing more partnerships in co-branding, Mike Weinbach, Wells Fargo’s CEO of consumer lending, told the wire service. "We believe the business is ripe for growth," he said.
In part, Wells Fargo’s new offering will fill the void left by the recently discontinued Propel card, a product the bank retooled in 2018 to offer greater rewards for spending on streaming services and travel. The bank saw a lull across its credit-card business in 2019 as it reviewed the channels through which it advertises and accepts applications. That decline continued throughout 2020 as the COVID-19 pandemic took hold.
Scharf teased upcoming changes to the bank’s card business during Wells’ Q1 earnings call in April.
"We’re underpenetrated in credit card given our customer footprint, and we’re working on developing a significantly improved value proposition that we can introduce to the market," he said.
Over the past year or more, Wells has been re-evaluating the business units in which it invests as part of a plan to shed $10 billion in annual expenses. It agreed in December to sell its student-loan portfolio to a group that includes Apollo Global Management and Blackstone Group. The bank last fall considered selling its corporate-trust unit.
It opted in February to keep its private-label credit card unit, according to Bloomberg, after reportedly reaching out to potential buyers last fall to offload the segment.
