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Beverly Anderson, a veteran banker in charge of Wells Fargo's new credit card push, shares her advice for how banks can pull women and people of color into their senior executive ranks.
April 29 -
Wells Fargo, a longtime laggard in the ultracompetitive credit card market, has been developing two new credit cards with partner American Express. Executive Brent Vallat also explains how a new bankwide rewards program could help its credit card growth.
March 21 -
Fifth Third Bancorp (FITB) isn't giving up on the small-dollar loan market, Chief Executive Kevin Kabat said Thursday.
April 17 -
Wells Fargo (WFC), U.S. Bancorp (USB), Fifth Third Bancorp (FITB) and Guaranty Bank of Wisconsin all pulled the plug Friday on a controversial lending product that competes with payday loans.
January 17
PHOENIX Wells Fargo's (WFC) credit card business is slowly growing, especially among students and lower-income borrowers. But now the San Francisco bank is about to make a play for the biggest spenders.
Less than a year after starting to expand its insignificant credit card operations, Wells this month
So far, much of that growth has come from customers who usually have a hard time qualifying for consumer loans: "40% of our acquisitions" are students and borrowers who only qualified for secured credit cards, according to Beverly Anderson, Wells Fargo's head of consumer credit solutions. Such customers, who pay an up-front deposit to "secure" the card and then borrow against it, tend to be either first-time bank customers without credit histories, or lower-income people recovering from foreclosures or other financial hardships that hurt their ability to qualify for traditional loans.
Wells, which is holding its annual shareholder meeting in Texas on Tuesday, has been one of the few big banks aggressively courting such potentially risky customers since the financial crisis. But now it's also about to start jockeying for the affluent, high-spending borrowers that most of its rivals want.
Wells Fargo is "days away" from introducing a new credit card for well-heeled travelers, in an effort to compete with the airline frequent-flier cards that are
The card will be "for affluent customers who like rich travel benefits," with rewards "in the areas where customers tend to spend their travel dollars," she said in an interview.
The bank is also about to officially unveil the more general-purpose "Propel 365" card that it
Wells Fargo's new travel card will likely compete most directly with the higher-end credit cards sold by
That said, some airlines, including Delta, are
"For those customers who are tied into airline cobrands but are finding it more and more difficult to use their rewards points, particularly with the airline this program will give them very rich rewards," Anderson says.
A longtime credit executive who spent eight years at American Express, Anderson joined Wells Fargo two years ago, and helped cement its credit card partnership with Amex
Anderson, who leads a 1,700-person unit, is noticeably ambivalent about playing the airline-points-bonus game, which has driven up competition and spending among the biggest card lenders. For example, right now Citigroup (NYSE:C), JPMorgan Chase (JPM) and American Express
"Today there is just a need to have a really rich value proposition at acquisition," Anderson says, comparing the airline-points bonus frenzy to the competition for credit card balance transfers in the late 1990s, when banks "had to get very aggressive."
Because Wells Fargo focuses mainly on selling more products to existing customers, "we don't always have to be that aggressive in terms of our acquisition bonus and therefore our acquisition costs," she says. "However, I do believe you've got to get people interested enough to get inside of the envelope, or to ask a question in the store."
"Stores" are what Wells Fargo calls its branches, and that's where its tellers are already trying to sell more credit cards to students and less affluent customers. Anderson says that 82% of the bank's new credit card accounts are opened in its branches, mainly by people who come in to open checking accounts or do other business.
"It's about the channel that we serve customers' needs in, which is the store," Anderson says. "You think about emerging credit, new to credit, students they come to the store to open up a deposit account, and we get the opportunity to cross-sell a card."
Most banks have shied away from lending to these less creditworthy customers since the financial crisis, when losses surged after many people with subprime mortgages or card loans lost their jobs and their ability to repay their bills. New regulations now prevent banks from charging customers some of the fees that they once collected for lending to lower-income people, making such business less profitable. And many lenders
Wells has been one of the outliers, even though how it does business with lower-income customers has frequently drawn regulatory
"A lot of issuers have moved away from some of those businesses, but we're really in the business of serving customers' needs," Anderson says, arguing that Wells insulates itself from the risks of lending to lower-income or less creditworthy customers by bringing them in as deposit customers first.
"Because we have a relationship-based model, we feel pretty comfortable in the underwriting. We don't have a massive risky profile today," she says. "We're just cranking the engine on acquisition. The good news is that we're still doing it with very high degrees of credit quality."