May 6 - Wells Fargo is releasing two new credit cards aimed at the wealthy. The partnership with American Express reveals the company's new strategy, and how regulation has impacted existing revenue opportunities. Lily Jamali reports.
Wells Fargo is wooing the wealthy, enticing them with two new credit cards in partnership with American Express. The Propel 365 offers rewards and concierge services aimed at big spenders. The Propel World targets the jet set. Wells Fargo's Vice President of consumer credit solutions - Beverly Anderson - says the bank is trying to grow market share in the credit card business, and it's not planning to look far. SOUNDBITE: BEVERLY ANDERSON, VICE PRESIDENT, WELLS FARGO CONSUMER CREDIT SOLUTIONS (ENGLISH) SAYING: "We are underpenetrated with our customers. About one in three customers at Wells have a credit card with us so we know we have lots of opportunity to penetrate the base and deepen our share of our customers wallets." There's room to grow, in particular, among consumers who charge $100,000 or more a year on their cards. Wells Fargo recently told shareholders that only 3 percent of that segment do it through the bank. The new marketing strategy was in part prompted by the passage of the Card Act and other bank regulations, intended to reduce consumer credit card costs, especially for those with poor credit. Eric Wasserstrom is a financial services analyst with SunTrust: SOUNDBITE: ERIC WASSERSTROM, FINANCIAL SERVICES ANALYST, SUNTRUST ROBINSON HUMPHREU (ENGLISH) SAYING: "The Card Act eliminated some of the key profitability drivers in the more tradition card space including for example penalty pricing and some of the back-end pricing. But I think what it shows is that clearly a lot of the pricing strategies that existed in the prime and down into the subprime space are no longer viable and so it's created an urgency for banks to find alternatives." As for the choice to work with American Express, Wasserstrom says the company's rewards network and infrastructure offer a key competitive advantage for Wells - and turn a potential competitor into a partner.