There’s no doubt that the Wells Fargo scandal left its impact on many careers, the firm, and the industry, but those days are almost a decade ago, which is a lifetime in the world of payments.
What is essential is that the firm paid its price, purged the old management team, and is ready to return to the business of consumer credit. Almost two years ago, Mercator said, “Getting Past the Wells Fargo Mess: If Charles Scharf Can’t Do It, No One Can.”
And, we meant it.
When it comes to consumer credit and payments, Mr. Scharf is on par with his peers that lead top US consumer banking businesses, like Steve Squeri (American Express), Brian Moynihan (Bank of America), Richard Fairbank (Capital One), Jaime Dimon (Chase), Jane Fraser (Citi), and Roger Hochschild (Discover). Indeed, you learn more than your share about payments running Visa for a few years, and a stint at Citi and Chase will undoubtedly open your eyes to the business.
Wells is getting back into the payments game in a big way. The most recent earnings report indicates $1.3 billion in 1Q21 credit card earnings, about a third of the firm’s $4.5 billion consumer and small business banking earnings.
Three credit card offerings are at the center of their strategy, and they position well against other top card companies.
The newest credit card product is the Wells Fargo Active Cash Card. It provides a competitive 2% cash rewards bonus after $1,000 in purchases over the first three months. The card carries a 0% APR for the first 14 months and prices between 14.99% and 24.99% APR. In addition, the Wells Fargo Platinum Card extends the 0% intro APR to 18 months, and the Hotels.Com card offers two reward nights after passing the $1,000 spending threshold.
Wells’ re-step into cards will torque things up for the market of more than 5,000 branches, slightly more than Chase and significantly more than Citi; Wells has a considerable need to position itself as a top card company. Moreover, with every credit card company trying to rebuild its card portfolio, be sure that this will trigger a wave of new card offerings and features during the rest of 2021.
Overview provided by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group