Bolder Thinking Blog

Financial services issuers are relaunching and revisiting products

January 11th, 2019 | Anjali Ambani

With a crowded climate of credit cards, issuers are continually refining their products to stay competitive and attract consumers to increase applications. Issuers attract new consumers by relaunching their products with enhanced rewards program, but often at the expense of higher annual fees and reduced benefits. Several top issuers are refocusing their attention on making products sustainable by improving the rewards multiplier category and ending secondary benefits that cost them money and are not often used by customers.

Increased value proposition, but at a price

Many brands are increasing the value proposition of their products by enhancing ongoing awards, but at the cost of:

Eliminating secondary benefits

Secondary benefits related to purchases, car rentals or insurance increase operational costs for issuers. Due to lack of usage among customers and the rise of mobile apps that automatically help customers look for cheaper products, issuers are dropping these benefits.

Increasing annual fees

In order to make the product viable for the company, issuers are increasing their product’s annual fees for a couple reasons. Issuers are mitigating costs related to various rewards multiplier as well as avoiding credit card churning and instead attracting customers who wish to make the product their regular card.

Lowering introductory bonus

In order to avoid consumers that sign up for credit card to reap the benefits and attract loyal customers, brands should offset the benefit with something of equal or greater value.

Revamped products with focused benefits

In order to remain competitive, brands must reevaluate their rewards programs to be more suitable to consumers’ lifestyle. For example, most relaunched cards include dining as a key rewards category. Three-quarters of iGens have dined out recently compared to six in 10 Millennials, representing an opportunity for issuers to consider dining rewards as being equally competitive with travel rewards, according to Mintel research on dining out.

American Express revamped the Premier Rewards Gold Card by launching the Gold card, with a new focus on dining rewards. While offering a more premium look with a metal card and competitive earnings, American Express continued to solidify its investment in the premium space by adding “experimental and rational benefits.”

Capital One relaunched the Savor card, with a focus on rewarding customers who enjoy experiences across dining and entertainment. Capital One enhanced cash back rewards and revised its categories but also introduced an annual fee and eliminated the 0% introductory bonus.

Issuers that improved product benefits

The relaunch of Wells Fargo Propel card is a testament to its re-commitment campaign, rebuilding trust with customers. After the discontinuation of sign-ups in early 2018, Wells Fargo introduced a revamped Propel card with enhanced benefits. The enhance rewards structure had no effect on the no-free feature.

In June 2018, American Express notified customers that it was making amends to the extended warranty and purchase protection benefits. It increased coverage for warranties less than two years and also increased the time to file claims of theft or damage on items from 90 to 120 days. The enhancements from American Express come at a time when competitors are reducing price protection.

Ceased applications, but door open to relaunch

Some issuers have stopped taking applications for certain products but may potentially relaunch in the future such as Barclays Arrival Premier card. The card stopped taking applications in October, but has made efforts to push demand for the card. Initially, the card featured competing rewards since its launch in April 2018, but offered few introductory bonuses. In August, the card featured two campaigns that more than doubled the amount of introductory bonus miles with the annual fee still intact or the annual fee waived for the first year but offered no introductory bonus.

Anjali Ambani

Anjali Ambani

Anjali is a Senior Research Analyst for Comperemedia, responsible for custom and syndicated financial services reporting.