Comperemedia’s Chief Insights Officer, Andrew Davidson is well known for sharing the latest insights on financial services products and marketing strategies/innovations on his LinkedIn, as an event speaker and as a host on Mintel’s Little Conversation podcast. In this bi-weekly recap, he will provide you with the latest news and insights happening in the financial services industry
Here are the 5 things you need to know:
1. Step Launches Step Mobile
Step, the credit-building fintech solution for Gen Z, has launched Step Mobile with two plans on the AT&T network: a 5GB plan for $15/month and an unlimited 5G plan for $35/month.
It is the first U.S. fintech to diversify into the wireless market, which is an intriguing move.
Meanwhile, across the Atlantic, U.K. based fintech Revolut has announced that it will soon launch mobile phone plans. It will offer users unlimited calls, texts and data at home and a 20GB roaming allowance across Europe and the U.S., launching first in the U.K. and Germany.
💡 Brand extension
- Save money and build credit
Step says customers can save up to $600 a year compared to other plans, and that monthly phone payments can help build credit. This aligns with the value proposition of Step’s secured card, which puts just as much emphasis on money-saving behaviors as on credit-building. I’ve really enjoyed Step’s social content lately, with practical tips on saving money on everything from eggs to rotisserie chickens. - Virgin Cola?
Or something more integrated? Virgin Cola is the classic example of a brand extension that didn’t land, even though Virgin had success stretching into other sectors like Virgin Money and Virgin Mobile. I’m calling out Virgin Money and Virgin Mobile because these brands share the name but haven’t really worked together in a meaningful way. Step’s approach may be different. Its new mobile plan ties back to its core promise of saving money and building credit, which could set the stage for a more integrated brand experience. If Step can connect these offerings meaningfully within one platform, it has a real opportunity to deepen engagement and build long-term value for its customers as they navigate adulthood.
2. Barclays Launches a New Version of the GM Card
The new Barclays edition of the storied GM Card has launched, promising a simpler experience than the Goldman Sachs edition with more ways to earn and redeem. It also features a unique approach to the intro APR.
- 30K bonus points after spending $1,000 within 90 days
- Earn up to 10x points on GM purchases with no caps
- 3x points on all other purchases
- Redeem points towards a new GM vehicle, GM Financial account balances, parts, accessories and eligible services
- 0% introductory APR for 9 months on qualifying GM purchases greater than $499 made WITHIN 30 days of account opening OR 0% for 6 months for GM purchases made AFTER 30 days🤯
- No annual fee
- APR: 22.99% – 32.99%
💡 The new “hands-free” GM card
- Subscription-first strategy
The press announcement leads with the ability to earn and redeem for digital services such as OnStar and Super Cruise (hands-free driver assistance technology) as GM expands its subscription services, planning 50 new services by 2026 as consumers increasingly show interest. Around a quarter of US consumers say they would subscribe to in-car subscription services if available according to Mintel and the new card value prop is leaning into that opportunity. Look for GM/Barclays to lead with subscription services in credit card marketing. - GM-customized tiered intro APR program
This is clever. A two-tiered intro APR on purchases (only for GM spend!) designed to: 1) Incentivize early activation 2) Reward brand loyalty 3) Guide spend toward high-value, GM-integrated behavior. I don’t recall seeing this exact structure before. A behaviorally-targeted intro APR for a specific merchant.
3. Referral Marketing Drives Growth at Chime
“Since 2022, MEMBER REFERRALS have been the single largest channel of new Active Member growth at Chime” – Chime S1 filing.
Let’s break that down:
- Chime reported 8.6 million members and 82% member growth since Q1 2022.
- Chime reported $520 million spent on marketing in 2024, up from $444 million in 2023.
- Back of an envelope (or ChatGPT, the modern-day equivalent), assuming 1.29 million new members in 2024 + assuming 50% referrals + assuming $200 per referral, puts the cost of referrals conservatively at $129 million. 🤯
Whatever the actual number is, that’s a big chunk of dollars allocated to referrals.
Note: In 2024, Chime’s acquisition cost per new Active Member acquired was $109, which includes advertising, brand marketing, referral bonuses, and other marketing incentives.
💡 Chime members are the key
- Personalized
Check out this quote from the S1: “Using our intelligent social graph that maps our members’ networks, we leverage machine learning (“ML”) and data science to personalize the referral incentive dollar amounts for members who are most likely to refer others to Chime.” Targeted offers are served up in the app and also via email. Chime has sent MILLIONS OF REFERRAL EMAILS with amounts/details/creative personalized to members over the last year according to Comperemedia. - Playing to its strengths
Chime is playing to its strengths – its members. The company says that 67% of its members treat it as their primary financial relationship and members who have been referred are 29% more likely to refer others, creating a self-reinforcing growth engine fueled by cash incentives. - Caution
It’s the speed of growth (+82% in 2 years) in the run-up to the IPO that’s so surprising/concerning and while we now know per the S1 that the company has a strategic vision to expand beyond households earning up to $100K to households earning up to $200K by broadening its product suite and reducing its reliance on interchange I for one hope that it didn’t grow too fast too soon.
4. Sparrow Card Expands to Direct Mail
Is Sparrow taking flight? According to this direct mail offer, it’s soaring.
We captured the first DM offers for the Sparrow Rewards Mastercard on Comperemedia in May.
Launched in October 2023, the Sparrow Rewards Mastercard has a lofty vision to be “the credit card guiding the overlooked and the underserved to financial freedom.”
- Up to $1,000 credit limit
- 1% cash back for on-time payments
- Immediate access to a virtual card
- Automatic credit limit increases
- APR: 29.74%- Annual fee: $59 for the first year, then $99 ($8.25 per month)
- Top rated app
💡 Taking it to the next level
- Thanks Credit Karma! If Sparrow is soaring, then early growth has been fueled by affiliate marketing (specifically Credit Karma). Now Sparrow is ready to take it to the next level, venturing beyond the CK nest with direct marketing. Capturing this campaign points to a new phase of growth.
- Finding the fintech edge. Sparrow has partnered with Zeta to power its digital platform which includes instant issuance in under 3 seconds and in-app card controls such as spending alerts. It seems that partnership is paying off with positive app reviews, so it’s a smart move to plug the app feedback in direct marketing. Instant issuance isn’t new, but it remains a competitive edge, especially in the subprime market, where it’s not yet ubiquitous.
- Subprime rewards. Offering 1% for on-time payments might not sound like a big deal in the context of the broader market but it stands out in the subprime segment. I particularly like that it rewards consumers for paying their credit card bills at a time when many are grappling with record credit card debt and are increasingly only paying the minimum due. Incentives to improve payment rates are a positive development. The Revvi Card and the First Access Card (both Vervent) recently introduced similar 1% cash back programs and this is a big shift in the subprime sector as competition intensifies.
5. Klarna and Visa Pilot VFC Debit Card
One for all! Klarna and Visa have announced the pilot of a new debit card – called the Klarna Card – that leverages the Visa Flexible Credential (VFC) to enable cardholders to pay like a traditional debit card or use Klarna’s Pay in 4 or Pay Later options.
The card is in a trial phase with 5 million already on the waitlist and a broad US rollout is planned for “the coming months.”
The final product value prop could evolve but according to the announcement, customers will be able to choose between one free, or two paid tiers, which include merchant discounts and improved cashback rates. The card will come in three colors: aubergine, black and bright green.
💡4 Thoughts on the announcement
- Doesn’t the Klarna Card already exist? Yes! But it’s a credit card. A little digging into the Comperemedia database revealed that Klarna sent emails to credit card customers in early May, renaming the existing Klarna Card to the Klarna Credit Card in anticipation of the announcement. It will be interesting to see how Klarna positions the advantages of both products alongside each other, given that Affirm positions its debit card product as the anti-credit card.
- Following Affirm. I posted a few weeks ago about the rapid growth of the Affirm Card up to 1.9 million cardholders fueled by email marketing. Klarna must have been eyeing the success of that product and thinking it would be a no-brainer to launch something similar for its 100 million+ global customers.
- How to know the difference? Visa requires physical VFC cards to have the words DEBIT/FLEX above/below the Visa logo so that merchants can visibly identify the credential (see above). It’s a UX signal baked into the plastic.
- Klarna wants to join the big boys. As it gears up for its IPO, it seems Klarna is trying to shed its Buy Now Pay Later image and position itself as a neobank challenger to the biggest players in the industry. That means a broader suite of banking-style products. It also means that competing BNPL specialists will have an opportunity to fill Klarna’s shoes.
