Building strategic cobrand card relationships

During American Banker's Payments Forum 2023 in San Diego, Barclays US Consumer Bank Chief Development Officer Peter Gasparro talked to Senior Editor Kate Fitzgerald about how the branchless bank uses co-branded credit cards to target the biggest group of consumers: the middle market. 

Kate Fitzgerald (00:11):
We are ready to rock and roll. Kate Fitzgerald, senior editor with American Banker, and we have Peter Gasparro here who is Chief Development Officer at Barclays...


Peter Gaparro (00:21):
US Consumer Bank.


Fitzgerald (00:23):
And we wanted to talk about Barclays and how it is building connections with its partners for co-branded partners.


Gasparro (00:33):
That's right. So at Barclays in the US, we're 100% partner-led. So, different than in the UK, obviously. We're not the bank on every corner like a JPMorgan or a Bank of America.


Fitzgerald (00:44):
You have no branches.


Gasparro (00:45):
Here we have no branches. We have no transactional banking. We do co-branded credit cards with some of America's well-known brands. We do have a deposit business, a high-yield savings deposit business.


Fitzgerald (00:57):
What's the rate you're paying?


Gasparro (00:58):
We're paying 4% right now.


Fitzgerald (01:00):
That's a little bit less than Apple, but higher than Discover.


Gasparro (01:04):
We're right in. We thread that needle right.


Fitzgerald (01:07):
In that special space and expense. So Barclays has with its co-branded partners, and I've observed and written about some of your recent wins. Including that you took over the entire AARP portfolio.


Gasparro (01:17):
That's right.


Fitzgerald (01:17):
Right.


Gasparro (01:17):
And we just launched The Gap credit card with 10 million cardholders. We converted that last year. It doubled our cardholder base.


Fitzgerald (01:23):
You also have a bunch of airlines. They are...


Gasparro (01:25):
We have American Airlines, JetBlue, Frontier, Hawaiian...I can keep going.


Fitzgerald (01:31):
And then you've got motels, hotels...


Speaker 2 (01:33):
Sorry, hotels. Wyndham Hotels.


Speaker 1 (01:36):
And the through-line that I see when I look is co-branded credit cards that are accessible to the everyday American for everyday purchases.


Gasparro (01:45):
Yeah. We want it to be a prominent card in your wallet. So the average used to be about four and a half cards in wallets. Today what we say is that your digital wallet is smaller. Most people only will provision maybe two cards. You probably don't know how many cards you have in your Apple Wallet. You said it. But yeah, we need to win that top-of-wallet presence.


Fitzgerald (02:03):
So, looking at the idea of building solid and strategic partner card partnerships, does it provide an advantage that a lot of your co-branded partners target that same kind of audience? Does that help you with the kind of research that you do and where you market and the channels where you reach them?


Gasparro (02:24):
I think so. I think it differentiates us because we don't compete with our own brand. So when we have a marketing dollar, we don't have to say, oh, is this going to go towards my Barclays card or is this going to go towards my partner card? We don't have to convince anyone. I've worked for other large financial institutions. I don't have to, from a DNA perspective, convince people internally. Our first-line or second-line risk people, compliance people, legal marketing, are all partner-centric. So they follow that. And then from an underwriting perspective, you have to be very comfortable being capable of underwriting more widely so you can attract all those customers. So we have a set of products that we can distribute to everyone.


Fitzgerald (03:01):
Is it working?


Gasparro (03:02):
It is working. We're growing. We're up 30% year over year, so we're pretty happy.


Fitzgerald (03:06):
What's the rest of your year looking like? Are you going to try for more? Do you want more? Are you still building new partnerships?


Gasparro (03:14):
We have a partnership coming out in September that, I can't disclose this yet, but it's to a nice new, emerging, attractive younger base. We're excited about who we're partnering with in that space. And we're working on a couple more. So we try to do one or two a year. We have 21 partnerships right now. We're not going to be 21 plus hundreds of thousands, but that's a lot. We try to do a couple a year.


Fitzgerald (03:36):
You've been on board there for a couple of years?


Gasparro (03:38):
I started in January of 2021. Previous to that I was with JPMorgan.


Fitzgerald (03:42):
You've been through some major economic cycles already.


Gasparro (03:46):
Yeah. It's been a little bit of an interesting time!


Fitzgerald (03:49):
We talked about the fact that you're about to name some more partners. You're still trying to gather more partnerships, but how do you feel about your companies that, with the portfolios that you've been given, and the economics conditions that we're in right now?


Gasparro (04:05):
We like it. We were a little concentrated in the pandemic, so all that travel you spoke about, obviously we saw a degradation to that. Revenge travel has come back and so we're doing great in our spend and we're really, really happy with where we're going and we're diversifying with our retail portfolio. That's a big part of where we want to go. So The Gap really put us in the retail business with private label as well as co-branded credit cards. So retail has an element of diversity.

(04:27)
That was your first private-label [credit card]?


Gasparro (04:28):
That was our first private-label.


Fitzgerald (04:30):
So now you're competing with a new set of companies?


Gasparro (04:34):
Yes. Or they're competing with us, but yes.


Fitzgerald (04:37):
Thank you.


Gasparro (04:38):
Thank you. Thank you so much.


Fitzgerald (04:41):
Very good.