After one year navigating Wachovia Corp.'s bank card unit, Beverly B. Wells is charting a new strategy - one that might surprise industry observers.
Wachovia, which made a name for itself a few years ago for competing on price alone, and thus undercutting the industry, has unofficially thrown itself into the cobranding arena.
The Atlanta-based issuer was one of the three finalists for the Delta Airlines contract to offer a cobranded credit card, according to a number of industry sources. American Express, however, secured the deal last week, announcing its plans to launch a card early next year.
Ms. Wells, president of Wachovia Bank Card Services, confirmed that Wachovia is evaluating several opportunities and has a dedicated marketing staff to identify potential cobranding partners.
"Cobranding is a piece of the puzzle," said Ms. Wells.
She resisted the characterization of Wachovia's efforts as a departure from the bank's pricing approach.
"I don't view it as a change," she said, but rather as a "supplement to our low-rate strategy."
Cobranded products generate less profit on a per-account basis, because issuers must share their revenues with a partner. However, Ms. Wells maintains that Wachovia would benefit from the spending such cards induce and from a larger base of customers.
"Cobranding is a way for us to increase our cardholder base, which gives us advantages in terms of scale and more information for our marketing capabilities," she said.
Ms. Wells is new to the card field. She took the job a year ago after 19 years focusing primarily on the bank's corporate relationships. She had no experience in card marketing, and she was taking over for one of the most respected names in the business, Jerry D. Craft.
The low-rate credit cards for which Wachovia is so well known were a brainchild of Mr. Craft, who is now president of Card Issuer Program Management Corp., an Atlanta-based consulting firm.
Ms. Wells said that it would have been a mistake for Wachovia to have offered cobranded cards during Mr. Craft's tenure, because at that time the bank was already on the cutting edge, delivering low-rate cards.
"It would have distracted Jerry then," said Ms. Wells. "What we are doing now is a natural evolution."
Others view Wachovia's interest in cobranding as a change of course.
Like Visa, Wachovia "sees that cobranding is working," said Robert B. McKinley, president of RAM Research Corp.
According to the Frederick, Md.-based researcher, Wachovia is the 17th- largest issuer of MasterCard and Visa cards, with $4.1 billion in outstanding balances, though year-to-date receivables have grown only 1.5%.
Partly in response to the slower growth, Ms. Wells said, the bank is enhancing its credit card services by installing a 24-hour customer service, through hiring, and by other means.
She said she plans to mine Wachovia's relationships with its corporate customers to launch a cobranded product.
Though Wachovia lost the bid to cobrand with Delta Airlines, the carrier is one of the bank's corporate clients.
Wachovia's relations with big companies as a major cash management bank will propel it into cobranding, she said. But analysts who cover Wachovia said specific candidates are a mystery, since the identity of corporate clients is considered proprietary information.
Ms. Wells said she is also interested in cross-selling other bank services and products to Wachovia's cardholder base.
She declined to elaborate but noted that Advanta Corp. has pursued a similar strategy. Advanta sells home equity lines of credit.