Breaking into the ultracompetitive credit card market requires time, money and creative thinking. Wells Fargo (WFC) is behind on the first and isn't talking about the second, but is hoping that the third can make up the difference.

The country's fourth-largest bank has been quietly developing two credit cards with its new partner, American Express (AXP), and plans to start marketing them this summer. Wells Fargo is also revamping its other existing cards and creating a companywide rewards program that allows customers to use their points to help repay their mortgages or other loans.

"Lots of work is going on right now," Brent Vallat, Wells Fargo's head of consumer credit cards and personal lines and loans, said in an interview.

Lots of work has long been necessary for Wells Fargo, which benignly neglected its credit card business before last year. Despite its oft-professed ambitions to cross-sell multiple banking products to its existing customers, Wells historically has been a non-presence in the card business, which is dominated by the other biggest banks and by specialists like Capital One (COF) and American Express.

In 2012, Wells had roughly $25 billion in outstanding credit card loans, according to PaymentsSource.com — less than even General Electric's (GE) niche card business, and a fraction of the $147 billion in outstanding card loans at Citigroup (NYSE:C).


But last summer, Wells Fargo Chief Executive John Stumpf turned his attention to the bank's credit card business, declaring that he wanted to "double our share" of the market. The relationship with American Express — the former employer of Vallat and his boss, consumer credit chief Beverly Anderson — started in August.

Seven months later, "we're doing a lot across the full spectrum" of Well Fargo credit cards, Vallat says. "Some of them are refreshes to the existing products, some are the addition of features to those new products."

He is cagey about details for most of that spectrum, aside from the "Propel 365" general-purpose card that Wells has been testing in a handful of markets. In keeping with longtime Wells Fargo strategy, the card is most lucrative for people who already do a lot of business with the bank.

Propel 365 customers earn annual rewards bonuses based on how much they spend on the card and what sort of accounts they have with Wells Fargo; the points bonus is 50% for those who count as "premier customers" and who have deposits and loans at the bank worth at least $250,000.

Wells Fargo is also taking its new credit card program as an opportunity to "fundamentally rethink" the rewards it offers customers across the bank's consumer businesses, Vallat says. The new rewards program is still under development, but part of what Wells Fargo is trying to do is make it faster and easier for customers to cash in their points. Besides using them for loan payments, customers can now also redeem rewards for new types of gift cards and what Vallat calls "digital assets" — like credit for downloading songs or digital apps — that people can earn with relatively few points.

The other credit card Wells Fargo plans to unveil soon is one that Vallat will only describe as a more "travel-oriented product." American Express, with its long history of offering travel-related rewards and concierge-type services, has been a particular help with that one, he adds: "They can provide access to a lot of the unique features the Amex network has."

But as a lender rather than a network partner, Amex is also a dominant competitor for Wells Fargo, which needs its new cards to do a lot of heavy lifting in a difficult and saturated market. The points bonus program especially seems designed to draw interest from more affluent customers — a group for which most banks are increasingly competing, and one that American Express has long cultivated.

The difficulties Wells faces were inadvertently highlighted last month, when JPMorgan Chase (JPM) trumpeted the results of its multiyear effort to overhaul its own, much larger card business. The country's biggest bank has made a concerted effort to get more transaction fees and other revenue from its well-heeled, high-spending customers.

When JPMorgan started its overhaul, "we had a schlocky credit card company," Chief Executive Jamie Dimon said at the bank's annual investor day in February. "I'd say it's now a very good credit card company."

JPMorgan backed Dimon up with several charts, including one that showed growth in its year-over-year credit card sales volume, versus that of its biggest competitors. Another chart, showing lenders' general market share, estimated that American Express and JPMorgan together controlled nearly half of the $2 trillion spent on U.S. general-purpose credit cards in 2013. Tellingly, Wells Fargo was not even mentioned on either chart.
But as per Wells' usual, the bank is being relatively deliberate and inward-looking about its efforts to get more card-lending business. Vallat says that he is focusing largely on getting more cards business from current customers, or from customers who would transfer the rest of their financial activity to the bank.

"The focus of our franchise right now really does remain on the existing customer and the customer seeking to bring the relationship over," he says.