10-Q, Member Exclusive

‘In health but not in sickness’: Wells Fargo might be having second thoughts about its partnership with Bilt

  • Wells Fargo and Bilt's partnership over the co-branded credit cards appears to be teetering on the brink of trouble.
  • The scenario is seemingly advantageous for the other two parties involved — Bilt and consumers — but less so for Wells Fargo, which naturally aimed to gain more than it stood to lose.
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    Is it really a win-win together?

    Like marriage, partnerships can either strengthen or weaken a bond. In fact, Will Stredwick, Senior VP and General Manager at Amex Global Network Services North America compares these relationships to dating dynamics, highlighting that trust is fundamental, compatibility is crucial, and strong partnerships last when there is alignment in chemistry and values.

    The good, bad, and ugly partnerships

    Some notable examples of successful bank-fintech partnerships have stood the test of time, such as Goldman Sachs-Stripe, Citi-IntraFi, and Cross River Bank-Revolut. But others haven’t been as smooth sailing; the Goldman-Apple partnership, for example, has faced more challenges than successes.

    Another partnership formed in 2022 between Wells Fargo and Bilt appears to be teetering on the brink of trouble. Though not apparent on the surface, behind-the-scenes issues are coming to light through damning reports.

    The Wells Fargo and Bilt saga: The evident and underlying realities

    Wells Fargo and Bilt launched a co-branded Mastercard credit card that enables users to pay rent, earn rewards points, and count it toward their credit scores without incurring extra fees from landlords.

    Launched in 2021, the Bilt Rewards loyalty program allows members to earn rewards on activities that typically don’t qualify for rewards, achieving immediate success. Earlier this year, Bilt secured $200 million in funding, increasing its valuation to $3.1 billion from $350 million in 2021, with Wells Fargo, Mastercard, and Blackstone among its financiers.

    Bilt generates nearly $20 billion in annual spending with profitable unit economics. The firm engages with three networks including property owners, local merchants and businesses, and redemption partners. Its earnings are closely tied to the spending and loyalty it cultivates and interchange fees represent just a portion of Bilt’s revenue sources. 

    Although the success of Bilt Rewards and its potential to help Wells Fargo attract new, younger customers likely influenced the bank’s decision to launch the co-branded credit card, the results have not aligned with the bank’s expectations. Despite bringing a novel feature to the market through the co-branded card, Wells Fargo is losing money on the deal.

    According to the Wall Street Journal, Wells Fargo reportedly faces losses of up to $10 million per month from the program.

    The effectiveness of targeting a new and younger customer base who value reward programs was mixed.

    ….


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