Barclays Will Focus More on Co-Brand Cards, Expect New Mileage-Earning Products

Barclays is moving away from issuing its own cards and acquiring its own consumer financial services customers, and focusing more heavily on co-brand relationships like their deal with American Airlines. As they work to grow on the back of co-brands, they need both more partnerships and to market those partnerships more aggressively. And they need to introduce new products to sell to their co-brand customers.

Expect Barclays to Aggressively Bid to Keep Its American Airlines Business

American Airlines struck a new credit card deal with both Citibank and Barclays three years ago. Instead of just one bank issuing consumers cards, American has two. This helped drive up the price the airline was able to get for the relationship.

  • Barclays can acquire customers inflight and in-airport (but not within 100 feet of an American club lounge)
  • Citibank gets all other acquisition channels

Citibank wasn’t willing to go all-in and pay enough to get exclusivity. American wanted more money for ThankYou points transfers. So both banks co-exist, which has been good for consumers because we’ve seen one bank then the other elevate their new cardmember acquisition offers.

While co-brand deals have been frequently been getting longer – instead of 5 year deals we’re often seeing 7 and United’s deal with Chase is 10 years (much to United President Scott Kirby’s chagrin, he wants more money from Chase but isn’t even halfway through his current deal) – I hear the Citi-Barclays-American deal may be just five years.

That would put them up for renegotiation soon at a time where they’re narrowing their focus to co-brand marketing relationships. Barclays “spent several years working to expand beyond its card partnerships with brands such as Uber Technologies Inc. and American Airlines Group Inc” but “will now stick to its more affordable co-branded offerings” citing how expensive it is to acquire customers on their own.

Barclays is Moving Away From Branded Business and Focusing on Co-Brands

Last year Barclays stopped acquiring customers for the Arrival Premier card. That was the issuer’s attempt to get customers to put their own spending ahead of the bank’s fronting bonuses, and it didn’t just not work the effort was killed in a matter of months. This year they even stopped acquiring new Arrival Plus customers.

And they’re explicitly relying on American as a source of customers, according to Barclays CEO Jes Staley:

We have slowed down the building of a Barclays-branded consumer bank..We want to build our unsecured consumer loan book in the United States not off the Barclays brand, which would be extremely expensive to create on a national scale, but on the brand of American Airlines.

This Suggests More and More Aggressive Co-Brands from Barclays

Since this strategy leaves them “vulnerable to losing some partnerships” expect Barclays to aggressively seek to retain their co-brand relationship with American rather than ceding exclusivity to Citi.

It also implies, I think, marketing through their co-brand channels more aggressively.

  • Uber card marketing has been anemic. I am a regular Uber customer, yet I’m never prompted to get the card in-app during rides. I don’t receive regular e-mail pitches for the card either. That has to change.

  • Bringing on new co-brands. They won’t wrest away deals like Delta, United, Marriott or Hilton. But they could pick off smaller co-brand deals currently held by issuers like Bank of America or Synchrony as those expire or introduce co-brands with travel companies that don’t currently have U.S. card products.

Barclays Needs New Banking Products to Cross-Sell

As credit card rewards have gotten more expensive, we’ve seen a slight pivot towards more aggressive cross-selling. Chase has explicitly justified the expensive of its Reserve card on the basis of marketing other products to millennials such as mortgages. I’m skeptical that will turn the portfolio into a profit engine, however I’ve also long been surprised by how little cross-selling has gone on.

Citi offers AAdvantage-earning banking products. However there’s surprisingly little data mining for high net worth program members where both program and bank could benefit from delivering more richly rewarding services.

Will we see AAdvantage consumer banking and loan products out of Barclays once a new deal is negotiated?

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. @ Gary — If they want more of my business, they need to a) fix their unbelievablly horrible business card interface/service and b) bring back the old EQD earnings to premium AA cards. Always awesome to see a chance to grab the bonus on a new product!

  2. Barclay should begin with the low hanging fruit, make it more valuable for me to use my Miles and More card. 1 point per dollar or the occasional small bonus is not worth it. With Lufthansa pulling away from transfer partners this is the perfect opportunity for them to grow that business with adding more value to Miles and More. Just sayin 🙂

  3. Already seeing it. My wife recently received a personal loan offer from Barclays which originated in her Barclays AA credit card.

  4. So does this mean we could expect a new JetBlue card or at least further benefits on the JetBlue Plus? I think that cards missing benefits that could make it a really good co branded product.

  5. @ Gene — right on. The customer service and website for the business card is embarrassingly amateur, and without Barclays improving the EQD earnings I’ll be a goner at renewal time.

  6. Bring back the China Airlines, Icelandair and other obscure co-brands The had not a decade ago.

    The not cross-selling them is odd, I’ve done a number of major bank checking or savings offers that require an applicant to go in-branch yet never once in those or subsequent have I received a cross-sell or follow-up.

  7. Cobranding is a terrible idea. Consumers want the flexibility of Ultimate rewards, Thankyou points or Membership rewards. I put almost all of my spending on these cards

  8. I bet they will be losing a lot of silver Aviator cardholders. The benefits have been cut too much, and AA isn’t too good these days.

  9. Barclays just gutted the card benefits for both the AA and B6 cards. That suggests to me it isn’t serious about attracting the affluent customer. Which makes sense as it has no other products to cross-market to them.

    If banks were smart they would get tough with the airlines who need them a lot more than vice versa. For starters demand guaranteed # of saver award seats on every flight (as BA offers) and other travel perks beyond free bags and early boarding.

  10. DP: Got the business card for the bonus about a year ago – annual fee hit and before cancelling thought I’d at least give the retention offer call a try (hardly used the card at all all year) and without even any questions (about spend, about business, etc.) they waived the fee just like that.

  11. I don’t know where all the bad customer service complaints from Barclays is coming from. I have both the AA and Arrival+ cards – the few issues I’ve had that required me to call in were handled quickly and required only a single call. I agree that they could bump up the features of the cards, but the customer service and the ui on the app (at least on android) looks nice and works great.

  12. “If they want more of my business, they need to a) fix their unbelievablly horrible business card interface/service”

    The Aviator *business* card indeed has one of the worst websites out there

    In marked contrast to their consumer cards, which has one of the best websites (+app) out there

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