A Conversation with Mike Simpson, Co-brand and Affinity Products Executive for Bank of America

Navigator Edition: October 2016

mike-simpson_boa_vwebWe recently spoke with Mike Simpson, Co-brand and Affinity Products Executive for Bank of America. In this Q&A format we discuss Bank of America’s card strategy with a focus on credit card partnerships and how the bank’s product suite and relationships have evolved since the Great Recession.

Mike Simpson serves as Co-brand and Affinity Products Executive for Bank of America where he is responsible for the overall leadership and direction of the U.S. Co-brand and Affinity Credit Card business.

Mike joined the firm in 1996 through a predecessor Bank, MBNA, as a Credit Operations Executive. Over the course of his 34 year career which includes experience with Maryland National Bank, Chase Manhattan Bank, and Providian Corporation, Mike has held leadership positions in Credit, Collections, Fraud, and Servicing Operations within Consumer Lending Products as well as Sales and Service of Property & Casualty and Life & Health Insurance Products. Bank of America is one of the top-10 credit card issuers in the nation. One in two U.S. households are Bank of America customers. Co-brand and Affinity credit card marketing has been a core strength and strategy for 30 years at the bank following the launch of the first general use credit card in 1958.  For more information visit bankofamerica.com.

1. Can you give us a brief update on Bank of America’s overall credit card business and specifically, its card partnership segment now that we are on the other side of the Great Recession?

We are pleased with our current position in Card. As the second largest general purpose credit card issuer in the nation, our $95B consumer and small business portfolio is well balanced. We exhibit desired stability from a credit quality perspective, a healthy mix of transactors and revolvers with solid spend behavior driven by relationship and co-brand customers where we are top of wallet – resulting in overall solid performance. We have simplified our product/reward value propositions focusing on a core offering of BankAmericard Cash 123, Travel Rewards, and our various co-brand and affinity programs providing customers with the value they seek in a clear, understandable, and transparent manner. We have invested heavily in our technology infrastructure having completed a full conversion of our portfolio from our legacy platform to TSYS in 2015, made significant enhancements to our instant credit platform, and improved digital and mobile capabilities that we believe, and independent sources such as Javelin, comScore, and Keynote have validated, are best in class. We are executing against plans to responsibly grow our card business and are in as strong a position as I have seen in my 20 years with the company and more than 30 years in the business to do just that.

2. Given all the noise in recent years, what would be the 1-2 messages that potential card partners should know about Bank of America’s strategy and commitment?

First, they should know that we are committed to the co-brand and affinity card partnership business. After making a strategic decision to focus on client segments where we could serve the full range of financial services needs for the end consumer, we did exit the Financial Institutions segment of the partner business. While some misinterpreted this as a decline in our commitment to the broader space, nothing could be further from the truth. During that same time, we have renewed and extended partnerships with our largest clients with many deals now running through 2025. In the last 12 months, we have launched new co-brand card partnerships with Amtrak and Allegiant with both programs outperforming our initial projections. We are eager to grow our co-brand business and willing to roll up our sleeves to execute on “win back” and denovo marketplace opportunities, not just portfolio acquisitions. Secondly, I believe it is important for prospective partners to know that we understand they have choices. Competition among co-brand card issuers is strong and core capabilities are often comparable. We understand that economics need to be compelling for the partner and core functionality delivered as promised. But we encourage partners to challenge us and the competition to show differentiation and bring more to the table – a better understanding of the partner’s business and customers, a true collaboration with alignment of objectives, and when necessary the ability to be a trusted resource not just a co-brand partner. We believe, when evaluated through this lens, we stack up very favorably.

3. What do you look for in a card partner given the evolution of the market and your business over time? Can you comment on size, sector, and other characteristics that fit your profile?

That is a great question, and you are right, the business has evolved. Where a high quality list of names and an emotional connection were once all it took to have a successful program, today’s market requires more. Our focus includes partners with strong brand recognition, a unique loyalty program, and value proposition that resonates with customers, strong marketing distribution channels and a commitment to the customer experience (from application through reward redemption). Typically, these partners are in the travel vertical, such as airline, hotel, and cruise lines as well as large providers in the service and retail sectors. Still, we have quite a few successful programs in the collegiate and professional association sectors that I would call traditional affinity as opposed to co-brand. In addition, we routinely seek introductions and conversations with a host of non-traditional partners in emerging markets to ensure we don’t miss that next big opportunity. As we were when we launched our first programs with the National Education Association and Georgetown University more than 30 years ago, who by the way are both still current partners, we want to be there for the future co-brand and affinity partners.

4. How do your credit card partners benefit from the broader Bank of America franchise given your scale, number of banking relationships, investment in areas such as digital, mobile payments, etc.?

It is a mutually beneficial relationship for certain. Our ability to display signage in our Financial Centers that reflect our affiliation with local universities or MLB clubs and even highly prominent national organizations such as Susan G. Komen can be a differentiator that draws customers to our locations. Conversely, sales of partner endorsed credit cards in our Financial Centers, digital and mobile channels generate incremental revenue to the partner beyond what could be achieved through their own channels or direct mail. In addition, we have select partners who have endorsed products with us beyond card. Sales of these endorsed products can yield additional revenue for the partner and/or deliver added value to their membership base. Partners can also join our proprietary BankAmeriDeals® program providing opportunities for the Partner to access the broader base of the Bank’s credit and debit cardholders with unique cash back or discount offers based on spending behavior. As the nation’s largest debit card issuer and second largest general purpose credit card issuer, this presents a significant opportunity for partners and prospects. While we recognize the co-brand card relationship is the priority for our partners, when and where it makes sense we will engage the broader enterprise to meet partner needs. Whether it is Commercial or Investment Banking at a corporate level, Wealth Management services for individuals affiliated with the partner, or financial education for their constituents through our partnership with the Khan Academy and Better Money Habits – our goal is to make the right connections needed to best serve our clients.

5. Innovation is clearly top of mind in cards and payments. Can you provide any color on your initiatives in mobile, Fintech, or other areas that partners would have access to?

We currently have more than 32 million active digital users and have been recognized as a leader in digital sales functionality and mobile banking functionality by Forrester as well as #1 in digital design and usability by Corporate Insight. We support mobile wallet capabilities through strategic partnerships with Apple Pay, Samsung Pay, and Android Pay so our more than 20 million active mobile users can choose the platform that best meets their needs. We are investing in future innovation with research and development in improved authentication including mobile voice recognition, facial recognition online, and fingerprint scanning; contactless interactions with wearable point of sale devices, and smartphone at ATM; and emerging payment solutions such as social media payments and real-time P2P payments. I am very confident in our ability to remain on the cutting edge of innovation in payment technology. That said, at the end of the day it is all about being responsive to customer needs and therefore our investments in innovation and Fintech will be guided by our customers’ feedback and behavior.

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