How Barclays profits from Uber's app-based business model
Barclays is one of the top five cobranded card issuers in the U.S., but because the bank has no branch network it must use unconventional marketing approaches — and unique technological innovations — to win customers.
Its Uber Visa card is a prime example. In the fall of 2017, Barclays partnered with Uber to enable customers to apply for its card within the ride-sharing app, the first time it’s tried such an approach with a third party and a bit of a gamble because it relies heavily on customer discovery and word of mouth.
About six months in, the Uber app is the leading channel for new customer sign-ups, according to Denny Nealon, Barclays’ head of U.S. partnerships.
“Demand has been really strong, particularly from the most loyal Uber riders,” Nealon said. “Uber is an app-driven business model, and that approach doesn’t work for a lot of other brands, so whether we try this elsewhere will depend on the partner."
Though Barclays doesn’t break out its total card account numbers or spending volume, the Uber Visa card has quickly soared to become one of the company’s top cobranded cards, with users skewing toward millennials under age 35, Nealon said.
Barclays U.S. relies on digital, print and on-site marketing for its broader credit card portfolio, which is heavy on travel. Its newest product is the $150 annual fee Arrival Mastercard, introduced last month; and last week it renewed partnership agreements with Frontier Airlines, Hawaiian Airlines and college-savings program Upromise.
Each of those products uses traditional marketing approaches — but Barclays is intrigued enough by the success of its Uber sign-up efforts to begin exploring in-app enrollment for other purposes.
The U.K.-based company last month announced a strategic partnership PayPal leveraging company mobile apps in a couple of ways. U.K. customers may now access their PayPal account from within the Barclays online banking portal or digital wallet and connect PayPal to Barclays’ Pingit app.
In the U.S., Barclays plans to add the capability for its U.S. credit card customers to redeem rewards points at businesses that accept PayPal, a partnership that could expand utility for millions of users.
Giving Barclays customers another way to redeem rewards will be handy, but it won’t provide much of an advantage, said Brian Riley, a director of credit products at Mercator Advisory Group.
“Many banks with brand networks support multiple ways to redeem credit card rewards, including putting them against the balance owed, so Barclays' move with PayPal rewards is just one more of many avenues consumers have,” Riley said.
Though Barclays didn’t disclose any other projects in development, it’s optimistic about in-app cross-marketing efforts.
“The key to effective partnerships is integrating across all channels where partners touch customers, and wherever possible we want to use technology to make that happen,” Nealon said.