At a time when more and more fintech partnerships are rebuilding the infrastructure of consumer banking, one stands out for being not just novel but also significant in terms of the resources involved. The venture in question is a credit card offered by Wells Fargo, the traditional banking giant, and Bilt Rewards, a fintech start-up designed to gamify homeownership for millennials. The card is unusual because it rewards cardholders for paying rent on time. Within its first 18 months, more than 1 million Americans had signed up. But it’s also unusual in that Wells Fargo is investing as much as $10 million a month in it. It’s a partnership that signals what the future of banking could look like, and what ‘home’ could mean to many of us.
It’s not just another financial product: it is a pivot point in renters’ perceptions of and engagement with one of their biggest monthly expenses. For most of us, our rent payments have always been a ‘silent’ expenditure in our personal finances. Rent often escapes our credit score, rarely earns points or rewards, and has no direct role in a multitude of financial enticements. This card turns rent into a source of points, trips and even, potentially, a house of one’s own.
A key to this partnership’s success is that it’s attractive to younger customers, a demographic long suspicious of banking products. Millennials and Gen Z consumers are drawn to both the rent rewards and the financial tech innovations. Mining this customer group should breathe new life into the consumer banking business and give Wells Fargo the opportunity to bring those customers into other areas of its business.
At first glance, the financial logistics of offering such a card – let alone one that costs the bank up to $10 million a month – might seem daunting. But that expenditure, though listed as an ‘expense’, is better thought of as an investment: an investment in customer loyalty and long-term engagement. The hope is ultimately that the initial cost will be recouped in the acquisition of long-term, financially engaged customers who would see Wells Fargo not just as a bank but as a financial partner.
This is a case study of one of the new ways in which banks are partnering with fintech startups. It helps banks fast-track innovation and enable them to offer services that engage the digital-first Millennial consumers who are increasingly driving the financial services industry. For fintechs, partnering with a major banking institution offers them the growth, scale and credentials they can’t build up alone for several years.
As far as the consumers who use the card are concerned, that benefit is what the points earned on rent signify: that their rent is being recognised when it comes to rewards, when it previously was a financial act essentially ignored. For the industry, it’s an imperative to rethink customer acquisition and retention strategies.
As Wells Fargo’s relationship with Bilt Rewards matures, it presents a roadmap for how financial institutions can form more compelling partnerships with their customers – by not only rewarding the transactional side of finance but the everyday activities that come along with it, turning your drudgery into some delight.
Ultimately, this business partnership between Wells Fargo and Bilt Rewards is more than just a successful enterprise. It is nothing less than a daring re-conception of what ‘home’ should be in the context of consumer finance. Home no longer exists in isolation from or even in opposition to money, but is forever linked to financial wellness, opportunity, and now reward. This example shows how new financial products could enable us to come even closer to viewing home as both a source of comfort and a source of financial wellness. Also, it demonstrates how we should expect this relationship to evolve. While this partnership represents a novel product in fintropical space, this isn’t an isolated occurrence. I expect that we will see more of it and even more ingenuity in reimagining home and the financial services it encapsulates in the trajectory ahead.
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