J.P. Morgan Chase's Sapphire Reserve Card Gets a New Chief
December 10 2017 - 9:29AM
Dow Jones News
By Emily Glazer and AnnaMaria Andriotis
J.P. Morgan Chase & Co. is bringing in a new executive to
run one of its hottest products, the Sapphire Reserve credit card,
at a time when doubts have surfaced within the bank about its
financial prospects.
The nation's largest bank has hired Barclays PLC card executive
Matthew Massaua to oversee the popular rewards card and other
Sapphire cards, according to a J.P. Morgan memo reviewed by The
Wall Street Journal.
Mr. Massaua, who is scheduled to start his new job Jan. 1, will
succeed Lisa Walker, who ran the Sapphire card suite and is
planning to take on a new role within the bank's card division.
The bank has already made changes in recent months to Sapphire
Reserve's rewards and how it has offered the card to customers.
Though consumer demand for Sapphire Reserve was high when the
bank introduced the card last year, J.P. Morgan executives have
raised concerns that it won't make money for the bank, due in part
to the card's generous rewards, The Wall Street Journal reported in
July.
The scrutiny inside the bank reflects changing economics of the
competitive premium-card market. Rewards for consumers -- paid for
by card-issuing banks and merchants -- have gotten sweeter.
Spenders, meanwhile, are growing savvier about maximizing benefits
and avoiding balances that result in interest payments to the
banks. Banks over the past year have started to pull back on
rewards offerings as a result.
J.P. Morgan has said it is making a long-term bet on the
millennial customers who favor the card. Much of that has been
riding on how many Sapphire Reserve customers will spend $450 on
the card's annual renewal fee.
Trish Wexler, a J.P. Morgan spokeswoman, said the bank has seen
renewals in excess of 90%. The bank has seen "strong retention,
frequent card usage, and we're beginning to deepen these
relationships across Chase," she added, noting that Ms. Walker "was
a big part" of those results.
Mr. Massaua was previously a top executive at Barclaycard
International, which includes the British bank's U.S. credit-card
unit and is most well-known for its co-branded cards with JetBlue
Airways Corp. and more recently Uber Technologies Inc. Barclays
declined to comment.
In recent weeks, J.P. Morgan also promoted its head of Chase
branded cards Pamela Codispoti, who helped launch Sapphire Reserve,
to run the bank's branch network, Ms. Wexler said.
During the bank's most recent earnings call in October, J.P.
Morgan Finance Chief Marianne Lake said that Sapphire Reserve
renewals are in the "early stages" but are "so far, very
encouraging...better than our expectations, but a little early to
sort of draw firm conclusions."
Ms. Lake also said, however, that revenue in the division that
includes the card business is expected to be "relatively flat" in
the fourth quarter. Credit-card openings fell to 1.9 million in the
third quarter, down 30% from 2.7 million in the year-earlier
period. Another bank spokeswoman said the decline is due in part to
three card launches in mid-to-late 2016.
Banks including J.P. Morgan generate credit-card revenue from
the annual fees customers pay, the interest charged on their
balances and the fees merchants pay when the card is used at their
businesses.
The bank pays out when it offers rewards, such as the
100,000-point sign-up bonus that J.P. Morgan initially offered on
Sapphire Reserve. But after about five months, it halved that
offer.
Around that time the bank sent an internal notice to branch
employees stating it would no longer preapprove customers for the
card, according to the late January memo reviewed by The Wall
Street Journal.
When bank customers meet with J.P. Morgan personal bankers for
matters relating to their deposit accounts, personal bankers often
suggest credit-card offers that they can qualify for. According to
the memo, though, the bank wouldn't include Sapphire Reserve among
the cards it pitches to them.
Still, consumers can apply for the card. And J.P. Morgan isn't
shying away from advertising it. In September, it rolled out its
first Sapphire Reserve television campaign, with late-night host
James Corden highlighting the card's travel and dining rewards.
Write to Emily Glazer at emily.glazer@wsj.com and AnnaMaria
Andriotis at annamaria.andriotis@wsj.com
(END) Dow Jones Newswires
December 10, 2017 10:14 ET (15:14 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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