Changing Consumer Needs Put Synchrony’s New CEO to the Test | Payments Source
Synchrony Financial was not immune to the pandemic, which slowed consumer spending in the first half of the year – but its mix of private label and co-branded cards for everyday items suffered much less than cards from other issuers that emphasized luxury and travel.
Other companies have done relatively well as well, and Synchrony faces a growing wave of competition from fintechs that have allowed small stores to accept new payment methods. Synchrony’s new CEO Brian Doubles, who will replace longtime CEO Margaret Keane when she retires on April 1, must now capitalize on the bank’s benefits as it shifts from recovery to growth.
The challenge for Doubles will be to increase Synchrony’s share of consumer credit spending in an increasingly tight and competitive market, where consumers have been drawn to credit card alternatives such as installment loans. as a way to limit their debt.
Doubles said Synchrony is not directly threatened by the buy now pay later (BNPL) trend, and is developing its own installment lending business.
“The credit environment is changing rapidly. Consumers want financing options to be transparent and visible throughout the buying journey, and we offer all of these options, including ways for retailers to stay in touch with the customer for repeat purchases, ”said Doubles.
Synchrony, which operated with a 100% remote workforce during the pandemic by launching co-branded cards with Venmo and Verizon, now relies heavily on digital channels to acquire and retain customers, according to Doubles.
“We don’t do much in the travel and entertainment space, which has benefited us this year given how much of this space shrinks during the pandemic, and we have re-prioritized our card initiatives by depending on changes in consumer behavior, ”he said.
All-digital co-branding Venmo Visa Card Synchrony announced at the end of 2019 with PayPal is being rolled out gradually this year with a QR code on his face as a differentiator. Synchrony has more products in the pipeline in the near term that will focus on digital and mobile tools, according to Doubles.
During the pandemic, the percentage of consumers requesting Synchrony cards through online and mobile channels has increased. These now represent around 60% of all requests, up from less than half of requests a year ago.
The urgency to go digital has accelerated Synchrony’s business to help small retail card customers add digital account access and functionality through its API-powered SyPI tool introduced five years ago, said Doubles. .
Going digital is also enabling the rewards programs that Synchrony uses to help merchants build long-term loyalty, he noted.
Synchrony’s experience in lending to various types of consumers also offers a risk management advantage over emerging fintechs in the booming BNPL space, he suggested.
“It’s easy to give credit, but we’ve been in this space for a long time and have developed methods of scoring clients using credit bureaus, alternative data and our own internal models,” said Doubles.
The private label credit card industry will be a tougher business after the pandemic, which has destroyed many stores that would normally benefit from private label cards.
“Coming out to the other side of COVID-19, the private label credit card industry will change, with more risk and fewer retailers and restaurants,” said Brian Riley, director of credit card consulting at Mercator Advisory Group.
During the pandemic, Synchrony was able to retain the Sam’s Club co-branded card program, following a few legal friction with the parent of Sam’s Club Walmart after Synchrony lost the Walmart co-branded credit card to Capital One Financial after a 19-year race.
Synchrony tends to develop its own talents, and Doubles is a prime example, starting at GE in 1996 after spending 16 years in retail banking at Citi. GE eventually created Synchrony as a separate unit in 2015.
With an engineering background, Doubles spent years climbing the ladder at GE through various finance roles, including a decade as CFO, first of GE Capital Retail Finance and then Synchrony. He was appointed president in 2019.
When Doubles becomes CEO of Synchrony, Margaret Keane will become Executive Chairman of the Company’s Board of Directors.