Synchrony Financial Stock

Synchrony Financial (Synchrony) operates as a consumer financial services company delivering one of the industry's most complete, digitally-enabled product suites.

The company provides a range of credit products through programs the company has established with a diverse group of national and regional retailers, local merchants, manufacturers, buying groups, industry associations and healthcare service providers, which, in its business, the company refers to as the company’s ‘partners’.

The company’s experience, expertise and scale encompass a broad spectrum of industries, including digital, health and wellness, retail, telecommunications, home, auto, outdoor, pet and more. The company has an established and diverse group of national and regional retailers, local merchants, manufacturers, buying groups, industry associations and healthcare service providers, which the company refers to as its ‘partners’. The company connects its partners and consumers through its dynamic financial ecosystem and provide them with a diverse set of financing solutions and innovative digital capabilities to address their specific needs and deliver seamless, omnichannel experiences. The company utilizes a broad set of distribution channels, including mobile apps and websites, as well as online marketplaces and business management solutions like point-of-sale platforms. The company’s offerings include private label, dual, co-brand and general purpose credit cards, as well as short- and long-term installment loans and consumer banking products. As of December 31, 2023, the company had 73.5 million active accounts.

The company’s business benefits from longstanding and collaborative relationships with the company’s partners, including some of the nation’s leading retailers and manufacturers with well-known consumer brands, such as Lowe’s and Sam's Club; and also leading digital partners, such as Amazon and PayPal. The company’s partners promote its credit products because they generate increased sales and strengthen customer loyalty. The company’s customers benefit from instant access to credit, discounts, or other benefits, such as cash back rewards, and promotional offers.

The company has omni-channel (in-store, online and mobile) technology and marketing capabilities, which allow the company to offer and deliver its credit products instantly to customers across multiple channels. The company continues to invest in, and develops, its digital assets to ensure the company’s partners are well positioned for the rapidly evolving environment. The company has been able to demonstrate its digital capabilities by providing solutions that meet the needs of the company’s partners and customers, with approximately 58% of the company’s consumer revolving applications in 2023 processed through a digital channel.

The company conducts its operations through a single business segment. Substantially all of the company’s revenue activities are within the United States. The company primarily manages its credit products through five sales platforms (Home & Auto, Digital, Diversified & Value, Health & Wellness and Lifestyle).

The company offers its credit products primarily through its wholly-owned subsidiary, the bank. In addition, through the bank, the company offers, directly to retail, affinity relationships and commercial customers, a range of deposit products insured by the Federal Deposit Insurance Corporation (‘FDIC’), including certificates of deposit, individual retirement accounts (‘IRAs’), money market accounts, savings accounts and sweep and affinity deposits. The company also take deposits at the bank through third-party securities brokerage firms that offer the company’s FDIC-insured deposit products to their customers.

Sales Platforms

The company offers its credit products through five sales platforms: Home & Auto, Digital, Diversified & Value, Health & Wellness and Lifestyle.

Home & Auto

The company’s Home & Auto sales platform provides comprehensive payments and financing solutions with integrated in-store and digital experiences through a broad network of partners and merchants providing home and automotive merchandise and services, as well as the company’s Synchrony Car Care network and Synchrony HOME credit card offering.

Home & Auto Partners

The company’s Home & Auto sales platform partners include a wide range of key retailers in the home improvement, furniture, bedding, flooring, appliance and electronics industry, such as Ashley HomeStores LTD, Floor & Decor, Lowe's, and Mattress Firm, as well as automotive merchandise and services, such as Chevron and Discount Tire. In addition, the company has program agreements with manufacturers, buying groups and industry associations, such as Generac, Nationwide Marketing Group and the Home Furnishings Association.

As of December 31, 2023, the length of the company’s relationship with each of its five largest partners was over 10 years, and in the case of Lowe's, 44 years.

Digital

The company’s Digital sales platform provides comprehensive payments and financing solutions with integrated digital experiences through partners and merchants who primarily engage with their consumers through digital channels. The company enables its partners to deepen consumer engagement by embedding payments and financing solutions, delivering compelling value and rewards, and providing personalized offers within seamless experiences. The company also works with its partners to extend digital relationships to in-person commerce. In addition to the company’s partner products, the company offers a Synchrony-branded general purpose credit card.

Digital Partners

The company’s Digital sales platform includes key partners delivering digital payment solutions, such as PayPal, including the company’s Venmo program, online marketplaces, such as Amazon and eBay, and digital-first brands and merchants, such as Verizon, the Qurate brands, and Fanatics.

The Digital sales platform has strong alignment with its partners through relationships that span decades, as well as through the company’s more recent program launches with Verizon and Venmo. As of December 31, 2023, the length of the company’s relationship with each of its four largest partners was over 10 years, and in the case of PayPal, 19 years. The Digital sales platform has highly engaged customers and can continue to drive penetration and everyday use by expanding products, channels, and deeper user experience integrations.

Diversified & Value

The company’s Diversified & Value sales platform provides comprehensive payments and financing solutions with integrated in-store and digital experiences through large retail partners who deliver everyday value to consumers shopping for daily needs or important life moments.

Diversified & Value Partners

The company’s Diversified & Value sales platform is consisted of five large retail partners: Belk, Fleet Farm, JCPenney, Sam's Club and TJX Companies, Inc. Through strong partner alignment, competitive value propositions, and embedding the company’s products in the digital experience, the company can continue to drive penetration and everyday use.

Health & Wellness

The company’s Health & Wellness sales platform provides comprehensive healthcare payments and financing solutions, through a network of providers and health systems, for those seeking health and wellness care for themselves, their families and their pets, and includes the company’s CareCredit brand, as well as partners, such as Walgreens.

The company offers customers a CareCredit-branded private label credit card that may be used across the company’s network of CareCredit providers and the company’s CareCredit Dual Card offering, access to installment loans in select providers, the company’s Walgreens private label and Dual Card, along with complementary products, such as Pets Best pet insurance. In November 2023, the company entered into an agreement for the sale of Pets Best for consideration comprising a combination of cash and an equity interest in Independence Pet Holdings, Inc. The transaction is expected to close in the first quarter of 2024.

Health & Wellness Partners

The vast majority of the company’s partners are individual and small groups of independent healthcare providers, which includes networks of healthcare practitioners that provide planned medical, elective and other procedures that generally are not fully covered by insurance. The remainder are primarily national and regional healthcare providers, such as Aspen Dental and Mars Petcare; and health-focused retailers, such as Rite Aid and Walgreens. In addition, the company has over 160 relationships with professional and other associations (including the American Dental Association and the American Veterinary Medical Association), manufacturers and buying groups, which endorse and promote the company’s credit products to their members.

As of December 31, 2023, the company had a network of Health & Wellness providers and health-focused retailers that collectively have over 270,000 locations.

The company’s ability to attract new partners is aided by being able to provide partners access to the company’s existing CareCredit accountholder base. During 2023, over 210,000 locations either processed a CareCredit application or made a sale on a CareCredit credit card, and the company’s CareCredit provider locator averaged over 2.1 million views per month during the year ended December 31, 2023.

Lifestyle

Lifestyle provides comprehensive payments and financing solutions with integrated in-store and digital experiences through partners and merchants who offer merchandise in power sports, outdoor power equipment, and other industries, such as sporting goods, apparel, jewelry and music. The company creates customized credit programs for national and regional retailers, manufacturers, and industry associations. Credit extended in this platform, other than for the company’s apparel and sporting goods retail partners, is primarily promotional financing. With the company’s large retail partners, the company continues to drive penetration and everyday use through strong partner alignment, competitive value propositions, and embedding the company’s products in the digital experience.

Lifestyle Partners

The company’s Lifestyle sales platform partners include a wide range of key retailers in the apparel, specialty retail, outdoor, music and luxury industry, such as American Eagle, Dick's Sporting Goods, Guitar Center, Kawasaki, Pandora, Polaris, Suzuki and Sweetwater.

As of December 31, 2023, the length of the company’s relationship with each of its five largest partners was over 10 years, and in the case of American Eagle, 27 years.

Partner Agreements

The company offers promotional financing across all five of its sales platforms.

In addition to the company’s revolving products, the company offers secured installment loans for certain large purchases, primarily for power sports and outdoor power equipment, and also offers unsecured installment loans primarily in the company’s Health and Wellness sales platform and through its other installment products, such as the company’s Synchrony Pay in 4 product for short-term loans. The company also promotes its programs to sellers through direct marketing activities, such as industry trade publications, trade shows and sales efforts by dedicated internal and external sales teams, leveraging the company’s existing partner network or through endorsements through manufacturers and industry associations. The company’s broad array of point-of-sale technologies and quick enrollment process allow the company to integrate new partners and providers.

The company’s five largest programs based upon interest and fees on loans for the year ended December 31, 2023, were Amazon, JCPenney, Lowe’s, PayPal and Sam’s Club. The company’s programs with Lowe's, PayPal, which includes the company’s Venmo program, and Sam's Club, each accounted for more than 10% of the company’s total interest and fees on loans for the year ended December 31, 2023. The length of the company’s relationship with each of the company’s five largest partners is over 16 years, and in the case of Lowe's, 44 years. The current expiration dates for program agreements with the company’s five largest partners range from 2026 through 2033.

Buying Groups, Manufacturers and Industry Associations

The programs the company has established with buying groups, manufacturers and industry associations, such as the Home Furnishings Association, Jewelers of America, Kawasaki, Polaris and Nationwide Marketing Group, are governed by program agreements under which the company makes its credit products available to their respective members or dealers.

Synchrony-Branded Networks

The company’s Synchrony-branded networks are focused on specific industries, where the company creates either company-branded or company and partner-branded private label credit cards that are usable across all participating locations within the industry-specific network. For example, the company’s Synchrony Car Care network, consisted of merchants selling automotive parts, repair services and tires, covers over one million locations across the United States, and cards issued may be dual branded with Synchrony Car Care and partners, such as Chevron, Citgo, Napa, P66, Pep Boys or Summit Racing. Under the terms of these networks, the company establishes merchant discounts applicable to each financing offer. In addition, the company earns interchange fees through credit card transactions outside of the program network. The Synchrony Car Care network allows for expanded use outside of the program network at certain related merchants, such as gas stations. Similarly, the Synchrony HOME credit card is accepted at participating home-related partner locations nationwide.

Dealer Agreements

For the programs the company has established with manufacturers, buying groups, industry associations, industry specific programs and Synchrony-branded networks described above, the company enters into individual agreements with the merchants and dealers that offer the company’s credit products under these programs.

Healthcare Provider Agreements

The company enters into provider agreements with individual healthcare providers who become part of the company’s CareCredit network. These provider agreements are not exclusive and typically may be terminated at will upon 15 days’ notice.

The company screens potential healthcare providers using a variety of criteria, including whether the potential provider specializes in one of the company’s approved specialties, carries the appropriate licensing and certifications, and meets its underwriting criteria. The company also screens potential partners for reputational issues. The company works with professional and other associations, manufacturers, buying groups, industry associations and healthcare consultants to educate their constituents about the products and services the company offers. The company also approaches individual healthcare service providers through direct mail, advertising, and at trade shows.

Customers

Acquiring and Marketing to the company’s Customers

The company works directly with its partners and providers to seamlessly integrate the company’s product offerings through their distribution networks, communication channels and customer interactions to market to their existing and potential customers. The company’s presence at partners’ points of sale (both physical (in-store) and digital (online and mobile)), enables incremental purchases at the company’s partners and providers, giving them greater conversion rates and higher overall sales. This dynamic also enables the company to acquire new customer accounts at a discount compared to the traditional methods of acquiring new credit card customers.

To acquire new customers, the company collaborates and integrates with its partners and providers leveraging the company’s marketing expertise to create programs promoting the company’s products to creditworthy customers. Frequently, the company’s partners and providers market the availability of credit as part of the advertising for their goods and services. The company’s marketing programs include marketing offers (e.g., 10% off the customer’s first purchase) and consumer communications delivered through a variety of channels, including in-store signage, online advertising, retailer website placement, associate communication, emails, text messages, direct mail campaigns, advertising circulars, and outside marketing via television, radio, print, digital marketing (search engine optimization, paid search and personalization), and product education. The company also employs its proprietary Quickscreen acquisition method to make targeted pre-approved credit offers at the point-of-sale. The company’s Quickscreen technology allows the company to process customer information obtained from its partners through the company’s risk models such that when these customers seek to make payment for goods and services at its partners' points-of-sale, the company can offer them credit instantly, if appropriate. Based on the company’s experience, due to the personalized and immediate nature of the offer, Quickscreen significantly outperforms traditional direct-to-consumer channels, such as direct mail or email, in response rate and dollar spending.

The company’s customer engagement is driven by its Growth organization, which encompasses Synchrony’s marketing, data analytics, customer experience, product development, incubation, branding, go-to-market and commercialization teams in one cohesive group. This organizational structure helps Synchrony drive continued growth, execute its strategy more quickly and deliver the right capabilities to partners and customers through one of the industry’s most complete, digitally-enabled consumer financing and payments product suite.

Marketing and Data Analytics

The company’s marketing teams have expertise and experience in omnichannel strategy and planning and understand the best opportunities to reach and engage consumers with tailored and personalized strategies for the company’s diverse product suite, including engaging with the company’s existing over 73 million active accounts. These teams drive qualified traffic, attract new customers and increase sales conversions. These capabilities also help to increase product usage and drive value proposition reinforcement. The company’s partners leverage its teams' expertise in financial services marketing for both business to business and business to consumers, to complement their brand promotions.

After a customer obtains one of the company’s products, its marketing programs encourage ongoing card usage by communicating the benefits of the company’s products’ value propositions to deepen the relationship with the customer. Examples of such programs include promotional financing offers, cardholder events, product and partner discounts, product upgrades, dollar-off certificates, account holder sales, reward points and offers, new product announcements and previews, and other specific partner value offerings. These programs are executed through the company’s partners’ and the company’s own (direct-to-consumer) distribution channels. These activities targeted to existing customers have yielded high levels of re-use of the company’s credit products. For example, during the year ended December 31, 2023, approximately 60% of purchase volume across the company’s CareCredit network, resulted from repeat use at one or more providers.

The company also maximizes its unique access to data and customer touchpoints to identify audiences for credit acquisition and utilization, and to analyze behaviors that drive insights to fuel creative content and contextually relevant placements both on the company’s digital properties, as well as through a network of publishers and platforms.

The company’s analytics teams, utilizing a set of analytics tools and machine learning algorithms, help the company expands and optimizes customer relationships through the building of targeting tools and the deployment of detailed test-and-learn tracking of omnichannel marketing campaigns.

Product Development

The company is focused on continuing to scale its multi-product offerings to the company’s customers and partners. The company’s Products team oversees the development and delivery of new products and capabilities to enhance consumers' shopping journey and to anticipate the evolving needs of both consumers and retailers, while providing scalability of products across the company’s sales platforms.

The company’s product suite includes Synchrony’s Pay Later solution, which was offered at an expanded number of partners during 2023. The Synchrony Pay Later solution can come in the form of a pay monthly product, as well as a pay in 4 product that charges no interest and fees, and requires the consumer to make four equal payments to pay off their purchase. Both of these products enhance the company’s ability to execute its multi-product strategy – looking to identify the best product for the customer and the company’s partners.

Digital and Mobile Capabilities

The company also remains focused on investing in its digital and mobile capabilities, bringing to market new features, channels and experiences for the company’s customers and enhancing its existing digital design and user experience.

The company’s approach continues to be focused on creating an exceptional digital experience through all aspects of the customer's journey, whether in-store or online. For example, by leveraging the company’s tokenization platform, the company is able to offer the ability to display single-use virtual cards within its installment products, such as the company’s Synchrony Pay in 4 product, allowing for a seamless in-store experience that does not require any integration work from the company’s partners. With its Pay with Synchrony app available within the Clover point-of-sale platform, the company is able to offer an entirely digital experience to apply for a new card or installment loan, and complete the transaction all within the Clover experience. These digital capabilities offer a range of choices to the company’s partners both in the products available to offer to customers, and in the flexibility provided by the ease of which these can be integrated.

In 2023 the company also launched a website consolidation effort to create a more unified set of digital properties. The new property also includes an improved marketplace, where consumers can shop a broad set of Synchrony partner brands, login to service their accounts, and find credit card offers from Synchrony.

Loyalty Programs

The company operates loyalty programs designed to generate incremental purchase volume per customer, while reinforcing the value of the card to the customer and strengthening customer loyalty. Many of the credit rewards loyalty programs the company manages provide rewards points, which are redeemable for a variety of products or awards, or merchandise discounts earned by achieving a pre-set spending level on their private label credit card, Dual Card or general purpose co-branded credit card. Other programs include statement credit or cash back rewards. The rewards can be mailed to the cardholder, accessed digitally or may be immediately redeemable at the partner’s store. The company continues to support and integrate into its partners’ loyalty programs which are offered to customers who utilize non-credit payment types, such as cash, debit or check. These multi-tender loyalty programs allow the company’s partners to market to an expanded customer base and allow the company access to additional prospective cardholders.

Commercial Customers

In addition to the company’s efforts to acquire consumer cardholders, the company continues to focus on acquiring small to mid-sized commercial customers. The company offers these customers private label credit cards and Dual Cards that are similar to the company’s consumer offerings and the company’s approach to acquiring these customers is consistent with its consumer strategies. The company is also continuing to focus on marketing the company’s commercial pay-in-full accounts receivable product that supports a wide range of business customers.

Credit Products

Through the company’s sales platforms, the company offers three principal types of credit products: credit cards, commercial credit products and consumer installment loans. The company also offers its Payment Security program, which is a debt cancellation product.

Credit Cards

The company’s credit card products are loans the company extends through open-ended revolving credit card accounts. The company offers the following principal types of credit cards:

Private Label Credit Cards

Private label credit cards are partner-branded credit cards (e.g., Lowe’s or Amazon) or program-branded credit cards (e.g., Synchrony Car Care or CareCredit) that are used primarily for the purchase of goods and services from the partner or within the program network. In addition, in some cases, cardholders may be permitted to access their credit card accounts for cash advances. Substantially all of the company’s private label credit card business is in the United States.

Dual Cards and General Purpose Co-Branded Cards

The company’s patented Dual Cards are credit cards that function as private label credit cards when used to purchase goods and services from the company’s partners, and as general purpose credit cards when used to make purchases from other retailers wherever cards from those card networks are accepted or for cash advance transactions. The company issues Dual Cards for use on the MasterCard and Visa networks and the company has the potential capability to issue Dual Cards for use on the American Express and Discover networks.

The company also offers general purpose co-branded credit cards that do not function as private label credit cards, as well as a Synchrony-branded general purpose credit card.

Dual Cards and general purpose co-branded credit cards are offered across all of the company’s sales platforms and credit is typically extended on standard terms only. As of December 31, 2023, the company offered either Dual Cards or general purpose co-branded credit cards through over 15 of the company’s large partners, of which the majority are Dual Cards, as well as the company’s CareCredit Dual Card. The company intends to continue to increase the number of partner programs that offer Dual Cards or general purpose co-branded credit cards and seek to increase the portion of the company’s loan receivables attributable to these products. Consumer Dual Cards and Co-branded cards totaled 26% of the company’s total loan receivables portfolio as of December 31, 2023.

Charges using a Dual Card or general purpose co-branded credit card generate interchange income for the company in connection with purchases made by cardholders other than in-store or online from that partner.

Commercial Credit Products

The company offers private label cards and Dual Cards for commercial customers that are similar to its consumer offerings. The company also offers a commercial pay-in-full accounts receivable product to a wide range of business customers.

Installment Loans

The company originates secured installment loans to consumers (and a limited number of commercial customers) in the United States, primarily for power products in the company’s Outdoor market (motorcycles, ATVs, and lawn and garden). The company also offers unsecured installment loans primarily in the company’s Health and Wellness sales platform and through its various other installment products, such as the company’s Synchrony Pay Later solutions, including pay monthly and pay in 4 products, for short-term loans. Installment loans are closed-end credit accounts where the customer pays down the outstanding balance in installments. The terms of the company’s installment loans are governed by customer agreements and applicable laws and regulations.

Installment loans, other than the company’s Synchrony Pay Later pay in 4 product are generally assessed periodic finance charges using fixed interest rates. In addition to periodic finance charges, the company may impose other charges and fees on loan accounts, including late fees where a customer has not made the required payment by the required due date and returned payment fees.

Payment Security Program

The company offers its Payment Security program, which is a debt cancellation product, to the company’s credit card customers via online, mobile and, on a limited basis, direct mail. Customers who choose to purchase this product are charged a monthly fee based on their ending balance on each billing statement. In return, the bank will cancel all or a portion of a customer’s credit card balance in the event of certain qualifying life events.

Consumer Banking

Through the bank, the company offers its customers a range of FDIC-insured deposit products. The bank obtains deposits directly from retail, affinity relationships and commercial customers (‘direct deposits’) or through third-party brokerage firms that offer the company’s FDIC-insured deposit products to their customers (‘brokered deposits’). Retail customers accounted for the substantial majority of the company’s direct deposits as of December 31, 2023. During 2023, retail deposits were received from approximately 628,000 customers that had a total of approximately 1.3 million accounts. The bank had an 86% retention rate on certificates of deposit balances up for renewal for the year ended December 31, 2023. FDIC insurance is provided for the company’s deposit products up to applicable limits.

The company continues to focus on expanding its online direct banking operations and the company’s deposit base serves as a source of stable and diversified low-cost funding for the company’s credit activities. The company’s online platform is highly scalable allowing the company to expand without having to rely on a traditional ‘brick and mortar’ branch network. The company is well-positioned to continue to benefit from the consumer preference for direct banking.

During 2023, the company continued to make investments in its servicing and digital platforms to expand features available for self-service and improve the user experience. The company’s deposit products include certificates of deposit, IRAs, money market accounts and savings accounts. The company markets its deposit products through multiple channels, including digital and print. Customers can apply for, fund, and service their deposit accounts online, mobile or via phone. The company has dedicated banking representatives within its call centers to service deposit accounts. Fiserv, Inc. (‘Fiserv’) provides the core banking platform for the company’s online retail deposits, including a customer-facing account opening and servicing platform. In addition, the bank offers a PayPal-branded affinity deposit product through PayPal's mobile application and website.

To attract new deposits and retain existing ones, the company may introduce new deposit products, enhancements to the company’s existing products, and deliver new capabilities. This may include the introduction of transactional capabilities, additional digital servicing options, person-to-person payment features, new affinity relationships, and Synchrony-branded debit cards. The company’s focus on deposit-taking and related branding efforts will also enable the company to offer other branded direct banking products more efficiently in the future.

Credit Risk Management

Credit risk management is a critical component of the company’s management and growth strategy. The company’s credit risk arising from credit products was generally highly diversified across approximately 122 million open accounts as of December 31, 2023.

The company has developed proprietary credit tools, which the company calls Synchrony PRISM. Through Synchrony PRISM the company leverages a broad spectrum of data to yield powerful, proprietary insights to enable a more holistic view of the company’s applications and customers.

Customer Account Acquisition

The company has developed programs to promote credit with each of its partners and apply a consistent underwriting approach using the company’s Synchrony PRISM tools that have varying results across the company’s client portfolios based on the underlying credit characteristics of their customer base and applicant pool. The company originates credit accounts through several different channels, including in-store, mail, internet, mobile, telephone and pre-approved solicitations. In addition, the company acquires accounts that were originated by third parties in connection with establishing programs with new partners.

Regardless of the channel, in making the initial credit approval decision to open a credit card or other account or otherwise grant credit, the company follows a series of credit and fraud underwriting procedures. In most cases, when applications are made in-store or digitally, the process is fully automated and applicants are notified of the company’s credit decision immediately. The company obtains certain information provided by the applicant; leverages historical performance on other Synchrony accounts, where applicable, as well as partner data on the consumer; and obtains a credit bureau report from one of the major credit bureaus. The credit report information the company obtains is electronically transmitted into industry scoring models and the company’s proprietary scoring models developed to assess credit worthiness. The credit risk management team determines in advance the qualifying credit worthiness and initial credit line assignments for applicants for each portfolio and product type. The company periodically analyzes performance trends of accounts originated at different score levels as compared to projected performance and adjustments to the minimum credit worthiness or the opening credit limit to manage credit risk are made as necessary.

The company also applies additional application screens based on various inputs, including credit bureau information, alternative data, the company’s previous experience with the customer and information provided by the company’s partner, to help identify additional factors, such as potential fraud and prior bankruptcies, before qualifying the application for approval. The company compares applicants’ names against the Specially Designated Nationals list maintained by the Office of Foreign Assets Control of the U.S. Department of the Treasury (‘OFAC’), as well as screens that account for adherence to USA PATRIOT Act of 2001 (the ‘Patriot Act’) and Credit Card Accountability Responsibility and Disclosure Act of 2009 (the ‘CARD Act’) requirements, including ability to pay requirements for the company’s revolving products.

The company also uses pre-approved account solicitations for certain programs. Potential applicants are pre-screened using information provided by the company’s partner or obtained from outside lists, and qualified individuals receive a pre-approved credit offer by mail or email.

Acquired Portfolio Evaluation

The company’s risk management team evaluates each portfolio that the company acquires in connection with establishing programs with new partners to ensure the portfolio satisfies the company’s credit risk guidelines. As part of this review, the company receives data on the third-party accounts and loans, which allows the company to assess the portfolio on the basis of certain core characteristics, such as historical performance of the assets and distributions of credit and loss information. In addition, the company benchmarks potential portfolio acquisitions against its existing programs to assess relative current and projected risks. Finally, the company’s risk management team must approve the acquisition, taking into account the results of the company’s risk assessment process.

Customer Account Management

The company regularly assesses the credit risk exposure of its customer accounts. This ongoing assessment includes information relating to the customer’s performance with respect to their account with the company, as well as information from credit bureaus relating to the customer’s broader credit performance. To monitor and control the quality of the company’s loan portfolio (including the portion of the portfolio originated by third parties), the company uses behavioral scoring models that the company has developed to score each active account on its monthly cycle date. Proprietary risk models, together with the credit scores obtained on each active account no less than quarterly, are an integral part of the company’s credit decision-making process.

Credit Authorizations of Individual Transactions

Once an account is opened, subsequent transactions by customers with revolving cards (via physical purchase terminals or online methods) are subject to the company’s credit authorization system. Each potential sales transaction is passed through the company’s authorization system, which considers a variety of behavior and risk factors to determine whether the transaction should be approved or declined, and whether a credit limit adjustment is warranted.

Fraud Investigation

The company provides follow up and research with respect to different types of fraud such as fraud rings, new account fraud and transactional fraud. The company has developed proprietary fraud models to identify new account fraud and deployed tools that help identify transaction purchase behavior outside a customer’s established pattern. The company’s proprietary models are also complemented by externally sourced models and tools used across the industry to better identify fraud and protect the company’s customers. The company is also continuously implementing new and improved fraud and authentication technologies to prevent, detect and mitigate fraud.

Collections and Recovery

The company re-evaluates its collection and recovery efforts and consider the implementation of other techniques, including internal collection activities, use of external vendors and the sale of debt to third-party buyers, as a customer becomes increasingly delinquent. The company limits its exposure to delinquencies through controls within the transaction authorization processes, the imposition of credit limits and criteria-based account suspension and revocation processes. In certain situations, the company may enter into arrangements to extend or otherwise change payment schedules, decrease interest rates and/or waive fees to aid customers experiencing financial difficulties in their efforts to become current on their obligations to the company.

Customer Service

Customer service is an important feature of the company’s relationship with its partners. The company cares for its customers, value their opinions and work hard to do what the company can to resolve their concerns swiftly. Its customers can contact the company via phone, mail, email, eService, eChat and social media. For certain programs, credit products and the company’s deposit business, the company assigns dedicated toll-free customer service phone numbers. For other programs, customers access customer service through one general purpose toll-free customer service phone number.

The company services all programs through its eight domestic geographic hubs and three off-shore call centers. The company blends domestic and off-shore locations as an important part of the company’s servicing strategy, to maintain service availability beyond normal work hours in the United States.

During the year ended December 31, 2023, the company handled over 274 million inquiries. The company attempts to resolve customer inquiries and concerns during the initial customer interaction.

Production Services

The company’s service delivery solutions organization oversees a number of services, including personalization, fulfillment and delivery (mailing) of credit cards (more than 35 million cards in 2023); printing and mailing and eService delivery of credit card billing statements (more than 765 million paper and electronic statements in 2023); printing and delivery via mail or electronically of letter communications (more than 125 million in 2023); and payment processing (more than 710 million paper and electronic payments in 2023).

The company utilizes third-party providers for certain production services. Credit card statement printing, card personalization, letter production and mailing services are provided through outsourced services with Fiserv. Fiserv also produces the company’s cards, statements and other mailings for deposit customers. The company also utilizes a third-party provider for its paper payment processing services. While these services are outsourced, the company monitors and maintains oversight of these activities. The company’s digital channels also allow for its cardholders to receive statements and make payments electronically. The company continues to encourage adoption of this option through regular communication with the company’s customers.

Technology

Products and Services

The company leverages information technology to deliver products and services that meet the needs of its customers and partners and enables the company to operate its business efficiently. The integration of the company’s technology with its partners is at the core of the company’s value proposition, enabling, among other things, customers to ‘apply and buy’ at the point of sale, and many of the company’s partners to settle transactions directly with the company without an interchange fee. A key part of the company’s strategic focus is the continued development of innovative, efficient, flexible technology and operational platforms to support marketing, risk management, account acquisition and account management, customer service, and new product innovation and development. The company continuously reviews capabilities and develops or acquires systems, processes and competencies to meet the company’s business needs.

As part of the company’s continuous efforts to enhance its technological capabilities, the company may either develop these capabilities internally or in partnership with third-party providers. The company’s internal approach involves the deployment of cross-functional product teams, often in collaboration with the company’s partners, focused on driving rapid delivery of in-house product innovation and development, and the commercialization of new products. In addition, at times the company partners with third-party providers to help the company delivers systems and operational infrastructure based on strategies and, in some cases, architecture, designed by the company. The company leverages Fiserv for its credit card transaction processing and production and the company’s retail banking operations.

Intellectual Property

‘Synchrony’ and its logos and other trademarks, including CareCredit, Quickscreen, Dual Card, Synchrony Car Care and SyPI belong to the company.

Regulation

As a savings and loan holding company and financial holding company, Synchrony is subject to regulation, supervision and examination by the Federal Reserve Board. As a large provider of consumer financial services, the company is also subject to regulation, supervision and examination by the CFPB.

The bank is a federally chartered savings association. As such, the bank is subject to regulation, supervision and examination by the Office of the Comptroller of the Currency of the U.S. Treasury (the ‘OCC’), which is its primary regulator, and by the CFPB. In addition, the bank, as an insured depository institution, is supervised by the FDIC.

Competition

The company’s primary competitors for partners include major financial institutions, such as American Express, Bread Financial, Capital One, JPMorgan Chase, Citibank, TD Bank, and Wells Fargo.

The company competes for deposits with traditional banks, including separately branded direct banking platforms of traditional banks, and other banks that have direct banking models similar to the company, such as Ally Financial, American Express, Barclays, Capital One 360, CIT, Citi, Citizens Bank, Discover, E-Trade and Marcus by Goldman Sachs.

History

Synchrony Financial was founded in 1932. The company was incorporated in Delaware in 2003.