The retail loyalty landscape is shifting, but a top manager of store credit cards sees an opportunity, not a threat, in the new ways that merchants are trying to build relationships with customers.

As stores broaden their loyalty efforts beyond cards, Synchrony Financial

Chief Executive Brian Doubles said that his company is shifting its approach as well. A few years back, store cards focused heavily on big initial discounts when cardholders first opened their accounts, but now the company is working to create customized rewards programs meant to encourage more frequent use of its cards.

“It’s not just the first purchase discount,” Doubles told MarketWatch. Now Synchrony is focused on “lifetime relationships” that can make people “pull out the card every time they shop,” including through cash-back and savings programs on the Inc.

and Lowe’s Cos.

store cards that Synchrony manages.

The company also works with PayPal’s Holdings Inc.’s

Venmo on its new credit card, which automatically adjusts the top rewards categories based on where cardholders spend the most. The arrangement represents a further expansion into more digital channels, according to Edward Jones analyst Kyle Sanders.

See also: PayPal takes on Square with launch of card readers in the U.S.

Spun off of General Electric Co.

in 2015, Synchrony is a major provider of private-label credit cards, and it makes money from interest and fees across its portfolio of cards, including those it runs with Gap Stores Inc.,

Dick’s Sporting Goods
and Walmart’s Sam’s Club
Synchrony has also been adding new partnerships in the health and pet-care space as it looks to provide financing options for medical costs that aren’t covered by insurance.

“Go back three or four years and you wouldn’t even think about financing before you make a decision to purchase. Today’s task, with data, is to anticipate “what the customer wants before they even want it.”

— Brian Doubles, CEO, Synchrony Financial

The company generated $3.4 billion in net interest income during the most recent quarter, and it had more than 16,500 full-time employees as of the end of 2020. Synchrony renewed more than 40 key relationships and agreed to 25 new deals during 2020.

Read: Visa takes another stab at open banking with $2.1 billion Tink deal

Stores have been turning to other ways besides cards of building customer loyalty, including through membership programs like the one that Walgreens Boots Alliance Inc.
a Synchrony card partner, runs for shoppers. The free Walgreens membership program offers its own opportunities for shoppers to earn rewards, but Doubles is betting that Synchrony can leverage such programs to find new potential cardholders.

Synchrony’s relationships with many of its partners allow it to tap into loyalty programs “to leverage some really rich data on those loyalty members,” including how often they shop and whether they use the mobile app, Doubles said. That can allow Synchrony to deliver personalized offers for corresponding store cards and better determine appropriate credit-line sizes, he continued.

“I view it as a pretty significant opportunity, not a competing platform,” Doubles said.

Don’t miss: The buy now, pay later wave: Klarna, Affirm and rivals hope to take U.S. by storm

He’s also optimistic that Synchrony can stay ahead of other emerging trends in the credit landscape. Younger shoppers have been driving fast growth for installment-pay offerings like those from Klarna and Afterpay that let them split purchases into chunks and pay for items over time, often without incurring interest. Synchrony offers its own installment service, called SetPay, which had $15.1 billion of consumer balances as of the end of last year.

Though Synchrony is offering installment-payment options for interested merchants, Doubles expects that more traditional forms of credit will continue to play a role in many purchases.

Doubles took over as CEO in April following more than two decades with Synchrony and GE, including as chief financial officer during the time of Synchrony’s initial public offering. Since Doubles assumed the top post, the company has reorganized along five distinct verticals, from home and auto to lifestyle, with the idea being that different categories of purchases necessitate different types of financing.

Big furniture purchases could be best suited for fixed-end installment loans, according to Doubles, while soft-goods purchases could lend themselves to traditional cards.

And while digitally focused merchants may be looking to add installment-pay options, operators of big physical stores may be trying to streamline the in-person process of applying for credit at the point of sale through online applications and prequalifications. Doubles said that consumers are interested in seeing financing information early on in their shopping journey and that Synchrony is using its own data, partner data, and information on things like utility, mobile-phone, and rent payments to help its partners deliver smarter, more personalized offers.

“Go back three or four years and you wouldn’t even think about financing before you make a decision to purchase,” he said. Today’s task, with data, is to anticipate “what the customer wants before they even want it.”

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