Lessons In Credit Access and Culture-Building at Synchrony

Steve Odland: Welcome to C-Suite Perspectives, a signature series by The Conference Board. I'm Steve Odland, the CEO of The Conference Board and the host of this podcast series. And in today's conversation we're going to talk about financial literacy, credit access, and leadership. Joining me today is the perfect guy to talk about it. Brian Wenzel, the CFO of Synchrony. Brian, welcome to the program.  

Brian Wenzel: Steve, thanks for the invitation. I'm glad to be here with you today.  

Steve Odland: So, Brian, tell us a little bit about Synchrony, and not all of our listeners may know all of the things that you all do. 

Brian Wenzel: Yeah, Synchrony was spun out of General Electric a little over a decade ago, but our history goes back over 90 years. We started financing refrigerators in the Great Depression. So we know a lot about retail underwriting and helping consumers out through difficult times. 

And today, we're over a hundred billion dollars in assets. We're the largest unsecured credit card is issue in the United States of America by number of accounts. We have 70 million accounts. So you think about that relative to the number of Americans. And we are one of the ones that are really diversewith regard to the credit spectrum we deal with. So we deal with people who are more challenged credit to super-prime credits, and then we span across multiple different verticals. So, we're just there to kind of help consumers live their lives and hopefully improve on the way in which they go about it. 

Steve Odland: Yeah. The joke about banks is that, if you don't need money, they're right there for you. and but Synchrony is different. You are providing credit access, as you said, going back to the Great Depression and helping people buy appliances. I mean, down to sort of microcredit and helping people who really are in need. 

Brian Wenzel: Absolutely, Steve. We have stories. You think about some of our verticals. In our health and wellness vertically, we do an awful lot in the veterinary space. And when you have someone who has a dog, let's say, that gets injured, and you go in to see the vet, and you have a couple thousand dollars procedure that has to get done cause maybe the dog broke its leg. Taking that financial burden off somebody, it allows the pet parent to really focus on the health of their pet, is a really bonding experience. Or that ability to finance diapers, for, a new mother to be, or a new mother. So to be there at every step of the journey for consumers is really a rewarding space to be in. 

Steve Odland: Yeah. Now obviously this isn't the 1930s, and we're not in a depression, but there still is a lot of need out there. And so access to credit is critically important in today's economic climate, right?  

Brian Wenzel: Yeah, Steve. It's interesting, as you look at Americans, there'sa large number of Americans who don't have credit scores, who appear to be invisible in the system. So it's really important for to help people get access to credit, and that's really good for them because then they can go about their lives and really engage in the economic prosperity of the country.  

Going a little bit deeper, Steve, there's 45 million credit-invisible people, as I talked about, that are out there. And without having access to credit, without building credit, they're not going to have the ability to give mortgages and do things or just go about some of the things in the American Dream that we talk about. And even beyond what I'll call credit-invisible people are people who actually come to this country. And you may have lived in Australia, you may have had a house, you may have had credit cards, you may have had cars. You come to America, and you have no credit. 

So the ability for us to really look through people that have no scores, and be able to get alternative data in order to evaluate the credit worthiness, really can kind of help the consumer at the time which they need to access the financial system. And allowing people to access that financial system builds their independence, builds their stability inside our country. 

Steve Odland: Yeah, now there are a lot of bad stories out there about payday lenders and people who take advantage of these underbanked and people with lack of credit, which is why it's so important for organizations like Synchrony to be there. Talk about the options out there and how you guys really rise to the top. 

Brian Wenzel: Yeah. So, I'd say just under a decade ago, Steve, what we've decided to do was pivot away from what I would say is a very traditional type of underwrite model. If you go out today, people always hear about your FICO score, your Vantage score. I'm sure most people who have credit cards can see what their score is online. They have free access to the credit bureau reports. But that was a very traditional way in which you had several companies create a proprietary model and effectively rate you. What we decided to do was to pivot and not necessarily be as reliant upon those models. 

Yes, in an underwriting decision, we get those scores and those models, but we also go beyond that. 10 years ago, we used to have a hundred attributes that we would use in order to make a credit decision. Today, that's over 9,000 to make a credit decision or open a new account. And this data, Steve, is data that we may have experienced something with you before with one of our products. When we go out, we get things like your utilities payments, other things that you have on the public records, to kind of bring those in. 

And so we take that information and say, OK, I'm not going to rely solely on that score, but I'm going to look at your holistic way, and your credit score may be low, but we actually think you're a pretty good credit. So therefore, we're going to treat you better than what your credit score would indicate. This is our advanced underwriting system we call Prism. We've invested a ton in it. We try to get as much data so that we really can analyze the situation and make the best decision, because what we want to do is empower people. 

And Steve, you talked about payday lending. What you also want to be as a responsible lender. So give someone the right access to the right amount of credit at the right time. We don't want to overextend people. Nor do we want to be too cautious, where we don't give customers credit. In our model, we generally go to market through our partners. So this ability to use all this information and different forms of information is super-critical because I'm not choosing someone. You may walk into a TJX store this afternoon, apply for credit. You may go on PayPal tonight and apply for credit. I don't know, but I get all this information. I have to make a very quick decision with regard to credit. So it's really important to our model, but it's more about trying to look at the individual differently than what had historically been done.  

Steve Odland: So with 9,000 different data points, I mean, you must be making heavy use of AI and all the recent technologies.  

Brian Wenzel: We have used machine learnings. The interesting thing, Steve, right, everyone talks about AI, and particularly with generative AI now, but we've always used machine learnings and models that constantly update itself. Even when it comes to fraud, when it comes to how people perform, we're constantly taking data. 

Again, if you think about 70 million average active customers a month, we have a ton of different data. So we have enormous data sets that allow us to build really responsive models so that we can be a responsible lender.  

Steve Odland: Yeah, and you've got some examples of cross-sector collaboration, which is making equitable access to credit more even. Talk about some of those approaches.  

Brian Wenzel: Yeah. There's one that's called Project REACh, which stands for the Roundtable for Economic Access and Change. And this is really a public-private partnership, not a partnership in the true sense of the word, but a project where the OCC, the Treasury, and large financial institutions, including Synchrony, are using alternative data, particularly cashflow data, in order to evaluate a consumer's credit worthiness. And over the course of this project, we've actually originated over 100,000 net-new accounts, which is more than all the other banks combined.It's one where we'veprobably embraced it a little bit more. 

But it is really an initiative, when you think about our regulators, the Treasury, and broad base, all of us sharing data together between those large financial institutions and ourselves in order really to help individuals who are credit invisible, but really are very decent credits. We just need to give them the opportunity to provide some incremental data to establish that.  

Steve Odland: Yeah. Now, the world of finance and credit just seems to be getting more and more complex, particularly for consumers who are not in the industry. And hence, financial literacy is important, and particularly now, when you have social media and you have all the electronic means of players getting involved. So talk about the importance of financial literacy as it relates to credit access and economic mobility.  

Brian Wenzel: Yeah, Steve, it's amazing the proliferation of the number of different financial institutions, products that are out there, that at times can be overwhelming to individuals. But really when you get down to it, it's really that access to credit, the ability to have economic mobility, and financial literacy are all really linked together. And in order to do that right, you have to provide them information, tools in which they can use at their own pace, to be honest with you, so that they can manage debt wisely. They can save, and potentially invest wisely. Soit's important to provide information out to your consumers that allows them to consume that information and get educated on it. 

And this is really important for building a bond. You talk about banks, you talk about financial institutions. One of the cores of that is trust. Trust between the consumer and that institution. And you build that by providing them the proper tools in which they can manage their lives. We're not trying to just get people to borrow money from us. We're really trying to build a long-term, lasting relationship, which creates greater lifetime value for our firm.  

Steve Odland: Yeah. And all of us have been subject to those pages and pages of tiny mice-type boilerplate. But you do it differently. I mean, you put it in common English for people.  

Brian Wenzel: We want the consumer to understand the product they're getting. We want them to understand the terms and conditions. We want to be as transparent as we can. That is the method in which we operate. And we want to make that process not as scary for people, particularly those who are newer to credit. You just don't want to confuse them and have them sign up for a product they don't necessarily fully understand. So, complying with the law is most certainly important, but making it clear and transparent is a really, really important thing that we value at the company.  

Steve Odland: Yeah. And it's in everybody's best interest for them not to get over their skis in credit, or over their heads, because that doesn't end well for anyone. Soit'sreally important. It's just so much common sense what you're doing to try to make it very plain and understandable. But there's a role here for employers, too, I would think, to get involved in helping people learn more and gain financial literacy. 

Brian Wenzel: Absolutely, Steve. We talk about wellness as employers. Wellness is multidimensional, right? You have financial wellness, you have physical wellness, you have your mental health that goes in there, as well.And what we always say is that if you are not in a good position on any one of those three levers, it is really difficult to come in and perform at the highest level inside the company today. And soit's important to provide benefits to people along those lines. 

Historically, we always thought about the role of providing benefits is really insurance, right? It goes much beyond insurance today. It's providing them access to savings, providing them access to financial planning, whether that's directly through yourself or, to be honest with you, through partners. We partner with Fidelity with regard to some of our benefits programs, making sure their content is available to do that. 

Soit's really looking at the employee from a more holistic perspective, and understanding that wellness isn't just defined as your physical wellness, but it goes both to the financial aspects and most certainly the mental health aspects.  

Steve Odland: Well, how do you tell whether your customers or your partner's customers are financially literate. What metrics do you use that show that you're making progress?  

Brian Wenzel: As you provide tools out there really that the customers can engage with, one of the things that you do is you put simple—I hate to use the term "test," Steve—but put tests out there and kind of gauge whether people are going through different modules and how they're doing. It's something you can track over time. It's something you can track different cohorts. It's something that, we don't really do this today, unfortunately, for discrimination reasons, but you'd like to understand between Gen Zs and baby boomers. I mean, we have a tremendous mix here. 

So having the access where you can test people as they kind of go along to see if they're getting it. And to be honest with you, Steve, you can actually make it fun. It doesn't have to be like you're in college, and you're reading a textbook. You can almost gamify it a little bit. And the consumers really engage that and like that, anddoesn't make it as intimidating for them to engage with.  

Steve Odland:We're talking with Brian Wenzel, the CFO of Synchrony. We're going to take a short break and be right back. 

Welcome back to C-Suite Perspectives. I'm your host, Steve Odland, from The Conference Board, and I'm joined today by Brian Wenzel, the CFO of Synchrony. So Brian, in the first half, we were talking about financial literacy and credit access and all the great things that Synchrony is doing. In recent years, we have seen a lot of shift to focus on the importance of workplace culture as a driver of organizational success. And clearly you and your colleagues are very proud of the culture at Synchrony and what it drives in the community and what it drives for your customers. Talk about that.  

Brian Wenzel: Steve, we could probably take a whole podcast on this particular question. So let me dive in a little bit. The first thing, and what makes Synchrony a different financial institution than others is, we are very value-oriented and purpose-driven. And that creates much more of a family-like setting. 

And when we talk about values, there's a lot of companies that put values up. They're on screensavers, or you get, notepads. We really go beyond that. We take people, we define what those values are, but we also tell them the how, like how do you display that value every day? 

And I think when you live, operate, and reward based upon those values, I think you have a much more engaged set of employees. I would say, Steve, there's been a big pivot. We are fortunate. We just got rated number two, great places to work or best place to work in the US by Forbes and in Great Places to Work. We're number one in the Philippines and number two in India. 

And so part of that is, do you evolve as a company as it comes to your people? And let me give you a couple examples, Steve. We came through the pandemic, and if we all remember back to March of '20, when everyone went home, our employees told us a couple months in that they wanted to work from home. They wanted to have the ability or the access in order to have hybrid working.So we changed our business model, and we allowed people to have hybrid working. You can commit to the office, or you can work from home. So this way they can be there when their son or daughter gets off the bus. Or be there when the Amazon package comes or whatever. And we haven't lost any of our productivity or creativity with regard to that. So that's one example. 

The second was we transformed our performance management process. Again, there's so many hours that were spent doing a formal performance valuation, putting it into the system. And then you have these conversations, and people were more caught up with words on a piece of paper than they were about the content. So we narrowed down the specificity of the document so it's only a couple of bullet points that may go into the system. But what we did is we said, OK, every quarter, we want you to have a conversation with your employees and your team. And so we have richer, better performance management feedback. 

We also just went into a whole separate exercise around, career experiences and doing that. And then finally, to be honest with you, Steve, we've invested quite a bit on total wellness and benefits. So, we have sabbaticals, we have an on-site psychologist that's here you can make appointments with. We treat the employees in a different way because we understand the world's changed over the last five years. We need to evolve with them. So those are just a few examples of how I think we try to embrace the employees. It's still a very competitive world. We'rea very competitive company. But we approach it a little bit differently through our values. 

Steve Odland: Yeah. And it doesn't happen accidentally. I mean, it is a very deliberate thing, as you've noted. You've taken some very deliberate strategy. You sit in the C-Suite, and I know that you engage in these conversations. You obviously engage your board in these conversations. What should other senior executive C-Suite folks be thinking about if they want to move their culture and become a great or the best place to work?  

Brian Wenzel: The first thing is you have to be active listening, you have to be an active listener, right?You have to have that ability to engage the employees in a manner in which they feel it's a safe space and can provide real and honest feedback to you. You talk about boards, Steve, we're one of the few companies that allows our board to engage directly with employees of the company without us present. So things aren't scripted, things aren't prepared, but we allowed them to kind of come in and embrace the teams. And that'sreally important when you have that, so transparency's big. 

You think about what we went through in the pandemic. We started a call called Ask Us Anything. We started in April of 2020, and we had a phone line. Anyone in the company can get on, and you can ask any question, unfiltered. And to be honest with you, back in April of 2020, there were some questions asked that we said we don't know the answer to. And I think that built a bond with the employees. 

So that active listening, that transparency with your employees and really the caring. You kind of go back, empathy has become this word that we use quite a bit in business now, but it's really that leading with vulnerability and accountability. It's so, so important when you do that, because you create trust and a bond with the employees, that they will follow you in times of stress.  

Steve Odland: Do you think it helps that Synchrony is a relatively new organization? Yeah, it'snearly a hundred years old in one sense as part of GE. But it'srelatively new because you could reset, you renamed yourself, you repositioned yourself. You had new leadership, a new board, this is a decade ago, or around a decade ago. Does that help that to take this organization and reset it and refocus it?  

Brian Wenzel: Yeah, it allowed us to really focus on the culture we wanted, right? When we were inside of General Electric, it was a very established culture. And when we separated ultimately in 2015, what we did is we took the aspects of that culture we liked, and we left the aspects of the culture that weren't necessarily ones that we embraced. So we were allowed to do different things. We do things differently here when it comes to benefits. So it does allow you to reset. 

That doesn't mean you have to have a name change or a separation in your organizational structure. To do it, you have to have a conscious effort to say, what do you really value as a company? But the important thing, Steve, is that the leaders have to walk the talk, right? You can't just kind of say, "OK, we're going to change the culture. We're going to do this." It has to be something that everyone embraces on the leadership team, and then you demonstrate that through your actions every day.  

Steve Odland: But it's not impossible to do in an organization that's been around a while, but you have to, as you said, you have to do it deliberately, and you have to sort of grab people by the lapels and go, "OK, we're going to do something, we're going to shift here, we're going to take a turn here." In other words, you can't just do it one little drip at a time and expect that kind of results. So you had the ability to do it because of an event, but other companies could make an event to make it happen, as well.  

Brian Wenzel: Yeah, absolutely. It goes down to focus on what you want to be, and how do you want to engage with the employee? The ultimate thing with being a leader is how do you engage the team to make them high performing? Number one, they have to understand the purpose and the mission.Number two, they have to be connected and understand where they fit in that purpose and mission.And number three, they have to have trust. They trust the people to the left or the right of them. They trust the leaders. That's what it's about. And I think at times organizations get lost because they think people understand the mission or understand the purpose or understand their role, and they really don't. 

And that linkage to the mission and the purpose is much more than just a task you do or a process you lead or an activity that you oversee. It's really about, how do you create value? And value is not necessarily for the company, but it's really for society and the economy in the United States.  

Steve Odland: Yeah. And the world has changed, as you said, and is constantly changing, but the world of business has changed pretty radically in the last 30 to 50 years.I mean, it used to be pretty hierarchical, pretty tough. And in the retail industry, we used to say, look, if the boss kicks the team, and the team's going to kick their team, and the last person that gets kicked is the customer. So, as a customer in a store or in that kind of environment, you know what the culture is cause you feel it. You are the end recipient of this. And clearly you all have done something different. You've done it just the opposite, which is you started with taking care of your employees, but that then cascades down, and your customers are cared for in the same fashion, right? 

Brian Wenzel: Yeah, absolutely, Steve. And I think the more you treat the employees with respect, transparency, show that you care about them, the more that they care about the company, are willing to go further for, whether it's our partners, our merchant partners, providers, or our customers. And one of the things we look at as immeasurable out of this, Steve, when I look at the attrition rates either in non-exempt or exempt populations, they're half of what they were a decade ago. 

And so when you have a great place to work, when you're showing that you care about employees, when they feel valued about what they're contributing every day, they're more likely to stay on. When I look at applications for new roles, they're higher than they ever been. Because people value the company, they value the culture. That's where I think organizations need to understand that this is an investment, and this investment can have a very high ROI. 

Steve Odland: Yeah. So as you look ahead for your industry, what do you see as the most pressing opportunities and also the risks that shape consumer finance?  

Brian Wenzel: Listen, there's a tremendous opportunity here. There are so many people who need access to credit, and our ability to create access to credit for those individuals is incredibly important to our economy, number one. 

Also on that opportunity side, we have over $70 billion of deposits so that our ability to help people save, and give them financial products so that they can grow their personal balance sheet is really important. And there's so many small and midsized businesses where we can be over 50% of someone's sales. Businesses are started every day, and they grow. And some grow to the size of Amazon, some don't. But being there for those merchants is a really important part of what we do. 

As far as risk goes, there are so many moving variables now, Steve. When you think about the economy and the changing nature of what's going on here in the US, whether it's immigration policy, tariffs, things like that, there are a lot of risks where the economy can Be a little bit, at times, uneven. And so what you want to be able to do is make sure you're dynamic enough to respond to that environment. But it's really important for us to listen to our consumers, watch their behavioral patterns, and figure out how we can help them through any of these times. 

It was amazing to watch individuals through the pandemic period and the post-pandemic period. And now they're going through a different thing. When you have an inflation that was 9%, they clearly waited on a lot of families. But they managed through it. And now we're going through another realm of change, and we'll continue to be there help them on their journey. 

Steve Odland: So, just wrapping up then, any last thoughts, advice that you have for other companies who would love to have the kind of culture and success that Synchrony's had?  

Brian Wenzel: Steve, I said it a couple times in this: Transparency and active listening with your employees is really important, and valuing what they do. There's so many companies that say you have to go back to the office five days a week or this or that, and they view that that's important to the culture. What's important to the culture is what you value, and what you allow them to bring to the table to do their job every day and feel like they're making a contribution to that mission and purpose. I think if you could do that, and we demonstrated this through the pandemic, that you'll have people who create a bond for you that will go above and beyond for all your customers.  

Steve Odland: Brian Wenzel, thanks for being with us today.  

Brian Wenzel: Steve. It's my pleasure. Thank you for the invitation.  

Steve Odland: And thanks to all of you for listening to C-Suite Perspectives. I'm Steve Odland, and this series has been brought to you by The Conference Board.