When we mentioned the Credit Card Industry Hall of Fame in June, Discover’s recently retired David Nelms was high on our list along with rock stars like Dee Hock (Bank of America), Ken Chenault (Amex), Jim Bailey (Citi), Earl Isaac (FICO), Jack Dorsey (Square), and Richard Fairbank (Capital One). Nigel Morris, Richard Fairbank’s early partner at Capital One.
With Mr. Nelms’ recent retirement, this article in Bloomberg talks to his successor, Roger Hochschild in one of his first interviews as Discover CEO.
- As Wall Street keeps a wary eye on Amazon.com Inc.’s possible foray into finance, Discover Financial Services’ new chief executive officer isn’t too worried about technology-based invaders.
- He said companies like Amazon, the retailing giant seen as poised to use its online platform as a springboard into financial services, and Alphabet Inc.’s Google aren’t likely threats.
- “I view them as partners with leading-edge capabilities that we need,” Hochschild said in a telephone interview. “Very few tech companies want to become a bank and are keenly aware of some of the challenges and regulation that come with it. So I think the risk of some of these tech players getting into banking is a bit overstated.”
Maybe “frenemies” as they say.
- Part of his focus will be on continuing to win deals with companies pushing emerging forms of payments, after Discover landed partnerships with firms like Apple Inc. and PayPal Holdings Inc.
- “Financial institutions that fall behind in terms of driving business value from the new technologies will wake up three years from now fundamentally noncompetitive,” Hochschild said in the interview.
Nelms’ retirement caps off a distinguished career, who carried on the tradition of Tom Butler, the person shepherded Discover through the Sears Roebuck and Morgan Stanley transition. Among many other accomplishments, David Nelms made Discover a global product, not only with the acquisition of Diners Club, but also through bilateral arrangements with networks such as UnionPay, Mir, and ELO, not to mention competitive acceptance points in the US to face off with American Express, Mastercard and Visa.
We think Mr. Hochschild will bring excitement to Discover, and help maintain the pleasures of the 19% Return on Equity (ROE) that the network has maintained over the past 20 years.
Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group
