Consumer financing is nothing new. Companies have been using it to sell goods to consumers for years, understanding that large purchases cannot be made by the average shopper if the item must be paid-in-full. But with the advancement of technology and the I want it now attitude of the modern-day customer, consumer financing has received a full-blown makeover. Just like food delivery services and popular television shows, alternative payment options are now at the fingertips of the average American.
To further discuss the changes happening in the consumer finance industry and Synchrony’s growing suite of digital payment technology solutions, PaymentsJournal sat down with Jay Neidermeyer, SVP & Technology Leader at Synchrony, and Raymond Pucci, Director of Merchant Services at Mercator Advisory Group.
The invention of the consumer finance industry
The history of Synchrony dates back eighty-five years as part of General Electric (GE). As the Great Depression started winding down, GE was trying to sell its appliances to interested customers. Because the economy had not yet fully recovered, the company soon realized that many consumers needed help on the financing front, and thus, the consumer finance industry was created.
“For most of those eighty-five years, consumer financing was the thing that we really only could offer to big partners, and we have some terrific partners who we’ve supported with that—some for many, many years,” said Neidermeyer. However, over the last 20 to 25 years, Synchrony has worked to become a more inclusive provider and offer financing to small and medium businesses (SMBs). Presently, Synchrony works with nearly one million small businesses nationwide.
“And as technology moves closer and closer to the customers, as more and more people are on a smartphone all the time, we’ve been able to really accelerate that movement,” added Neidermeyer.
The digital transformation of consumer financing
There has been a significant shift from commerce to e-commerce to m-commerce over the last few years, and especially since COVID-19. Traditionally, in-store commerce and the financing of those transactions has always been pen and paper based. However, due to accelerated digitization and the advanced technology of smart phones, as well as the contactless lifestyle people have become accustomed to during the pandemic, consumers no longer have the patience for the old school financing and payments processes.
Fortunately, many businesses are working to keep up with the times by following the trends that will ultimately lead to greater customer satisfaction. “As we’ve come through the pandemic, [Synchrony has] really doubled down on our investments for both digital commerce online and also digital commerce for the customer in-store so that they can do most of that financing transaction on their phone versus using a pad of paper and a pen in-store,” explained Neidermeyer.
According to Pucci and knowledge obtained from Mercator Advisory Group’s consumer surveys, today’s consumer is a hybrid shopper. The best mode of attack for businesses is to implement technologies that allow the shopper to swap seamlessly between online and in-store, then back again. Their financing journey should follow that same path.
Synchrony’s recently expanded suite of digital payment technology solutions
Synchrony has invested over a billion dollars on cloud infrastructure, API framework, and a data lake to help accelerate their ability to bring digital tools to market.
Digital apply platform (“dApply”), is a tool used by Synchrony to offer the customer an opportunity to apply for financing. “The first key to any consumer financing transaction is determining whether the consumer is credit worthy, or within our risk profile,” said Neidermeyer. Consumer finance has a history of being a long, drawn out process, which includes a lengthy credit application. dApply helps to streamline this process by using a few data points from the customer to get a complete picture of their credit worthiness. Synchrony is working toward having the smallest amount of data collected for a credit application in the industry while simultaneously feeling confident in their ability to make informed credit decisions.
“We’ve also taken that tool (dApply) that was initially an online tool, and built that kind of omnichannel bridge through a tool called Direct to Device,” added Neidermeyer. Direct to Device is intended to make it easy for a customer shopping in-store to have the same simple, direct credit application process experience that they do online. For example, a customer shopping in-store for a bed finds one that they love. Instead of having to go to a different part of the store to fill out a credit application and wait for approval, the customer can now apply on their phone, while sitting on that bed, and get a decision within seconds. If approved, the customer can take home their purchase the same day.
“[Shoppers are] pretty impatient, and anything that gets in the way of our shopping experience is really not going to be great for the merchant to make a sale,” offered Pucci. “Synchrony’s full suite of solutions is really unique to the consumer financing industry, and it helps create a frictionless, streamlined experience for the customer.”
Implementing Synchrony’s technology solutions
While Synchrony strives to convince the consumer to use their products, they also focus on getting the merchant to offer the product. “We’ve worked with some of our partners to provide very specifically curated solutions that take minutes for the merchant to implement,” assured Neidermeyer. Part of Synchrony’s mission is to provide the right level of specialization and personalization for a partner to handle.
Small, independent merchants may not have IT departments, but that is not required in order to implement Synchrony’s digital payment technology solutions. Merchants can add consumer Synchrony’s financing options to their website, social media, and marketing with a simple copy and paste of a link. No coding is required to seamlessly integrate and configure a digital application experience.
“To be able to compete equally with the big stores is just something that is a great revenue optimization formula for [SMBs] to stay in business and to stay in the community,” concluded Pucci.