Technology will stimulate more personalized consumer-lending products and facilitate further integration of merchant/consumer relationships via direct marketing. Those best placed to capitalize on emerging trends are the companies that invest in versatile and advanced platforms that support online and mobile solutions, incorporate AI capabilities, and improve all aspects of data processing and management. The growing number of platforms (e.g., credit cards, auto, mortgage, and particularly label card) will increase the availability and variety of products offered by the companies under review. Disintermediation is a threat to traditional financial companies if they fail to evolve.
Company specific thoughts:
In the card space, Synchrony seems best-positioned to benefit from technological innovation, as merchants enjoy private label consumer direct relationships/no discount fees. Because Amex tends to rely on brand value and past status, it is not moving with the times. AER, AL, FLY, COF, DFS, and SYF are more forward-looking and investing on that basis. COF, DFS, and SYF are all online national lenders, giving them a head start versus traditional bricks and mortar institutions, and all three have a progressive approach when it comes to customers and competition. Aircraft lessors AER, AL, and FLY are focused on owning newer technology commercial aircraft, so should be well prepared for environmental and other changes.
Financials: Up close
The future will be determined by those who are willing to reinvest, adapt and turn future threats into opportunities.