Synchrony Financial (SYF) Earnings Call Transcript & Summary

Well, thank you, Tom. So we'll kick off this first panel session with our speakers, as Tom mentioned, Brian Doubles, who is the President of Synchrony and Brian Wenzel, who's the CFO. We've been very fortunate to have Brian here many times before. And this is your first time, I think, Brian Wenzel. So thank you for attending. There's obviously a lot going on at Synchrony, and we'd love to get your thoughts on how the year is set up. So maybe, Brian Doubles, you could start. It's been a year since you transitioned to your role as President. Maybe you could just talk a little bit about your new role and sort of where you're spending your time.

Yes. It doesn't even seem like a year. It's been -- there's a lot going on. So it's been pretty fast. But if you think about why we put all these different groups together under one org, it was really to find ways to deliver solutions, capabilities, new products and bring them to market for our partners faster. I think we've had a lot of success innovating, building new capabilities, but we took a step back and said, okay, can we be solving problems for our partners faster, can we get to market quicker? And so we took marketing, we took new products, the digital teams, strategy, M&A, our ventures group, data analytics, customer experience, we brought all those things together. And if you think about -- probably, a good example is, what we've done on Digital Apply. So if you think about Digital Apply, we've made tremendous progress over the last 4 years. We took a look at that and we said, okay, that involved so many different functions across the business. If we had them under one umbrella, could we have brought that to market quicker? So now you can apply for credit, really by putting in 1 or 2 fields, everything pre-populates. And that took teams, that took our digital teams, that took our data analytics teams, customer experience teams. It also relies on a strategic venture that we made -- strategic investment we made with Payfone. And so we brought all those things together to create what is, we think, a leading digital apply process. We said, we probably could have done that a little bit faster for our partners. And so that was really the goal of bringing all these things together. And I think so far, it's been successful. I'm spending a lot more time with our partners now, just getting out in the field, visiting them, trying to understand, both for our large partners in Retail Card, but also in Payment Solutions and CareCredit. What are the pain points? What are the things that we can be doing to help you succeed? We've got really good traction on digital, which I talked about. We're seeing really good traction, too, on data analytics. I would say, all of our large partners are sharing data with us now. That's very powerful when it comes to both marketing and growth, but also credit and underwriting. And now we're starting to take a lot of those data share technologies and practices, and we're starting to roll those out in Payment Solutions to some of our small and medium-sized partners.

Okay, great. And I guess, when we think about strategic priorities, maybe you could rank order, top 3?

Yes. It's hard to rank, where I would say, look, first and foremost, we are very focused on helping our large partners succeed. So that is still the core of the business. I think we've got terrific engagement across all of the large partners. When you're in uncertain times, like we're in right now, retail is a bit challenged, we tend to see really good engagement from our partners. They're bringing a lot of great ideas to the table. We're bringing a lot of great ideas to the table. That collaboration, I think, has never been stronger. I think we're also delivering a lot of new capabilities for them. I talked about data analytics, I talked about everything we're doing on the technology side. And look, if you think about our 2 most recent announcements with the Verizon relationship and Venmo, I think that's real evidence that the places we've been investing over the last 5 or 6 years are absolutely the right places to invest. They're helping us win and compete for new programs. And if you think about like Venmo and Verizon, those are going to be 2 very unique, very large programs for us. And we're pretty excited about that. So I'd say that's first, large partners continues to be the core. But then I think you're also going to see a heavier focus on diversification. And diversification, primarily through CareCredit, Payment Solutions and even some of our direct-to-consumer products like the general-purpose card. So if you look at CareCredit, we couldn't be more excited about the opportunities in front of us at CareCredit. One, if you look back over the last 20 years, how we've grown CareCredit, we've got tremendous scale in the business. So we're in over 80% of dentists, we're in over 90% of vets. It's a large and growing market. There's $350 billion of out-of-pocket health care spend. There's $70 billion that people spend on their pets. And we're positioned really well in that space to win. As we think about growth over the next 10 years, though, it's not going to come from being present in more dentist office and vets. We're already very saturated, and we've got a market-leading position. As I think about where the next wave of growth is going to come from, it's really going to be more -- getting more deeply penetrated inside of the provider offices. So we still have a lot of provider offices today where we get 1 app a month or less than 1 app a month. And part of the challenge that we've always had historically is in smaller offices. You've got an office manager or practice manager who he or she is stretched, just trying to make the place run every day, get people their appointments, et cetera. But this is where I think technology can play a large role. They may not have time to walk a customer through a CareCredit application process, but there's no reason why the customer sitting in the waiting room can't scan a QR code or do text to apply and do the whole thing on their mobile phones, so that when they get -- it comes time for their appointment, they're ready to pay using CareCredit. So we started to roll out technologies that will help us really get more deeply penetrated inside of those 200,000 providers that we've gotten CareCredit. And then Payment Solutions, similarly, we're really excited about the launch of both the home and the auto network. I think these are really great strategies to drive growth into the future. Our Synchrony Car Care card is now accepted at over 0.5 million locations. The HOME card is accepted at over 1 million locations. So really, the strategy there is driving awareness across that cardholder base. They know what -- where they can use the card, the value proposition, et cetera. So there's a big awareness campaign that we're running there.

Cool. So you mentioned in the outset of your response to the previous question, sort of the uncertain times. Obviously, top of mind subject for a lot of our investors. Maybe Brian Wenzel, you could talk about sort of any early indications of anything in terms of credit quality. And then maybe, Brian Doubles, you could talk broadly about any of the threats you're thinking about to the business model in general outside of just specific macro impact.

Sure.

Yes. Thanks, Sanjay. So from a credit perspective, just go back to '19 for a second, we saw improvement throughout the year, stabilization really in the fourth quarter. As we move into 2020, we don't see anything today as we look at it that gives us any different concern or raise awareness. We look, obviously, at all our credit grades by product, by channel, by partner, so we haven't seen things there. But we also looked at consumer behavior pattern, payment behavior pattern, which, to be honest with you, at the end part of 2019, we actually saw payments increase, which is very unique, probably given the credit quality of our portfolio. So we looked at payments, we looked at consumer spending behavior patterns, are they changing the way in which they consume groceries, gasoline, discount because we haven't seen anything from a credit perspective that gives us pause today. We continue to watch it every day. We continue to make refinements. But so far, it's a very stable environment and favorable for '20.

Yes. And then in terms of threats, I think sitting here today, I see a lot more opportunity than I see threats. I think a couple of years ago, we were -- and we continue to watch fintech and new competitive entrants into our space very closely. I think we respect all of our competitors, but I feel even better today than I did 2 or 3 years ago in terms of how we're positioned, both in terms of the product set that we have, our -- the technology and the architecture that we've developed and our ability to integrate into the partners' experience and provide a really good experience for the customer. 2, 3 years ago, I probably would have said we got a little bit of work to do there. Now I feel like we are absolutely best in class. And as we go out and compete for new business, Venmo is a great example. I mean you can imagine the very high bar that they set on customer experience and the ability to integrate into their app, into their digital experience and bring the credit capabilities in. So I feel like we are absolutely positioned to win right now. So I see a lot more opportunity sitting here today than I do threats.

I guess, we hear a lot about the fintechs and installment-based lending. Could you just talk about sort of how your capabilities and your product set compares to them because some of those guys seem to be at least winning in some places?

Yes, it's an interesting trend. I mean we have an installment product today called SetPay. We can -- we finance small dollar purchases through an installment product. So we have the products. And look, our goal is really just to provide our partners and our partners' customers with choice. And interestingly enough, if you go out and pull our partner base, they're not unanimously supportive of an installment product. From their perspective, they say, hey, well, over the last 5 or 10 years, we've been working really hard to get that second purchase, right? We've driven really good reuse rates on our products. An installment product is kind of a one and done, right? It makes that next purchase a little bit more challenging. So we do have partners that are a little more cautious around an installment product. They like the revolving product. They like the repeat. They like the loyalty that, that builds. With that said, we also have partners that are like, hey, look, I just want to give the customers, my customers the choice, and we're able to flex to that as well.

And I guess, when we think about the economic model around each of those different products, does it differ in any way? Or is it comparable?

Yes, it's fairly comparable. There's a different competitive set. But when you look at it, the discount that you're charging between those, we price relatively the same return, so it is comparable. It's really how do you -- Brian hit on this, how do you meet the needs of the merchant or the retail partner and what they're trying to accomplish with the program, whether it's repeat sales or really trying to pull through a sale.

Got it. I want to talk about Verizon and Venmo. But maybe before we get into that, as we think about some of these investments you're making for these new clients, I mean is it adding to capabilities that you didn't have? Or is it tailoring those product sets for your partner? I mean could you just talk about contextually sort of what you're doing?

Yes, sure. I mean it's a little bit of both. So part of this is, again, I think part of how we're winning in the marketplace today is our ability to flex to the partner, right? A lot of our -- many of our partners, almost all of our partners want to control that customer experience, right? So we have to find ways to integrate into their -- whether it's their digital environment or mobile app, et cetera, which we've done over the years with SyPI. And so this is now kind of think about it as kind of a next level of SyPI where we're building an API architecture that will plug into our partners' mobile experience, their app and it will be absolutely seamless. So you'll move from their in-app experience to credit functionality, and you'll never know. You'll never know. Think about the alternative, if you were to -- you're inside of one of our partners' apps and you're doing some things, and all of a sudden, you want to do something related to credit and it pops you out to a website. That's a terrible experience. And then you got to go back into the app to kind of figure out whatever you're going to do, and this will be completely contained in their experience. So that requires some technology build. Now we're building it in a way that it will be scalable across the enterprise. So once we build it -- and you're never done building it, right? You're always adding new features and functionality, but we're building it in a way that it can be scalable across the enterprise, so our partners can benefit from it.

And when we think about like -- and we'll start with Venmo and go into Verizon. But when we think about Venmo, I mean we've heard PayPal talk about it being sort of a unique offering. Could you maybe just elaborate on sort of that product and what to expect?

Yes. There's not much we can share at this point. Obviously, we're still in discussions, and you'll see more around the launch in the second half. But it will be very innovative. It will -- we are laser-like focused on delivering an experience on the credit program that aligns very closely with the current Venmo experience. And again, you can imagine, as we went through that process with PayPal and Venmo, and I participated in a number of meetings with our technology team, it was all about the experience. I mean that was -- we would spend a couple of hours together, and it was all about the experience. It wasn't a traditional RFP process, where you go in, you spend time on the experience, you spend time on the economics, you spend -- this was like, okay, how are we going to make sure that at the end of the day, this feels very much like Venmo.

Got it. And I mean, I guess, their target customers, like do you feel they have a propensity to want to take on credit cards? Because we hear a lot about millennials and sort of their unwillingness to take on debt. Like, do you guys feel like that's an...

No, absolutely. Absolutely, we do. And I think -- but part of this is going to come down to the experience and the value proposition on the card. But we've done research on this cohort of consumers, and they are open to credit. There's an aversion to what they would view as banks, I think, stodgier banks. And I think this won't feel like that. We need to make sure it doesn't feel like that. It needs to feel different, but we think there's -- there'll definitely be a really strong reception to it.

So could you talk about the Verizon product because that one is a little bit more sort of foreign to me in terms of just understanding what they might do with the lending products? So could you just talk about that a little bit?

Yes. Well, I think this is also -- this will be very unique for us as well. And I think there's a tremendous amount of growth opportunity in this space. It's pretty exciting to enter a new vertical. So I also think, at the same time, it gives us some nice diversification inside of large partner programs, but also for the company. And if you think about it, when you go in and buy a phone, a lot of people put that on a payment plan, right? This gives them another alternative to open a Verizon co-brand card. You put the phone on it, there will be, we think, a very strong value prop and other incentives attached to it. But at the end of the day, it's a way for Verizon to drive even more customer loyalty with a great brand. We're pretty excited about the prospects there.

And then when we think about the future and your pipeline or -- is that pipeline more like the Venmo and Verizon type stuff? Or is it -- are there more traditional RFPs and stuff out there?

I'd say, right now in the pipeline, it's probably more start-up opportunities that veer a little bit more towards like Verizon, Venmo type opportunities. There's not a lot of large programs that are currently sitting in the pipeline, a lot of those have been renewed. So that's what I would say in terms of Retail Card. In Payment Solutions, you got a pretty broad cross-section of new opportunities, but also a very strong pipeline there. And then CareCredit, we just recently announced a great new program with Kaiser Permanente in the health system space. So [ they on the team ] have a really good pipeline in that business as well and new opportunities that they're working.

One more question I get a lot from investors with these investments you're making. As we think about the returns on these new wins, are they comparable to the stuff you've had before? Or is it lower?

It's comparable. I think the difference, and Brian referred to it, de novo programs, especially where you have to make this type of investment in the technology, creates a little bit more of the upfront drag. So this year is a year of investment for us. We talked about in our earnings call in January, about a $0.20 headwind. If you think about that, it's the people to go behind these programs, it's the technology build that we have, it's launch funds, et cetera. So there's initial drag, but we believe a couple of years out, obviously, this will -- as we get through the first early vintages, they would be very comparable and hopefully, the mainstay is for us 10 years from now. If you look at some of our largest programs, they were start-ups a number of years ago. Amazon, the Gap, Sam's Club. So they're stalwarts, but again, de novos have a little bit different profile in the front end, but the overall return, we believe, they're good risk adjusted returns for us.

Great.

It's a good problem to have, but it's very rare, Brian and I were talking the other day. It's very rare to have 2 big start-up opportunities like this in the same calendar year. So I do think about it as a year of investment because we're very fortunate to have 2 big launches coming this year. I can tell you our teams are working around the clock to make sure that both of these are successful. Usually, you get one of these every maybe 3 to 5 years. We have 2 in a 12-month period. So our teams are hard at work trying to make these things happen.

And just to clarify, like these investments don't reoccur. They should scale after this year?

Yes.

Yes.

You have a big upfront, all the things Brian talked about, but then we look at these programs over a 7-, 10-year period and say, okay, do we like the return profile, do we like it under different economic circumstances. And in both cases, these are very attractive opportunities for us with a lot of room for growth.

So Brian Doubles, you touched on a little bit, CareCredit and Payment Solutions. Obviously, they're really exciting opportunities for you guys. We tend to sort of overlook those a little bit as an investor.

So I have to talk about them as much as I can.

No, and I appreciate that. So maybe you could just elaborate a little bit about those opportunities more -- in more detail and talk to sort of the profile of the consumer there and whether or not it's comparable to private label?

Yes. The profile of the consumer is very consistent across the 3 platforms. If I start with CareCredit, I mean this is a business with, again, just tremendous scale in the industries that we participate in, but we're also doing a number of different things to continue to grow the business. I talked about getting more deeply penetrated already. But the other thing we're doing is we're entering new specialties. So we're now in 25 different specialties, right? Whereas, if you go back in history, it was primarily dental that we did some audiologies and cosmetic. Now we're in 25 different specialties. So that's one big avenue for growth. And the other thing that we're doing, we talked about health systems. So the trend in the market over the past few years has been one of consolidation. So as we continue to see practices consolidating and moving into larger health systems, we want to be there, right? And I'll be honest, those are not -- that's not an easy sales cycle, right? These are big practice groups, where it takes some time to work your way in, but they've been very receptive to the CareCredit product and what it can do for their customers to help them pay the out-of-pocket expense. So we feel really good about that strategy. And then the other thing that is probably underappreciated is just how important technology is going to be for CareCredit. I go back to that small practice, for example, where it's just too hard to offer CareCredit. And now somebody sitting in the waiting room can just do text to apply and pre-populate it using Payfone, enter a couple of fields, get approved. And by the time their son or daughter goes in to get their braces, they know exactly how they're going to pay for that treatment. That's a really big deal. And then the other thing that probably gets overlooked a little bit in CareCredit, is just how we drive awareness in CareCredit in terms of where you can use the card because acceptance is a big deal. And we have a provider locator that gets over a 1 million hits a month, where people who have the CareCredit card go in, and they look at, okay, where can I use my CareCredit card, right? That's great for 2 reasons. One, it's very easy for the customer to know where they can use the card, but it also brings business to our providers, right? So if they accept CareCredit, they're in our provider locator, and they know that they're going to have access to the CareCredit customer base to come in and spend. So that's kind of CareCredit in a nutshell. I think Payment Solutions has a ton of momentum as well. We talked a little bit about the auto and home networks. I think they are obviously not as mature as CareCredit. And so the one thing that we're working on there is, again, around awareness. Where can you use the card? What are the benefits attached to the card? That's really more of an awareness campaign that we're running right now. But I'd say, just in the core of Payment Solutions, we're seeing a lot of really good momentum and a ton of engagement on things like technology and data share. So most of our large Retail Card partners are leveraging data share to some extent. Now we're taking that -- the Payment Solutions clients, and we're seeing really good engagement. We're hosting them at our innovation stations. We're taking them through the technologies and things that we have that can help them. And you can imagine, our big partners have big digital teams working on this stuff. But if you've got 2 or 3 electronic stores in Middle America, you don't have a digital COE, right? So these technologies and the things that we've built can be even more impactful for our small- to medium-sized partners. And we're seeing a lot of really good traction there.

I guess you mentioned data before and that you're getting data for all your partners now. How much are you using that data to sort of inform the merchant on getting repeat business and such? And getting better conversion even?

Yes, it's really both. So one -- so they're sharing things with us like how much the customer spends, how long have they been a customer, how long have they been registered on the website, average basket size, we've always had the SKU level data, which, as you know, is really powerful. But now we're able to calculate what we call a customer engagement score for that customer, which helps us, at the end of the day, really make better underwriting decisions, better line assignments. So in cases where we have a good customer engagement score, we can give lines that are 20% to 30% higher. And at the same time, have better credit risk for us, right, a lower propensity to default because we know so much about the customer at the time they apply. And that can be really powerful. So if they have a 20% to 30% higher line, you're going to get 15% to 20% higher sales on that customer, more repeat, more loyalty. And we can actually target offers to them as well. So it really is a combination of different things, which is why our partners are so excited about it. It was -- if you go back a couple of years, we started doing this with 1 or 2 partners and you have to have a good -- you got to have a good test case. But now that we have some actual results, we take that -- we don't share any names or anything, we take that kind of results to other partners, and they see it. And they see the power of it, and they say, yes, I'm bored, okay, I can improve my approval rate, bigger lines for my customers, more sales for me. There's no reason not to do it. And so it's really now just proliferating, which is pretty exciting.

And how far along are you in terms of penetrating your customer base with this? With all of these types of...

All of our large partners share data in some form with us. I'd say, we have -- as you can imagine...

Utilizing the data, I mean.

Utilizing data, yes. All of our large partners. And now we're starting to roll it to the smaller ones. What I would tell you is that it's not one size fits all, right? So we have -- and again, this is where you have to be flexible in your architecture, your technology because we have some partners that want to -- they want to share data lake, right, on one technology platform, and we need to be able to work inside of that framework. It's not one size fits all. I think as we start to roll it out to small- to medium-sized enterprises, we're going to have to find a way to make this scalable. So it's not as customized as it is today, but I would say all of our partners are very engaged on this topic. And while each approach may be a little bit different in terms of what they're actually sharing, the level of sharing, what we're doing with it, the engagement is exponentially greater today than it was 2, 3 years ago.

Great. So I'm going to ask another question on loan growth, but then maybe we'll open it up to the audience. So audience, please think up some questions. I guess you guys are targeting 5% to 7% loan growth this year. When we look at some of the early indications, it's been a little weaker than that, but that's probably because you have these relationships pulling up. But maybe you could just talk about how you guys got to 5% to 7%, sort of contextualize it with what we've seen thus far? And then also maybe factor in some of the weakness that we might see in retail sales and how we should consider what that impact might be?

Yes. So if you look at the 5% to 7%, we think we should be growing 2 to 3x the GDP of our retail partners. And a big driver to that is our Dual Card in capturing world spend from our customers. So -- and if you look historically, our growth rate has been in the 4% to 7% the last 3 years. So we see pretty consistent growth. I mean Brian has talked about the tremendous opportunities that we have in CareCredit, which has grown high single digits in that 8%, 9% range. Payment Solutions, again, right in that 8% range, from growth when you factor out the loss of Yamaha and oil and gas coming out, but a very consistent growth pattern. And then we had a lot of noise in Retail Card with Walmart coming out. But again, they're growing in that kind of mid-single digits. So as we look at that, we come back to that 5% to 7% is a very achievable and manageable number now. Again, there's going to be a little bit of benefit, smaller this year with the launch of Verizon and Venmo. Verizon in the first half, Venmo in the second half. So that growth rate as we go through the year, we expect to accelerate towards the back half of the year with our plan kind of coming in. We do get a lot of questions on the coronavirus. What are you thinking about that? It is way too early for us to really have any impact from that. We do talk to our retail partners. But as we see it, the sales growth projections and how we're coming into the year is very achievable and manageable. So we think it's a good plan.

And when we think about like retail sales, obviously, we hear a lot about offline retail suffering in terms of growth. How do you see that growth profile changing over time? Do you feel like, for your own partnerships, more of that is going to come from online? And that's why you guys are making the investments you are?

Yes, absolutely. I mean we have -- one, we're partnered with really strong online players, obviously. But we're also helping our partners who have been traditionally more brick-and-mortar, transform to be more online, more digital. That's a big part of the value proposition, I think, that we bring to our partners. We're helping them transform. And one of the things that we've talked about the card program is so instrumental to that transformation because if you think about it, the traditional brick-and-mortar retailer, they want to be able to get that 360-degree view of how the customer is shopping. How much is in store? How much is online? How much is through the mobile phone? And they want to be able to see what they're buying through the different channels. Well, the only way you can put that picture together is through the card, right? If you come in and use a general-purpose card, the retailer doesn't know, unless they have a really strong loyalty program, which many don't. The only way they know is they can look through the card and the SKU level data that we get and say, okay, this customer, they might buy jeans in store, but they buy T-shirts on their mobile phone. Well, that's pretty powerful for the retailer to know. They also know number of visits, the average basket size, et cetera, and they can get all that from the card program. So as our more traditional retailers are kind of undergoing this transformation, they're leaning very heavily on the card program to help them do that.

That's fair. All right. Let me open up to the audience. Audience, any questions? One right up there.

Just high level, do you expect Venmo or Verizon to be a bigger contributor when it's at maturity?

Come on.

I mean is one -- the question is, if one is really much bigger, I guess, just order of magnitude is...

Well, I think, look, they're both going to be great programs. And I would say both programs have the potential to be top 10 partners for us, relatively quickly. So that's how I would answer. I think it's too early to say it's one or the other, and I wouldn't want either partner to come back to me and say, well, why didn't you pick me? Thanks for your question.

Any other questions in the audience? There's one right there.

From a data capture perspective, can you give us a sense of what additional information you're getting from your partners that helps you make decisions on the credit side? We understand data from a behavioral perspective, purchase perspective. But when you're underwriting credit, how does that help you? And what specific data elements do you get from your partners?

Yes. So it's actually a lot of the same data, but knowing that -- how loyal a customer is with the partner is incredibly powerful from a credit standpoint. They're more likely to make good on their payments. They're more likely to be an engaged customer. So it's the same stuff. It's how long they've been a customer, how long they've been registered on the website. Even simple things to reduce fraud like if we know the ship-to address that they've registered on our partners' website ties to the address they put on the credit application, you know the fraud's going to be dramatically less on that type of account. So again, it's engagement, not just from a sales perspective, but engagement from a credit and underwriting perspective. We've now demonstrated over the past couple of years and when we look at the probability of default for a highly engaged customer versus a relatively mixed level of engagement, it's dramatically better. So it's the same type of things, but it comes back to this customer engagement score.

Any other questions in the audience? I guess, when we think about partnerships in the future, are there other sort of -- I mean I'm not saying Venmo is nontraditional, but big tech technology, are there any other types of deals like that, that might be in the pipeline that are interesting and unique in that regard?

Yes. What's great about our position, I mean, anybody who is thinking about doing a card program, whether it's a fintech, who wants to round out their product suite or a telecom like Verizon, they come and talk to us. We are in the mix on every competitive process that's out there, just given our size and scale in the space. So I think that's great. That doesn't mean you're going to go pursue every opportunity that's out there. I think one of the things that has been and will continue to be very important for us is the level of engagement from the partner on the card program and is it one of their top 3, top 5 priorities. And in both cases, if you're just talking about whether it's Venmo, Verizon, Fanatics, the big launches that we've had recently, the level of engagement at senior levels inside of that company has been exactly what we look for. So if you can get the card program to be a top 3 priority for the CEO and leadership team, you're almost guaranteed success. You're almost guaranteed success. If you've got the [ value prop ] structured the right way and you got engagement of senior management, then there's nothing more important to guarantee the success of the program. So as we evaluate opportunities, whether it's -- they can be fintechs, they can be new industries, things like that, that's a key criteria for us to evaluate.

That one right there.

Brian, just curious obviously, working closely with your partners isn't new, but the flip side is a number of the technologies, I presume that you're going to be using in your new relationships involve things like machine learning and AI and learning to mass customize and make the experiences more seamless for consumers, as you've said. Can you talk about the degree to which adopting these technologies and making these investments is being priced into the relationship with clients, in general? Or how you would see it evolving, in general, whether that essentially is the evolution of the already existing expectation that you're working closely with your partners? Or does this actually create a new potentially type of consulting relationship that gets priced differently in the future?

It's a great question. I'd say, right now, it's part of the package that we offer our partners, okay? And we never lead with price. So we never lead with price. We lead with our capabilities. Our goal is to demonstrate that our tools, our technologies, our product suite, our capabilities are worth a premium to the market. And we believe that, and that's how we compete. Look, I think we've certainly entertained the idea for some partners that, whether it's data analytics or some things that we do for our partners that aren't necessarily related to the credit program, could that be a service? Could that be something we charge for down the road? Sure, we've thought about that. We've talked about it. We don't have an immediate plan for that, but it's something we'll continue to evaluate. Right now, our goal is to provide these services and these capabilities to our partners to help them win. And it's part of a package deal that we offer. And we think -- we do think we get paid for that in the overall program economics. So we haven't considered breaking it out separately at this point, but who knows down the road.

Any other questions in the room? So no discussion is complete without talking about capital and capital management and liquidity and CECL, and everything combined. So maybe, Brian Wenzel, you could just talk about sort of the outlook for capital and how you're going to use it? Obviously, you guys bought a lot of stock back on the heels of the Walmart loss? Any constraints related to CECL that we should be mindful of going forward?

Yes. So as you think about capital, we've been on a journey right from our separation from our parent, GE, a number of years ago, where we came out with a very high CET1, really to facilitate and make sure that we could get the regulators confident and get that exit point and stand up the company. We've been on a journey to deploy capital into growth of the company over the last number of years. So that's obviously one of our first priorities, and then we've begun a capital plan that includes a -- we view as a strong dividend as well as we're beginning to reduce the CET1 level and return that back through share repurchase program. We currently have a $4 billion program that runs through June of this year. We had $2.7 billion done at the end of December. So we have $1.3 billion still to go on that. So we'll continue to manage that. As we look forward, and you bring up CECL, obviously the phase-in for CECL happens over 4 years. It's roughly 60 basis points of CET1. But there, we've been really engaged with our regulatory partners. We engage with Treasury, who's doing a study on CECL and the implications of CECL. So at the highest levels inside the Board of Governor and at the Treasury, highest levels as well as the National Economic Council. We've been trying to educate people with regard to the impact of that. So it was factored into our 2019 plan. Again, we will be factoring it to our 2020 plan. And listen, the regulators get it. They may not react in the same time frame that we want to react, but we think we're going to get or we expect to get some relief. And at the end of the day, as you think about our capital return program, we expect to execute that in a manner whereby we get closer to our real peers on a journey. Obviously, you have to be mindful of the fact that you can't reduce the capital so quickly as the regulators would get uncomfortable with that. So if you do it in a measured pace, which I think we have done, obviously this year is a little bit higher relative to Walmart really think about an extra $2 billion, but we're going to continue that capital plan and reduction of our capital level strictly with CET1.

All right. Well, we're out of time. Thank you, guys. Appreciate it.

Thanks for having us.