As Wall Street keeps a wary eye on Amazon.com Inc’s possible foray into finance, Discover Financial Services’ new chief executive officer said he is not too worried about technology-based invaders.
Roger Hochschild, 54, yesterday took over the top job after more than a decade as president and chief operating officer of the US’ sixth-largest credit-card issuer.
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 are not likely threats, he said.
“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.”
Hochschild succeeded David Nelms, who stepped down after almost 15 years as chief executive.
The Riverwoods, Illinois-based company counts Amazon and Google as partners, Hochschild said, adding that many financial firms rely on those companies as technology providers.
Discover uses Amazon’s cloud computing services and relies on Google’s speech analytics technology to improve its call centers, he said.
Part of his focus would be on continuing to win deals with companies pushing emerging forms of payments, after Discover landed partnerships with firms such as 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.
Discover has boosted credit-card lending to new and existing clients in the past few quarters.
At the same time, it has been among lenders setting aside more money to cover souring loans as outstanding credit-card debt reached a record in the US.
Discover is already focused on building the credit and collections capabilities it will need in the event of a downturn, Hochschild said.
“It’s very hard to cut back too hard in anticipation of a cycle turning,” he said, adding that if the bank did that several years ago it would have “missed out on a lot of great opportunities.”
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