Margaret Keane is no stranger to personal hardship. Raised in a tight Irish-Catholic community in New York’s borough of Queens where those who didn’t grow up to become policemen usually went into the priesthood, Keane worked two part-time jobs while putting herself through college. Three of her brothers were, in fact, policemen or married to someone in law enforcement, carrying on a public service tradition started by her grandfather. Money was tight. When her father fell ill, Keane took on a third job working for Citibank as a bill collector.
Her father hoped she might join the force, but she had other ideas. After graduating from St. John’s University in Queens, she took a full-time job with Citibank partly because the company paid for her MBA. Over the next 16 years, she learned the ropes of consumer finance, eventually running U.S. retail operations before being recruited to GE Capital, where she became CEO of its credit card unit in 2011.
Plainspoken and down-to-earth, Keane earned respect in the male-dominated U.S. financial sphere, where few women rise to the top. She won high marks in the aftermath of the financial crisis, when GE Capital Retail Finance, as the division was known, was grappling with regulators pressuring credit card companies to lower fees at the same time that retailers were suffering from consumers’ cutbacks. Keane saved strained relationships with store-brand credit card partners by explaining the company’s moves and working out compromises with unhappy retailers.
In 2014, GE initiated a spinoff of what became Synchrony Financial, and Keane became the new entity’s president and CEO. Today, the $15 billion Stamford, Connecticut-based firm she leads is the country’s largest issuer of private label credit cards, powering the credit offerings of retailers like The Gap and JCPenney, as well as those of e-commerce giants like Paypal, eBay and Amazon. It’s a sector growing by 3 percent annually, according to Packaged Facts, which reports that private label cards account for $210 billion in purchases annually—and that approximately half of those purchases are made using Synchrony cards.
Since the company’s IPO, Keane has made it a critical mission to drive growth by leveraging technology. Early on, she created Innovation Stations consisting of cross-functional teams focused on digital, data analytics and enterprise operations. Based in Stamford, Connecticut; Chicago, Illinois; Kettering, Ohio; and Hyderabad, India, the centers seek to optimize the use of technology at the point of sale.
The concept of an innovation center originated after a trip Keane took to Silicon Val-ley, where she saw how digital technology was being used and recognized its potential for the financial world.
One result is Sydney, an AI-powered virtual assistant available 24/7 that covers more than 500,000 chat requests monthly. Trained to answer questions about opening accounts, payment options, log-on issues and rewards programs, Sydney also leverages machine learning on calls in order to enhance its consumer needs knowledge base.
Linking with big partners outside traditional retail, such as airlines and car companies, is also a focus. And Keane is steering expansion into new industries. Synchrony’s CareCredit arm offers point-of-sale financing at medical offices, veterinary clinics and day spas. In 2019, Synchrony acquired Pets Best to help CareCredit edge into the large and growing pet care financial services market.
Keane’s decision to diversify comes at a crucial time. In 2018, Walmart opted to move its credit card programs from Synchrony to Capital One Financial, prompting a dip in the bank’s share price. The company recovered swiftly, buoyed in part by a deal to develop a Venmo card for PayPal, already a customer, and news of an extension of its card partnership with Sam’s Club.
In addition to strengthening its retail partnerships and driving toward diversity, Keane has worked to forge a culture of inclusion at Synchrony. There are eight diversity networks, and 10,000-plus employees are part of at least one. The company ranks among Fortune’s 100 Best Places to Work and won similar recognition from Glassdoor and the National Association for Female Executives (NAFE). As of last year, 18 percent of its senior executives were women, and women accounted for 63 percent of its U.S. workforce and a third of its board.
“I can’t change the world,” Keane told an audience at an Elevate Action Summit conference, “But what I can change is how we treat employees inside the company; understanding what they’re going through when they walk outside of their house and come to our office.”
Chief Executive’s J.P. Donlon recently spoke with Keane about her experiences leading Synchrony since its inception. Excerpts, edited for length and clarity, follow.
What were your priorities and challenges when Synchrony was spun off from GE?
The hardest thing was just time. The Fed put fairly stringent requirements on us to make sure we were ready, and getting all this done in a tight timeframe was hard. It meant that we had to work seven days a week for quite a while. But in some ways it energized us and brought the team together. Having this big goal and knowing that GE was dependent on us doing it was a rallying cry for the team. To get approval from the Fed, we had to build out a number of capabilities that we would have been getting from GE. For ex-ample, we needed our own tax department, certain finance functions, the separation of our IT and new data centers.
We hired around 2,500 people in that one year to get us ready. And the Fed was actually doing reviews of all of our functions to ensure we were ready. So it was just an enormous amount of what I would call real roll-up-your-sleeves tactical kind of work to make sure that we were successful in the split-off and getting the approval.
At the same time, we had to think through starting our own board. Initially, we had three external directors and five GE directors. So we had to continue to hire di-rectors so that when the split-off happened, those directors were well-versed in the company. So, there was a period of time where we had a lot of people in the boardroom as we were getting ready for the spin-off.
Afterward, we had to think through what our culture would be like ex-GE. This meant spending time on our purpose, our mission and our values, which we continue to drive and refine. In fact, we just went through another exercise recently to make sure everything still made sense. We’ve made some refinements to our mission, but our purpose is still whole, and our values are still the same. And that’s really how we’ve led the company since we separated.
How would you contrast the culture of the company today from that of GE?
We tried to take the best of all worlds. There were certain things that GE did really well. They are a performance-driven company. But on the other hand, we were not going to be a GE. We were a much smaller company. We didn’t have the same level of panache when we sat around a negotiating table, so we had to adjust our egos accordingly because we weren’t GE.
We had to change our focus from B2B to B2C and think through how best to serve our partners and what investment this would require. We knew everything was going to digital, so we really tripled down on getting the company ready for digital technology.
How did your tenure at GE, known for leaders like Jack Welch and Jeff Immelt, among others, influence your leadership style?
I’m not going to choose any particular CEO, but one of the things I took away from my GE experience is the importance of listening. It’s important for a CEO to listen, have a pulse about what’s really happening and not think you’re the smartest person in the room because then it’s easy for you to talk yourself into things.
Considering how fast the pace of change is today, a leader must stay open to new ideas and where the future’s going. A CEO must create an environment where people are able to have that dialogue, so that you’re not the one forcing certain things just because you happen to be the CEO. It’s important that the organization and leadership team are very competent, but also, you need to make sure you’re pushing each other enough to get the best answer.
I came to GE in mid-career, but one of the things that I always admired was that its leaders were very decisive. Once they made a decision, they made sure it was resourced, and they went forward. The worst thing you could do in an organization is not be decisive and not have a clear vision of where you want to be. I definitely took those lessons from GE.
You’ve said that credit cards—your largest source of revenue—are going away within five years. What does that mean for Synchrony?
Plastic. Plastic cards will go away as more people use devices such as mobile phones. There will always be underwriting and some form of a credit line. That will not change, but what will change is a customer’s experience at the point of sale, whether it’s on your phone, sitting at home or shopping at a physical location. We’re already seeing this with Apple Pay, Amazon Pay and the like, where it’s just a lot easier to click a button than to actually pull out plastic and swipe.
As a result, people will pull out plastic less. But the actual process of credit is going to be similar. We made an acquisition called GPS hopper that helps integrate payments into a retailer’s mobile app. More customers want to shop in a mobile environment. Amazon is a great example. Shopping on Amazon allows you to click your payment. We will see more of this as apps are embedded, making it easy for customers to pay.
Do you see fintechs as a competitive threat?
It’s hard to say because I still think you need credit at the end of this process. And to issue credit, you need a bank. So, without a big change in banking regulation, which I don’t think will happen, it’s more about how do we partner with the fintechs and less about them. Consider PayPal as an example. We’re behind PayPal, that’s a real positive for us. It’s a growing fintech payment company with Synchrony in the background. This is where the world is heading.
The public’s trust in financial institutions has been on the wane. How are you ad-dressing that?
I can’t speak for the whole banking world, but the Wells Fargo situation hurt the whole industry. It’s more important than ever for us as an industry to make sure we’re treating our customers well with respect to whatever product we’re selling. We have certain values as a company that we live by. These include being honest and responsible. It’s not beneficial for us to put credit in the hands of someone who’s not ready for credit or shouldn’t have that credit. We have an even bigger responsibility because in many cases we represent our partners’ brand. So, we have to make sure we’re delivering not only for that end customer but also living up to the brand of the partners that we work with. It’s something that we talk about all the time.
Remember also that we have human beings involved and sometimes mistakes happen. So then the question is, how do we fix it? How quick do you make that customer whole? How do you treat that customer through your customer service experiences?
Elizabeth Warren is determined to put consumer finance in the government’s crosshairs in 2020. What are you doing to prepare for the possibility of her becoming President?
We’ve been in this business for 85 years. We’ve seen a lot of change in the industry itself, and I think we know how to adjust and change if that needs to be done. We went through the CARD Act, which was probably one of the biggest transformations that occurred in the banking industry for credit cards, and we came through that just fine.
What people are looking for is for institutions to be clear and transparent with their customers, and there’s no reason we shouldn’t want to do that. We’ve been here a long time. We started in the depression. There will always be consumer credit. People need credit. That’s how the economy rolls. It’s just a question of us making sure we continue to deliver in a fair and trans-parent way for consumers.
How is AI changing your industry?
It’s still early days on AI. Its immediate impact is the leveraging of data more effectively to do our models better, find fraud more easily, authenticate a customer more easily. Down the road we will employ AI in our back office, such as using chatbots to allow customers to talk to us so that, over time, easy customer service questions will get answered that way.
We’re always going to have to have people who talk to people. The goal is to have the simple calls go away, and the more complex calls stay. In some cases, we can combine the roles and create better jobs for people in the future. We want to make sure we’re preparing our organization for that shift and training and developing them in new technologies. Every company has a responsibility to step back, look at how this will change their workforce and make sure that they have the right programs for development. We take skill development very seriously.
You’ve observed that half the workforce will need to be reskilled over the next five years. What are you doing at Synchrony? We’re doing a lot of things. We have technology boot camps. We’ve partnered with third parties to come in and teach our employees coding. In the future, we may or may not need as many people as we have today. So, we expanded our tuition reimbursement program to include areas like healthcare and teaching because we think those are two important areas. We pay for their college, and they go on to new roles outside the company. We want to ensure that we’re taking care of our employees as we go through this transformation.
What steps have you taken to protect Synchrony from cyber breaches?
We’re always on guard. We had to build our whole [cyber] team when we split from GE because it was something GE took care of for the most part. Ours is a talented group of people. We have partnered with the University of Connecticut, giving them a $3 million grant and helping them build out their cyber curriculum. We have UConn graduate students helping us build and strengthen our cyber safety net. Cyber is a new type of warfare that requires you to be on your game every single day. We train our employees to look for phishing and malicious software. But vigilance has to happen at all levels of the organization—not just the cyber team. We’re constantly training people not to open things they don’t recognize. It has to become a part of the culture of the company that thinks about how we protect our consumer and our consumers’ data going forward.
In addition to engaging experts, we have experts in the field on our board who are constantly helping us with our strategy and techniques, who we are hiring and where we’re hiring.
Is cyber the thing that keeps you up at night?
Yes, because it’s just a scary world out there. I’m sure all these companies that have had problems thought they had all the right tools in place, right? It’s some-thing you can never get too comfortable with. This is why my team repeatedly undertakes exercises on what would happen if there was a cyber event, how we would lead, what we would do.
Last August, the Business Roundtable is-sued a statement positing that a wide array of stakeholder interests are as important as shareholders’. What is your view?
Our number one job is to deliver for the shareholder; that will remain number one. But in light of that, we have to make sure as leaders that we’re looking out for other constituents and making sure we’re taking care of those as well. It’s not an either-or situation. You need to take care of them all. At the end of the day, shareholders are the primary people who are keeping us in business, so we have to make sure we’re delivering for them, but…
Look, we’re responsible leaders. We’re CEOs. I have to take care of my employee base. I have to take care of my customer base. I should be thinking about what we can do about the climate. These are all real issues. And as a leader, I should be addressing them. But I also have to make sure I’m taking care of my shareholders at the same time. So I don’t disagree. We have responsibilities as CEOs to be good in our community.
True, but the question is what gets the highest priority?
It still has to be the shareholder that gets the highest priority because that’s why we’re here. But that doesn’t mean we should forget about everything else. As leaders we have to be able to make sure all boats rise. In my opinion, a leader should be thinking about your community, your employee base and making sure you are paying a good wage so that people are coming to work every day. In addition, you should be thinking about the environment. You have to play a role in all of these things, but it’s not either-or. It’s all of them. But at the end of the day, the shareholder is critical.
How do you feel you have changed as a leader from your early career to your present experience?
It’s hard to say, but probably the biggest is having greater self-awareness of being a leader where you have big impact on everything and everyone. It makes you think about how and where you spend your time. Are you, as the CEO, spending your time in the most impactful way every single day? My job is not just to be internally focused but to be externally focused. Also, as a woman, I have a responsibility to represent diversity. I’m a role model for what could be. Having self-aware-ness around all this is really important.