All right. I think we'll kick it off. All right. Good afternoon, everybody. Very pleased to have with us the management of Synchrony. Synchrony is the largest player in the private label credit card industry. It's been in business over 90 years, first inside of GE, and it's been public now, I guess, about 10 years. Company has both partnerships with major retailers and very well-known brands, including Amazon and PayPal, and has also built its own networks in healthcare, home, and auto, among others. With us is Brian Wenzel, the CFO, who has been with Synchrony well before the IPO, part of the GE management team as well for many years, and we're looking forward to his the discussion with him this afternoon.
Brian, you did publish your financial results for the month of January in terms of, you know, balances, delinquencies, and losses. Maybe could you talk about that? You know, what trends that you're seeing and, you know, how that kinda stacks up to the expectations you had just set out a couple of weeks ago.
Sure. Well, first of all, let me start, Moshe. Thank you for the invitation. Pleasure to be with you and the investment community today. A couple of things as we think about the 8-K this morning. Let me start with the receivables, right? Receivables were down $1 billion, a little better than normal seasonality, up 15% year-over-year. If you look at that and say, "Okay, what's some of the drivers?" It's slightly ahead of our expectations. I'd say there's two factors at play there. Number one, the continuation of strength in purchase volume.
It's continued on here in January. About half of the favorability as we would think about is coming from purchase volume. The other half is coming from payment rate, which again is normalizing at a little bit faster than our expectations, but not significantly faster. When we look at that's leading to some very good favorability. When I think about it, and I look at it kind of week over week, what's interesting, Moshe, is the last 2 weekends have been our two strongest weekends of the year. We had some benefit most certainly on January first, the way the calendar fall, but we had really strength in the last couple weeks. Doesn't surprise me this last weekend with Super Bowl.
Some people say, "Let me go out and shop before the big game." Appease them, appease your better half, potentially either way. Really strength there. When we look at inside the portfolios, continued strength inside the digital and most certainly the health and wellness platform, which is really strong in the beginning part of the year. I think when we look underlying that, the consumer, no real discernible shift with regards to transaction value is where they're spending their money. From that standpoint, the consumer's continuing to show, strength from a receivable standpoint and purchase volume. As you start to go down and think about delinquency for a second, 10 basis points up sequentially.
That's in line with the expectations and what we've laid out most certainly for our expectations for the first quarter, but really how you think about the full year. When you think about the loss rate being at 4.3%, you know, you first look at that and say, "Well, that number's up significantly from the fourth quarter." You have to look at it cycle adjusted. We balance those cycles. We have more cycles than others. When you look at the calendar, with one of our partner processor, it shifts some things. There's five extra cycles sequentially, two extra year-over-year. If you cycle adjust it's generally on par with that.
Again, you'll see a little bit of hump here in January that you wouldn't necessarily see as you move forward. We're pleased with credit. We don't see any abnormalities or things where we have to take broad-based actions.
From a macro standpoint, I think macro indicators certainly don't seem to be worse if, you know, in perhaps, you know, some slightly better, some no worse, I guess, is probably a fair assessment as to.
It's definitely fair. I think some economists actually have called for not a soft landing or a hard landing, a no landing. you know, there may be some upward bias in some of the economists' views. As we see it, we don't see stress coming into the consumer, so it's not playing out any worse than that. It very well could be better. Again, we're only 45 days into the year. We're optimistic. Even the report this morning on CPI, there were some positive things inside of that. Now you really have to look at the trend data and say, you know, what do you feel is more sticky, as you move forward? We're encouraged by that.
Listen, you continue to have a strong labor report, you know, I think it was last week, that continued to show strength in the consumer.
Right. When you think about your partners, like, you know, what are they telling you in terms of their appetite for, you know, growth in accounts for, you know, and, you know, how do they view this at this stage?
Yeah. listen, you know, our partners always wanna grow accounts, and they wanna do it. The one thing about our business, if you go back, and I looked at this data before I came down here, the number of new accounts we originated. If you go back a couple years prior to IPO through now, we've been relatively consistent band of number of new account originations. That's one thing they value about our model. We're not on and off the origination engine, and they very much appreciate that. The conversation with our partners continues to be around two things. Number one, can you bring me more products so I can approve more, get more people to buy, close more sales, maybe upsize the basket, number one.
Number two, which is a dynamic that shifted over the last number of years, is it used to just be grow my sales. How do you help me grow my sales? How do you help me build loyalty with my shoppers? Now it's yes, yes to that and then how can you bring me incremental new customers to my business? Some of the things we're investing in in our marketplace is our provider center in their health and wellness business, payer provider. How do we bring more customers to them? Most certainly they feel the competition. They really like where we're doing, where we're in each of their digital retail channels, et cetera, meeting the customer where they wanna be. They're focused on bringing more customers and continue steadiness and underwriting.
Right. I was gonna ask this later, but I guess it's a good, you know, it's probably a good time since you just mentioned it. One of the things when we've had this conversation a year and 2 years ago, you know, kind of very high profile was buy now, pay later. That's become somewhat less high profile in the discussions, but I'm sure it's still an important part of the toolkit. You've launched, you know, you've launched your SetPay. Can you talk a little bit about how that's been received by the partners where it's been launched and how you're, you know, how that, you know, how that will be rolled out as we go forward?
Yeah. Most clearly we learn from the development of that product in the marketplace, really more around customer experience, applications, et cetera. They do operate in a slightly different regulatory regime and don't have some of the same requirements that we have as a bank in order to do, you know, ability to pay, et cetera. We learn from that customer experience, and what our view is we want a multiproduct presented to the customers.
I think our partners appreciate the fact that we don't look at a pay in four products or a closed-end installment product and say, "That's my only thing." What we wanna be able to do is look at those customers and say, "How can I migrate you to a product that you can continue that relationship on?" For us, we look at most certainly pay in four as a vehicle in which it's a different cost to acquire. If it's, you know, choose a number, $3 or $4, okay, if I can originate six of those and I get one, you know, one or two to kinda convert over, I have the same cost to acquire my core business. That's what they appreciate, is that ability to migrate that.
We demonstrated through our other products, whether it's secured or private label or dual card. They're very appreciative of that. You know, we've looked at a number of different players in that space and really try to say, "Okay, what's the best of what they offer?" I think you combine that with some of the things we do really well, and it sets up nicely, and I think you'll continue to see us expand into a lot of our, hopefully expand into a lot of our larger partnerships.
Gotcha. We have to have some level of discussion about the CFPB and the late fee rule. Can you talk a little bit about what, you know, what's happened, what they've said, and, you know, your, you know, positioning vis-à-vis that, you know, any changes there and what might, you know, what might happen in, you know, over the course of the next year or 2?
Yeah. Let me start with, you know, as a firm, we are unfortunately disappointed with the proposed regulation. There's a couple of things. You know, you're looking at a fee that is most transparent regulated fee in the banking industry to start with. You look in and say, "Okay, as I look at the proposal, there's a couple of things." Put aside some of the procedural elements about the proposal itself, there's a rush to kind of get this done going outside of what was traditional time frames to evaluate a rule like this, to gather information and put it in play. There are two concepts that we find are fairly deficient in the rule itself. The first is around deterrence, right? The CARD Act really contemplated deterrence.
When you come in here, when you look at the level of late fee, number one, when you look at the failure to be able to apply that at an escalating level to some degree for deterrence is problematic. Third, even the contemplation, right, relative to let me charge it 15 days afterwards, which is essentially a cycle. It's effectively saying, "I don't really care about deterrence." You know, I tell people, we don't look at late fees, right? I look at the deterrence. I just want people to pay us back, and that's what we want. That's one challenge. I think the second challenge that you have is there's a lack of contemplation of what's going to happen to the consumer. Most certainly you are gonna see more consumers go into default, maybe not roll to loss, but go into default.
You say, what does that happen? Therefore, you're now gonna impact people's credit scores. You're now gonna sit back and say, "Okay, how do I increase the cost in order to collect that?" Now you look at other issuers who say, "Well, late fees isn't big for me," but now they have to take that, the consumer delinquency and lower credit scores and say, "Okay, how does that impact a mortgage model? How does it impact an auto model? How does it impact a private loan model?" What happens in greater risk and uncertainty until they get a sense of how their models work, cost of credit is just gonna go up for people. There's gonna be a contraction of credit to the extent that we can't solve for some of the deterrence and other things.
What you're gonna do is you're gonna contract credit. You're gonna make cost of credit for almost a large number of people, most certainly higher. You're gonna have ripple effects outside of just the core credit card business. I think if you look at that, this is where I think even businesses, you know, banks that may not have as much exposure to late fees are probably gonna be much more interested in looking at this and saying, "Let's get the data." I encourage people to go back and look at what was done in the CARD Act around deterrence. There's a lot of things that are on the record that were submitted.
We'll continue to work with trade associations and other banks in order to try to advocate for this to hopefully get a better proposed rule. To the extent that that does not work, you know, put aside the legal piece of this. This is something that could come in play probably mid-2024. I leave people with this thought, Moshe. You know, we started back in April when this first came about.
We had a team working on this cross-functionally, who's done a lot of great work with regard to analytics around this, understanding it, understanding our relationships with our partners, how they work, and then really what's happening in the marketplace and other things that we can sit back and say, you know, how do we make sure we have deterrence and what things are available? 2 weeks ago, that team's gotten a little bit bigger. We've allocated resources, but they're carved out from the business, so they're working on that. We're gonna focus on the core business and we'll try to work with our partners. Our partners are in this fight with us. They're gonna lose sales potentially. I think everyone has a vested interest to try to get to a better solution here.
Got it. Okay. You know, clearly you've laid out a, an expected path of credit normalization kinda continuing during 2023. Can we just talk through that a little bit? Like, you know, what do you kind of expect to see? What would you like us to be watching in addition, obviously, to the, you know, the numbers you're gonna publish on a monthly basis. But anything else that we should be watching to kinda track that during the coming year?
Yeah. What we see, Moshe, and I talked about this in January on our fourth quarter earnings calls, we've seen a very linear progression in delinquency back to pre-pandemic levels, where you were moving almost at 10-point increments between 30+ and 90+ delinquency back. We haven't seen anything that says that trajectory bends at all. If you follow that through mid-2023, we should be back to historic delinquency, which means early part of 2024, you're back to what I would say more normalized losses. You know, why that normalization, how that path works, you know, not many people talk about it on the, the cable channels about the K-shaped recovery, we do see non-prime and deep non-prime, which is more migration for us. They've normalized back to pandemic levels.
What you're seeing is the top half, both in prime and super prime, migrate back down to those pandemic levels, right? That's where the path will come back as they go through excess savings. They're impacted by inflation, et cetera. The things that you should be looking at, clearly, we look at delinquency formation. You'll get that. A leading indicator also goes back into, how do you see payment rate evolve, right? You do not see payment rate and entry into delinquency and losses moving in nonlinear fashion. They may be slightly off a little bit, but they will move. I think to the extent that you start to see a more pronounced normalization of payment rate, that may be preceding an acceleration in delinquency. That's something that we look at.
Again, we go further upstream, Moshe, and we look at what's payment behavior pattern. Are you shifting from statement pay into MIN pay? Is there different characteristics? If you have multiple accounts, are you moving multiple accounts at once in how you pay? When you look at consumer spending behavioral patterns, are they shifting into lower transaction values, higher frequency? Is the timing of which you're doing that more aligned to potentially your payroll days, things like that. Those are also indicators that we look at as far as health. Not as visible to folks, but most certainly we would like to keep people informed with regard to that. Those are some of the things that we see. Again, we didn't open the credit box in 2021 and 2022, you know, beyond our 2019 or pre-pandemic levels.
We're not seeing a faster deterioration in the underwritten book.
Got it. Could you talk a little bit about the development of the RSA in this, you know, in this, you know, kind of path? Obviously, you know, your retailers share in the profitability, and they shared very handsomely during the, you know, the days when profitability was at, you know, kinda peak levels. They're gonna share in some of that, you know, on the way down. Just talk about that here and the protection that affords for Synchrony.
Yeah. You know, this is always one for me. When it went over 6%, a lot of people said, "Well, you know, gosh, the RSA, is the RSA broken? It's not working." You're exactly right. It's performing as we intended. We made more money. Our partners shared in that. That's what we had, is we wanna earn within. You know, we wanna cap our downside, we wanna cap the upside, and we're willing to provide more. The partners made more, we're making money. We're over that 6% on an ALR basis. That has trended down as net charge-offs have gone up, and we're now kinda sub 5% . I think when you look at it, you know, we've given guidance that you'll be in the 4%-4.25% for the full year.
I think the other thing, Moshe, I bring you back to, if you go back to some of the early guidance back in 2014 and 2015, we kinda said it was gonna be four and a quarter to four and a half. Here we are, eight years later, it's four to four and a quarter. Everyone thought, "Hey, listen, you're giving away economics and things like that." We're really been in the same place because of the alignment of interest. I would expect as you see charge-offs begin to again rise here and normalize in 2023, you're gonna continue to see the RSA decline.
Got it. Okay. As you think about, you know, some of the new partners that you've kind of engaged, have the terms been similar in terms of the, you know, the way these partnerships are structured? Are there any differences that you've called out in terms of how, you know, kinda some of those new partnerships are, you know, are structured?
Yeah. I wouldn't say they're dramatically different. What I'd say with any de novo program, it's tough to immediately go and share 'cause you have no back book. You have to kinda get there. When you talk to them about sharing mechanisms, it's okay, you're gonna start sharing in year 3 or 4. For that, it gets a little bit more, you know, challenging a conversation 'cause they have to understand it to and start to feel it. There's nothing fundamentally structurally that's incredibly different between those relationships and some of our prior ones.
I mean, you did start three programs, you know, during kind of the tail end of the pandemic, three.
Middle of the pandemic.
In the middle of the pandemic. Right in the middle, actually. You know, potentially, you know, large, really large partnerships and, you know, I know you said, and Brian Doubles has said that any one of them would've been a significant partner. Any updates that you can share on, you know, on those three?
Yeah. Listen, we look at all three of those and say they are kind of one in 10-year partnerships. I think our first one launched in June 2020, which is at the very beginning of the very beginning of the pandemic. You know, we're excited about each one of the partners. The one thing that's fundamental to our business model is the connectivity to the customer. We want the most loyal customer, whether you're a TJX customer, a Lowe's customer, an Amazon, PayPal. We want someone who's loyal to the brand and gonna use the product. I think when you look at a Verizon, a Venmo, a Walgreens, you have incredible loyalty, and you have a big install base.
You know, we said, you know, we expect a couple of those partners to be top 10 programs in a 3 to 4-year horizon. We've kinda consistently said that. I think everyone always asks us that this question as we're kinda a couple years in. Here's the way I would frame it for you. When we define top 10 programs, we look to interest and fees on loans, right? When you think about the credit card industry, you balance build first and then interest and fees come in. I think if you look solely at the balance build and the level of assets that we have with that, two of those are inside the top 15, one's inside top 10 already.
All right.
Now you're gonna get the interest and fees that follow off of that. We're really not to change the metric. It's interest and fees. We're really excited about the trajectory of those programs and how we're gonna continue. We have lots of opportunities, both with Verizon, Venmo and Walgreens, to continue to accelerate the growth there and reach more of the customers. We're happy with the programs.
Right. You, you've referenced some elements of this, a couple of times in a couple of the questions already, but could you talk a little bit about strategies in driving, you know, kind of e-commerce sales? You know, your digital connection to the customer. I'm sure that's something that's gotta be increasingly important to your partners. Can you talk about the, you know, the things that you're doing and how that's having an effect?
Yeah. You know, the first thing that I'd say, focus on our API and our tech stack. What we are focused on is making the experience incredibly seamless to the consumer. If you went to Venmo for a second, and you're inside the Venmo app, and you wanna do anything with credit, you have no idea that you're on or off the Venmo site. You're really on the Venmo site, but they're doing API calls to us. It's just a tremendously seamless experience. Taking that technology out to other places in, you know, digitally is incredibly important. Using technology with alerts and other features, incredibly important. For ones where we've embedded our apply applications and other things, we call it SyPI, Synchrony plugin into others' apps. We've kinda had the next generation.
Now the ability to use these kind of calls and do this, we can do better servicing, inside their app. It becomes much more seamless for the consumer. That's really what our partners want. They want that seamless ability to say, "I can service the account. I can buy in the account. I can provision it to digital wallets." This is a real big push now, right? As you kind of look at all the territories. Now it's digital wallets. Can I originate and push something into a digital wallet? Can I get into a digital wallet? Can I get it into the default tender type? Those are the things that we're working on with partners and that ability to get front of line.
Because once you're in the default tender type inside a digital wallet or a default tender type inside a wallet with a partner, you really have stickiness with the consumer. As you make less friction in that, they tend to stay with you longer. Those are some of the investments really around the consumer side. We then are trying to do much more with regard to marketplaces and how we drive consumers to our partners. Then the third angle is even how we're doing marketing campaigns and how we can, you know, get a better selection, a better execution, and better response rate inside of driving things from that contact point to closure of the sale.
You mentioned marketplaces and, you know, certainly, you know, you've got, you know, kind of verticals in healthcare, home, auto. Can you talk about the development of those, and are there others that, you know, that can be significant over time?
Yeah, we see power in these networks. If you look at auto, the fact that you can have an auto card that works at a tire, a muffler, oil and gas, a parts store, it just really allows that person to compartmentalize, to spend, drive value back to them and really resonates with the consumer. It's really adopted by the partners. They like the fact that, "Hey, I may not sell tires. Go get tires, but you ain't come back here because I'm selling you a battery." It really resonates there. Now, that has the power. What we learned in home and auto, it has power, but it can be expanded. Would you look down in our lifestyle segment and look at outdoors? Okay. I just sold you a closed-end secured loan.
Is there a network card I can give you that allows you to get accessories and other things you may not have closed on there? Theirs could be a network card. I think there's a lot of thought in our health and wellness business. We have CareCredit, a tremendous brand, strong NPS, great resolution. Now as you went to wellness, that's a whole different play. Can you stand something up where that's a value prop off the card or a separate card? That's something where you can lean into it. The important part when you get into these networks is defining what wellness is. You may have a different view than I. Really trying to find how the consumer, target consumer looks at it and how do you create the value prop and targeting that resonates with that consumer.
Got it. We talked about credit. What's the other side of that is the loan loss reserve. This is actually, I think, been one of the potentially positive surprises in 2023 is that, you know, I think it's led us to understand that the reserves of how strong those reserves are. Just talk a little bit about how you kinda, you know, see the reserve developing in your kind of base case. I guess what would happen if things got, you know, better or worse during 2023?
The interesting thing about CECL, I think, you know, all the industry participants will say we've gotten much better with qualitative reserving, which was probably a little bit more challenging, I think than pre-CECL. For us, it really goes back into it gives us the ability to look at scenarios and say, "Okay, I can look at my basic delinquency formation. I can put in scenarios for unemployment claims, you know, financial obligations, housing starts. I can kind of get a range of outputs." It really allows you then the freedom to say, "Hey, listen, if there's a different macroeconomic overlay or you take student loans, student loan overlay, you can look at those and really measure for that exposure and be prepared.
I think as we look at as we enter 2023 is we had a core model that proves the quantitative outlook. We had a series of overlays that covered us with things of student loans, inflation, and macroeconomics. As I look at 2023, while our base model may have taken Moody's at a 4.2 exit rate of unemployment in 2023. When you think about the development of going back to your mean loss rate and then a macroeconomic overlay, we're at a 5% on effect of a, you know, call it 5% overlay, 5% unemployment rate as you exit the year so. That allows you to be protective. I think for us, we're probably ones that look at data a little bit more in trends to kind of get into that overlay.
We're not gonna probably be peaks and valleys. We're gonna kind of be more analytical as we move through it. As you think about 2023, the things that kind of drive it up or down is unemployment is going to go significantly higher than 5%? Is unemployment really going to be longer lived? What's that trajectory? If it doesn't, what you'd expect to see is that qualitative reserve begin to manifest itself in your base model. Your qualitative come down, base model comes up, and you're essentially equal.
I think if we got to a point where we said, we don't see the macroeconomic going on the base model, you then have potentially a release of the macroeconomic reserve, or if you had student loans resolved, and we didn't think we had exposure there. Those types of factors, we'd look at. I would expect and this is important, I think, for the first quarter, Moshe, and then for the rest of the year. You know, I don't expect release of reserve. I think you're gonna see the seasonality piece come back. Everyone should think about TDRs because that lowers the coverage, but think about the loan coverage last year. You're gonna see that rate rise back from seasonality in the first quarter, and we're really gonna have growth-driven provisioning in the 4 quarters of 2023.
Right. Got it. From a funding and deposit standpoint, I mean, we've been having this discussion now for some time. You know, the deposit pricing competition's probably been a little hotter than at least I would have thought at the beginning, maybe, you know, roughly in line with where you were thinking. Any change of late, you know, in terms of that? Talk a little about your, you know, specific strategies within the deposit piece now.
Yeah. Moshe, if I go back to just kind of frame 2022 for a second, what happened is when you looked at 2022, what really started was you're in a dynamic. You look at pricing relative to money market mutual funds relative to the money center banks say, "Okay, what's your starting point?" We expected a slightly higher beta. What you saw among the competitive landscape is the beginning part of the year, people were trying really hard to manage beta. They saw outflows, they got aggressive in pricing. You saw betas accelerate really in the third quarter into, I call it the third week of December. The last 8 weeks it has been more stable, I'd say from that perspective. You can theorize a couple things.
One, you know, banks had a lot of excess liquidity and excess deposits they were willing to let go of, in the beginning part of the year than they want to hold onto it. Now they're willing to maybe release a little bit of that. They could be demand-driven when you look at, you know, demands on the consumer side for mortgages, autos, personal loans down, maybe C&I and real estate in the commercial world down. It's been much more stable as we look forward. I think that's one that's encouraging to us, you know, the first 6 weeks of the year and one we hope continues because, you know, as I think about margin of the business, the bigger variable for us is that the absolute rate is really the deposit beta.
With regard to strategy, I think last year what you've seen most of the growth came for us in certificates of deposit. People wanted a lock-in rate, which we said last year was a little bit more, you know, you think in the current period a little more and more painful as people went long. As we think about this year, probably good rates. We'll have some of that reset in the back half of the year, but most of the growth was in that. We went a little bit liability sensitive because of that. I think if you look at some of the growth that we're seeing, recently is more balanced between savings and CDs. I think the consumer is starting to sit back and say, "Wait a second, I have to lock rates in here.
I'm kind of I want to keep my options open." We're seeing savings kind of grow up here. The last point I'd sit back and say, if you look at the 29 largest banks, there's a cluster of banks that are digitally, we're in that are still experiencing, you know, even in a stable market, deposit growth. You have a, you know, a large number of banks that are still experiencing, I'd call it low single digit deposit outflow. We like the market where it is now. We hope it remains stable and balanced.
Okay. Maybe, just let's talk a little bit about capital. You've, you know, been returning capital at a fairly healthy clip. You still got a, you know, fairly, you know, nice cushion above your of your targeted levels. How do you think about that capital return? You know, asset growth is still strong. Not quite as strong as it was, but still strong. Put all of that together and talk to us about, you know, your thoughts on capital return.
You know, first off, I'm really proud of the company and what we've been able to do from a capital return standpoint. Moshe, we've had the conversation at one point we're at 18%. People ever wonder we get to target. Now we're at 12.8% CET1 at the end of December. We bought back 17% of the shares last year, which is more opportunistic being the fact we weren't trading at what I would say is intrinsic value. It's important part of our philosophy going forward. As I look at it, you know, one of the important steps to get to target was the continued maturation of our capital stack, part of which we accomplished a couple weeks ago with our subordinated debt offering that fully maximized our Tier 2.
We have a little bit more Tier 1 to do. Not in a rush to do that. At some point we'll come back and get that done. I think we look at things on a measured approach, and we wanna get to target. We have a plan. We're working on our capital plan now with scenarios, but we feel good about the resiliency of the company. The loss stresses, you know, what we saw from the CCAR assumptions was probably in line with what we expected. I again, I expect us to follow that capital plan. We'll be back hopefully in the second quarter with a non-objection to that. We're gonna continue to return capital to shareholders, you know, at a meaningful clip. Clearly, our first preference always is to grow RWAs.
While we're in this period where growth's a little faster, most certainly that will take precedence to capital return. I think as that normalizes, it throws off even more capital for us to return back to the shareholders. I think in a, in a measured pace, we should be approaching our target levels.
Let's see. Maybe there's a question or two from the audience. If you would like to ask a question, raise a hand and someone will bring a mic to you. Got one over here.
Is there a risk that when your retail partners start making less money from the RSA, they'll just wanna go back to you and renegotiate?
Yeah. Listen, I think there's cycles with the RSA where people make more, sometimes they make less. I think when they're making less, they're going back to historical norms. You know, is there a risk that they may come back and say, "Hey, listen. Can we renegotiate economics?" Of course, there's a risk they can ask. There's not a right to do that. I think the same way we didn't go and say, "Hey, when RSAs were over 6%, can we do something about it? We wanna reinvest in the program." While there is a risk, I don't really view that as something that we're, you know, particularly top of mind for us. I think the RSA is really alignment of interest.
I think, you know, as we go through the process of the CFPB and some of the mitigants, both from a cardholder perspective and how we're gonna deal with it, you know, the RSA will be there. I don't view that as a big risk for us, you know, as I sit here today.
Gotcha. Any others in the room? Okay. Maybe if you, if you think about, you know, kind of priorities, over the course of the next 12 months, I mean, what would you kind of put at the top of the list and leave the CFPB and leave the thing off the list for now? You know, when you think about the things that, you know, Synchrony wants to get done to really, you know, kind of maximize, you know, your relationship with your partners, growth in, you know, in assets and earnings, what are those things at the top of the list to do?
Yeah. The top two or three things I think about, Moshe, number one, we have an incredible franchise in health and wellness. You look at a vertical that has a broken ecosystem, that really has a need to help patients, through the shifting responsibility from healthcare providers and, or health insurance, excuse me, to consumers about being there for the consumer so that when they need to finance an emergency or to finance, you know, something for dental or vet, that we're there for them. I think you're gonna continue to see us lean in to try to help consumers in that space. There are, you know, verticals inside of there and specialties inside of there which we haven't really tapped yet, but that we're gonna be cautious into, such as, let's say, behavioral health.
I think there's a lot of opportunity. We're over-allocating resources into that segment, which we think from a margin and otherwise is a good investment for our stakeholders. That's one big piece as part of our strategy. The second big piece is around, we call it accelerating our customer experience. These are things around the marketplace we talk about. We have a lot of people go to mysynchrony.com. How do we enhance, make that rollout more robust, and how do we target more inside of there to drive consumer adoption and behavior for our customers? When you look at things we wanna do with Clover, how do we get our distribution to the masses? I think when you think about, you know, going to market, how do we get there faster?
This is really where we had a benefit around, you know, a reorganization almost two years ago into verticals and into finding organizations that were around growth, technology, and operations. Enhancing that customer experience and driving that so they wanna stay inside the Synchrony ecosystem and the partner base, big for us. We'll continue to invest there. We'll lean into that over the next couple years. Finally, we continue to invest a lot in digital in our underwriting. Digital is around, you know, go to the back end of the business, digital first servicing. We do everything that we can to allow the customer however they want to be serviced, wherever they want to be serviced, allow them to do as much as they want in that.
How do I get people never to have to call me and I'm predictive with regard to their concerns? When I think about how to service the account online, is it the best in class? How do I make the, you know, again, the digital shopping experience through digital wallets, provisioning into the wallet, default tender in the wallet. It's continuing to invest in that technology really to be there for the customer, and that. Those are the big areas of focus. I think if we can do that, if you can make the customer experience better, you can drive more customers to our partners. We're gonna be, you know, continue to drive value for them, and that's something that, you know, helps us, you know, renew with our partners almost every day.
Right. Right. You know, you've talked about the, you know, the fact that now you've got this vast majority, I think it's 95% of your partners, you know, or the rep there by revenue kind of protected through 2025, right?
You know, one of the things that's kind of occurred to me, we talked about a little bit last night, is this idea that, you know, I mean, do you think in the next cycle, you know, some of the partners that perhaps went elsewhere would, you know, kind of rethink that? I mean, is it? You know, is that something that, you know, that could happen? I mean, are there, you know? I'm assuming you still talk to some of those, some of the people there.
Yeah. When I sit back and say, you know, we had a, we had a couple small examples in our home space that came back to us in the fourth quarter, and we highlighted those for folks. What I'd say with the folks that have left, both in the, in the recent term and a little bit longer, it wasn't about capabilities. It was more about price and, and that risk-adjusted return trade-off, which is very difficult for us as a company. We never wanna fire a customer. We never wanna not to agree with a customer on price, but you sometimes get to that, and we have to do what's best for our stakeholders.
That said, if a partner wants to go back to us because they value what we've brought to them from an analytics perspective, from a digital asset perspective, from a credit perspective, and we can get on terms, absolutely, we go back and look at relationships and do that. We don't, we don't look at any of our people who are with us in a negative vein. We clearly want to continue to grow our business. We're in the partnership business. That's why when we ended those partnerships and even when we transitioned, we try to really take the high road because I've realized in being in this business 24 years, it is a short track, and you run into partners. Never say never, and we'll continue to look for further relationships.
A good deal. With that, we are actually out of time. Join me in thanking Brian and the Synchrony team for being with us today. Thank you.
Thank you.