Discover Financial Services’ advertisements primarily emphasize its credit card brand, but the company is now planning to spotlight its less visible online banking operations.
For the last couple of years, the Riverwoods, Illinois-based company has been weighing when to begin advertising its deposit products, CEO Roger Hochschild said this week.
“My guess is that’s something you could expect to see going forward,” Hochschild told analysts Tuesday during a presentation at the Goldman Sachs 2021 U.S. Financial Services Conference. “It’s a significant area of opportunity for us.”
Discover operates a full-service online bank that offers checking accounts with cash-back rewards, savings accounts, money market accounts and certificates of deposit, along with personal loans and home equity loans. The $109 billion-asset company also markets student loans to consumers through education channels.
Credit card receivables at the end of the third quarter accounted for about 78% of Discover’s $90 billion in loan balances, while the company had $10 billion in private student loans and $7 billion in personal loans.
Meanwhile, direct-to-consumer deposits accounted for 65% of the company’s total liabilities at the end of September.
Discover sees opportunities to improve its cross-marketing by increasing the profile of its online bank, Hochschild said.
In recent Facebook ads, Discover cites online banking as the first of its three core services, along with credit cards and loans.
“We have a leading position in multiple lending products and actually a great model where we have strong consumer relations on both the asset and liability side, and so more and more we want to showcase our deposit products as well,” Hochschild said.
Putting more advertising weight behind its online banking operations could help Discover sell banking services to its student loan borrowers, Hochschild suggested.
Student loans “are a great way to get our brand in front of students and their parents when they’re making a very important and sometimes the first of many financial decisions,” he said.
Discover had been considering launching an ad campaign for its online banking services before the pandemic hit, Hochschild said.
“We decided not to do that because we, like most banks, saw such a huge rush of liquidity. And we were in an overfunded situation, so it really didn’t make sense to be spending money on advertising for deposit products,” Hochschild said.
Discover, founded in 1985, operates a robust credit and debit card network along with a global card network that includes the Diners Club brand. The company wants to make sure it is capitalizing on all of its advertising and marketing opportunities.
“We’re continuing to build the Discover brand, and expand consideration [for it], as well as get people to understand we’re not just a credit card issuer,” Hochschild said.
