The path Margaret Keane chose was her own from the start.
As the daughter of a New York City police officer, it seemed almost a foregone conclusion that Keane would follow the family tradition. All five of her siblings either worked in law enforcement or married cops. Keane went her own way and took a job at a Citigroup call center instead. She eventually ended up running the former GE Capital Retail Finance, the largest provider of private-label credit cards in the country.
Now the company she leads is in the process of separating from its own parent — General Electric — following an initial public offering last year. But as Keane is well aware, there are risks that come with venturing out on your own, not to mention a lot to do.
As a new company, Synchrony Financial needed to build its own board and corporate governance. It needed to tell analysts and investors how it would compete in the ever-changing payments space. It also had to soothe the concerns of employees and credit card partners who, nervous about the disruption, might look for stability elsewhere.
Keane and her team had branding to consider as well, with decisions to make about whether Synchrony should adopt a new color scheme or give a nod to GE's iconic blue. (Synchrony ultimately decided on a distinctive yellow and black design.)
The company ended up being well prepared for its IPO in July 2014 — the third-largest of the year — managing to exceed expectations.
"When all of the initial plans were put together, there were a lot of constituents who thought that the timelines and the goals were aggressive," recalls Keith Sherin, chairman and chief executive of GE Capital and vice chairman of GE. "But we have been able to meet all of our original timelines and sometimes even accelerated the execution against those plans. The results have been better than what we expected in terms of the outcome. Margaret and her team have met every one of our key objectives."
Synchrony's stock price jumped 50% in the year following its IPO. Despite a dip, it was still up 38% as of early this fall.
Keane's team has been able to sign 88% of its retail card receivables to contracts that extend to 2019 and beyond. Employee attrition has been negligible.
Synchrony's staff and outside observers attribute the success to Keane's deep understanding of all aspects of the business, along with her ability to collaborate with different stakeholders — employees, customers and investors.
"Margaret probably has the best broad leadership skills I've ever seen," says Brian Doubles, Synchrony's chief financial officer. "She is able to connect on a personal level with individuals."
As Doubles describes it, Keane's style is to offer input where it'll help, without being a micromanager. "One of the most impressive things about Margaret is just her overall command of the business," he says. "She lets individuals on her staff run their respective areas, but she finds the right places to add value."
Synchrony has submitted an application to the Federal Reserve to complete its separation from GE — a process expected to be complete either later this year or in early 2016. (GE still owns roughly 85% of Synchrony.)
Once independent, the company will exceed $50 billion of assets, a threshold that could subject it to regulatory stress testing. Synchrony has a thrift charter, and therefore won't be automatically required to participate in the Comprehensive Capital Analysis and Review process. But it is widely believed that the regulators will make Synchrony do so, and management is preparing for it. Observers don't seem at all stressed themselves.
"Margaret has many wonderful gifts. One of the most impressive is she has a lot of substantive and technical knowledge but she can explain it simply and clearly. Not everyone can do that," says Tim Pawlenty, former governor of Minnesota and CEO of the Financial Services Roundtable, a trade group of which Synchrony is a member. "The real measure will be how Synchrony performs in the coming years, but they are off to a good start."
TACKLING THE TRANSITION
Any time there is a disruption, there is a chance for competitors to pick off employees and customers. And that was an even greater concern for Synchrony, which for more than 80 years has benefited from the shade of the GE umbrella.
Though the chance to lead Synchrony was an "incredible lifetime opportunity," it was also bittersweet for Keane, who "loved GE," she says. She realized this was a feeling that some of her colleagues may share. Many employees join GE with the intention of spending their entire careers there. Keane knew that establishing the same passion for Synchrony would be key.
"Culture was something that I knew out of the gate was going to be important," she says. "You are coming out of a brand that is as iconic as GE. There is a tremendous amount of brand equity there built in for employees."
Keane and her team worked to figure out what parts of the GE culture they would like to take with them and what values would constitute its own unique identity. They deemed a focus on execution and innovation as essential.
For example, as part of GE, Synchrony benefited from its parent company's brand name and creditworthiness, so it was able to secure funding at lower rates. But as an independent company it has needed to lower these costs, partly by gathering more deposits.
Its Innovation Station is a unit meant to cultivate and test ideas for new programs and technological advancements. The unit has worked with customers — sometimes even traveling to their houses to watch how they complete transactions in the real world — and used that information to make Synchrony and its services, like mobile deposit, more relevant.
Involving customers in the design process has helped increase the $6 billion of deposits the company purchased from MetLife Bank in January 2013 to $24 billion at the end of June.
"We wanted to be a little more innovative, a little more bold, so we added 'bold' as one of the elements of our culture," Doubles says. Such tactics ultimately helped retain employees, he adds. "Once we were able to communicate that we are going to keep all of the things that you like about GE but make it better that eased a lot of their concerns."
But Doubles also gives some credit for the "extraordinarily low attrition rates" directly to Keane. She was "front and center with all different levels of the organization, communicating how we were thinking about the future of Synchrony and that the future was very bright," he says. "And that resonated."
Keane emphasized that being an independent company would allow Synchrony to "take bigger swings" and that "innovation is at the forefront," says Florin Arghirescu, a senior vice president in information technology at Synchrony and a 16-year veteran at GE. "Probably the most important advice that Margaret gave me was, don't be afraid to fail," Arghirescu says. "If you are afraid to fail, then you aren't taking big enough swings."
This has included the push to find "those incubators that are in the early stages and incorporate them into our world and be quicker to market," Arghirescu says. For example, Synchrony invested in GPShopper, which builds applications for retailers, earlier this year. The move complements Synchrony's own mobile offerings, which includes functions such as account acquisition and reward redemption, and expands it for retailers.
FROM CALL CENTER TO C-SUITE
Taking risks is something that Keane knows about personally. She defied family tradition by forgoing a career in law enforcement. In her 16 years at Citi, she moved up the ranks until she was the director of retail bank operations. She left in 1996 to become a quality leader in GE Capital's vendor financial services business.
Through that first job in customer service, Keane got a "good sense of the real fundamentals of how business works," she says. "You understand how important your frontline folks are from a customer service experience. They are seeing it all. They are a great source of information and we can learn from them every single day. I stay close to that part of my organization."
Keane still regularly does roundtables and site visits with employees, including those at the call centers. It was partly this approachability that made Keane the "natural person" to run Synchrony when GE announced in the fall of 2013 that it would spin off the business, Sherin says.
Keane had run the unit since 2011 and had strong relationships with its retail partners from previously heading the cards platform. She led the effort to provide transparent information to customers about changes to the business, and Synchrony ultimately retained all of its largest partners, Doubles says.
Signing the majority of its customers to five-year contracts is "one thing they did well before going public," says Sanjay Sakhrani, an analyst at Keefe, Bruyette & Woods. "That put them in a position where they had their customers locked up for a period, and that gives people comfort."
Synchrony announced a deal in April to take over providing credit cards for Guitar Center from Capital One Financial. The retailer, which sells musical instruments, lighting equipment and accessories, felt that Synchrony's approach fit with its own culture, says Susan Starnes, senior vice president of services at Guitar Center. Synchrony's separation from GE did not concern Starnes since "there is a difference between separation and having that freedom and complete turnover and change."
Synchrony has assigned a business development group, marketing lead, project managers, a dedicated IT team and other associates to work with Guitar Center to ensure a smooth transition, Starnes says. This helped her company think through everything from the creation of in-store marketing to associate training. "The reputation of the team that works for Margaret is good," Starnes says. "There is a diversity of thought there and that always comes from the top down."
STICKING AROUND FOR ANOTHER 80 YEARS
The payments space is undergoing vast changes, with more consumers moving away from using their traditional plastic cards to completing transactions through mobile wallets, something that Keane anticipated. Keane has "a personal passion for emerging technologies," Pawlenty says.
Keane has been pushing the company to invest in mobile since as far back as the financial crisis. Being at the forefront of technological change will help ensure that Synchrony is "around for another 80 years," Keane says.
There are concerns that as customers move to mobile wallets they may leave their private-label credit cards behind and simply use their general purpose credit cards. So Synchrony is working to be a leader in those developments.
Keane is a champion of its Innovation Station, which opened in 2013. So far, that unit has helped make Synchrony one of the first issuers to offer private-label credit card holders the ability to add their cards to Apple Pay and Samsung Pay. The company was also an early investor in the mobile payments app LoopPay, which was eventually acquired by Samsung.
Keane's "vision was to create a space that really allows us to push the boundaries," Arghirescu says. "We can engage the startup community on a partnership perspective. We have the ability to move faster and the ability to attract talent."
Keane views the underlying fundamentals of the business as relatively unchanged whether Synchrony is trying to get customers to use their cards through a mobile wallet or from their physical wallet. It's about ensuring customers want to use that card over others by making it beneficial.
"Synchrony has been a leader in terms of getting mobile enabled through Apple Pay as well as Samsung Pay," Sakhrani says. "They talk a lot about how they are helping merchants with mobile technology and enabling payments and providing data. They are definitely checking those boxes."
It is perhaps too early to tell how Synchrony's focus on mobile will pan out, says Dan Werner, an analyst at Morningstar. The company has "a lot of balls to juggle as they get ready for the separation" and all that comes with it — developing its own internal systems, lowering funding costs and dealing with heightened regulation, he says. But Keane should get credit for handling these various responsibilities well. "She has done a great job so far," Werner says. "And just based on how the stock is doing, I think investors tend to agree."
CHOOSE A SEAT AT THE TABLE
Now that Keane is CEO of the $54 billion-asset Synchrony, she joins a small group of female executives that lead large, publicly traded financial institutions. But she hasn't always put herself out there. Even as her career was advancing, Keane had a tendency to take a seat off to the side during meetings. But once she joined GE, another executive stopped her and asked why she was sitting in the back row. "He told me, 'Get up here to the table,'" she says. "He observed that behavior and corrected it. All you have to have is that confidence once and then next time you won't sit in the back row. You will sit at the table. I think women need to have a little more confidence in ourselves and our abilities and sit at the table sooner."
That's something Keane has since tried to do throughout her career and convey to others. She even became involved in mentoring high school girls through the Ridgefield, Conn., chapter of A Better Chance, a nonprofit that helps disadvantaged students. Keane's participation on the Ridgefield board showed "our female scholars that everything is achievable if you are motivated," says Philip Lodewick, who founded the chapter in 1985 and has known Keane for about 20 years. "Margaret is a great role model in terms of teamwork," he adds. "She is one of those people that everyone respects her judgment. When she speaks, everyone listens."
As one of the few female top executives in a male-dominated industry, Keane recognizes her responsibility in promoting diversity, something that she says millennials value greatly in their employers. "The world is more diverse," she says. "Millennials in particular are coming into the workforce and they are extraordinarily open-minded about everything. As a leader you have to recognize that's who we are trying to attract now."
Overall, men probably still remain more confident in the choices they make, Keane says. For example, a man may take time off to attend a child's baseball game and be fine with that decision. However, a woman may go and then start thinking, "Should I have stayed? Should I have left?" she says.
"I think they both make the same decision," Keane adds. "It's really just that men maybe compartmentalize a little better."
Women need role models who demonstrate work-life balance and acknowledge that it's fine to put family first, Keane says. She did this herself when she left a demanding job at Citi. It required 14-hour days, and Keane had a 2-year-old and a 5-year-old at the time. "I decided to take a step back and I came to GE to a much smaller role," Keane says. "It allowed me to refresh myself. Since I left a company that I was at for 16 years, I had to re-create my brand and all of my relationships. I started from zero. I think for me that was a very good decision and I've never looked back."