Q&A: Nick Yoong, Capital One Financial Corp.
Capital One Financial Corp.
Capital One Financial Corp., the credit card issuing company, acquired the HSBC credit card business in 2012. Powersports Business editor in chief Dave McMahon recently got to learn more about the company’s powersports plans, and the retail credit business as the company sees it, from Nick Yoong, vice president of card partnerships.
What’s the state of your current credit card partnerships in the industry?
“Capital One provides manufacturer retail financing for Polaris, Yamaha and Kawasaki, and we are very proud of the relationships we have, the oldest of which dates back to the late 1980s. We acquired this franchise from HSBC in 2012, and after a year of integration we are more committed than ever to the powersports industry and eager to help dealers grow their business. Most people are familiar with Capital One’s fun television commercials where we’ve done some very innovative things in the credit card space. We hope to bring some of that fun and innovation to our powersports financing programs, so dealers should keep a look out.”
How would you assess the state of retail lending in the first half of 2013?
“Generally speaking, retail lending in the first half of 2013 has been positive. We are seeing higher levels of spend when compared to last year and lower levels of risk (i.e. charge-offs). As consumer confidence has increased, so has their spending.”
What trends are you seeing from the consumer side in 2013?
“At the end of the day, we pay more attention to the trends of our risk and charge-off levels for our business. These risk levels for the first half of 2013 are lower than 2012, which means consumers are spending more responsibly on their cards and fewer of them are going delinquent on their accounts. This is fantastic news for the economic state of the consumer and ultimately the powersports business.”
Consumer confidence earlier this summer hit a five-year high. How does that effect volume at the credit card level?
“We are seeing larger purchases from the customers that are visiting our partners. In other words, customers that are out in the marketplace are demonstrating their confidence by making larger purchases. We can hypothesize that the larger the purchase decision, the more a customer will plan and do their diligence to ensure it’s a good decision before purchasing. This seems to hold true given our lower risk levels despite larger purchase volumes.”
Are you hearing of any challenges that dealers are facing at the retail lending level?
“While approval rates are back to near pre-recession levels, the regulatory environment around the financial services industry is very different. It has significantly raised the bar for the requirements to provide financing to a consumer and the disclosures that a dealer must provide to that consumer. The good news is that this has created a more transparent and fair lending environment for the consumer — which we fully support and believe in. We’ve made many changes to our program over the last few years, not just to reflect the regulatory environment, but really because it’s the right thing to do.”
What’s different about the retail lending space now compared to five years ago?
“Retail lending is growing and evolving — the variety of card offerings in the market place is expanding by the day. Dealers have more choices than ever with most OEMs carrying multiple lenders. The low interest rate environment has also enabled the credit unions to offer low interest rate financing with dealer incentives. This has provided dealers and consumers more options to help dealers make the most of the door swings they are getting as the industry recovers. As I mentioned earlier, regulation and oversight of the financial services industry is at an all-time high. As a result, consumers have become more aware of all aspects of lending in general which helps facilitate richer conversations about what products will best meet their needs.”