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Discover CEO on adapting to coronavirus pandemic

Roger Hochschild, Discover CEO & President, joins Yahoo Finance’s Alexis Christoforous and Brian Sozzi to discuss how Discover is helping small businesses amid the coronavirus outbreak.

Video Transcript

BRIAN SOZZI: I want to get right to Discover CEO Roger Hochschild. Roger, thanks for taking some time this morning. We do appreciate it. So we've seen a lot of-- we've seen a lot of big banks come out this week. And the quarter's not so good, but they have highlighted a lot of their efforts for small businesses. What is Discover doing in that regard?

ROGER HOCHSCHILD: So we-- because we own our own network, a lot of what we do is on the payment side. And so we're looking to support our small-business merchants every way we can. A big part is helping them facilitate PIN-less transactions. No one wants to touch a keypad anymore, so having the chip tap-and-go technology, waving signatures, changing the rules around card not present, those are all some of the things we're trying to do as a payment network to help small businesses in this incredibly challenging time.

ALEXIS CHRISTOFOROUS: Roger, Alexis here. What are you doing for individuals, especially those who are carrying debt like student loans or auto payments? Are you being able to extend any assistance to them?

ROGER HOCHSCHILD: So we're not in the auto-loan business, but we're extending assistance across all of our lending products, whether it's the credit card, personal loans, student loans. We have options in terms of deferring your payments for multiple months. For our CD products, we eliminated the early-withdrawal penalties in case people need emergency access to their cash. So, you know, luckily, we're coming into this with very strong capital, very strong funding, and so we can make the right long-term decisions and support our customers.

BRIAN SOZZI: Roger, have you made any changes to how you think about risk management and your risk-management practices? Look, we're headed for double-digit unemployment, if we aren't there already. Job losses continue. Does that change how-- what type of risks you take in your business?

ROGER HOCHSCHILD: Oh, it definitely does. Our biggest business is consumer lending, and so we're carefully watching the risk for new accounts that we originate across every product as well as how we look at the portfolio. So we've cut back on line increases, balance-transfer offers, those type of programs, but we continue to book credit cards and book new accounts. I think it's important to be a provider of credit for those who do need it in this environment. We just want to maintain and be even more disciplined in our underwriting.

ALEXIS CHRISTOFOROUS: Roger, we know nobody wants to touch cash right now. You touched on it in your previous answer, those screens. And even when I go to the store, there are still some merchants that are asking me to sign using one of those touchpads, and I actually have declined to do that. So how is the payments industry going to change long term when we come out the other side of this pandemic?

ROGER HOCHSCHILD: So I do think it will continue the push towards digital adoption. And there are some advantages we have, again, being a card issuer but also having our own network. I think you'll continue to see the growth of digital wallets. So whether it's Android Pay, whether it's Apple Pay, and just an acceleration of the move away from, you know, signatures required or even touching PIN pads.

BRIAN SOZZI: Roger, have you seen, in your business, a pickup in credit, in reserves, in charge-offs? And then secondarily, a lot of consumers are getting their stimulus checks soon. Do you expect that to be a-- to stop, perhaps, some of those increases in charge-offs?

ROGER HOCHSCHILD: So we're going to announce our earnings next week. So I'm limited in what I can say in terms of what we're seeing. But, you know, clearly we are getting a lot of demand from customers calling us asking for the ability to extend their payments.

I think there's a tremendous amount of uncertainty out there, though, in terms of how much of an impact all the government stimulus will have to offset the stress that consumers are feeling right now.

BRIAN SOZZI: All right, let's leave it there. Discover CEO Roger Hochschild, please do come back on earnings day. It's coming up, right?

ROGER HOCHSCHILD: Yep. It'll be next week.

BRIAN SOZZI: All right, we'll talk to you soon. Please do stay safe out there.

ROGER HOCHSCHILD: You too. Thanks a lot.