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Synchrony Finalizes $2.2 Billion Ally Lending Acquisition

Synchrony

Synchrony has completed its purchase of Ally Lending, Ally Financial’s point-of-sale (POS) financing business.

The deal, first announced in January, includes $2.2 billion of loan receivables and a loan portfolio that includes relations with nearly 2,500 merchants and supports more than 450,000 active borrowers in home improvement services and healthcare.

“Through this acquisition, Synchrony deepens its presence and reach in the home improvement and health and wellness sectors including high-growth specialty areas such as roofing, HVAC, and windows, as well as in cosmetic, audiology, and dentistry,” the company said in a Monday (March 4) press release.

And as PYMNTS wrote soon after the deal was announced, Synchrony’s entry into the POS financing space gives it a further foothold with consumers beyond its credit card offerings.

“Synchrony’s borrowers show VantageScore credit scores, and 73% of the card portfolio score 651 or higher; there’s a similar percentage of installment loan borrowers in Synchrony’s portfolio with similar scores,” PYMNTS wrote.

That report also pointed to PYMNTS Intelligence data showing that 60% of consumers used an installment plan to pay for consumer products at some point in the prior 12 months, and in many cases for high-spending categories such as home furnishing and appliances.

The research also showed that 74% of installment plan users said they pay this way because it helps them manage spending, while two-thirds of consumers have said they want merchants to introduce installment plan options before checkout begins but at the point of sale.

Meanwhile, PYMNTS spoke last week with Mike Storiale, vice president of innovation development at Synchrony, for the series “What’s Next in Payments: Authentication: What’s New and What’s Next?

“Identity theft, phishing and data breaches have all become more prevalent. So, more robust authentication has become crucial to ensuring that the person is the right person involved in a transaction, that they are who they claim to be,” Storiale said.

Traditionally, that report said, payment authentication has centered around things like passwords, cards or phones and biometrics. But the landscape is fast shifting with advances in things like multifactor authentication and modern approaches like biometrics and tokenization, increasingly gaining favor.

“There’s been a lot of advancements in technology,” Storiale said. “We are trying to get to a point where we know the customer more deterministically as they move through their payment journeys. Customers expect personalization. They expect that we know them. And with fraud as an ever-present threat, we’ve got to get better at knowing who the customer is to avoid false positives and combat fraud at the exact same time. It’s a delicate balance.”