Discover 2009 Annual Report Download - page 8

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2010 and Beyond
I am proud of the results we achieved at Discover in 2009. As we entered 2010, we had positive
momentum from our efforts to expand acceptance and grow direct-to-consumer deposits, and credit card sales
volume had also begun to grow again. I expect that positive momentum will continue into 2010 and beyond.
However, we will be affected this year by continued high unemployment levels, by accounting rules that now
require us to account for all credit card loans on our balance sheet, and by changes to credit card rules.
So 2010 will be a year of transition. But longer term, I have faith in the strength and resilience of the U.S.
economy, and in the employees of Discover. I am confi dent we will overcome the near-term challenges and
move toward more normal levels of profi tability.
Our Future: Direct Banking and Payment Services
Throughout the recession, Discover focused on managing its business conservatively. It was the right focus,
and Discover distinguished itself from competitors in terms of more stable profi tability, credit card sales volume,
credit card receivables, credit quality, network volume and other metrics. At the same time, we acquired and
invested in the Diners Club International network, and established a greater presence in direct-to-consumer
deposit products and consumer loans as part of our plan to build for the future.
Moving forward, we have set our sights on becoming the leading direct banking and payments company.
Discover is starting from a position of strength. We have a number of unique assets, including the Discover
brand, a large customer base and a strong banking deposits foundation. We also have our own credit and
debit networks, a path to global network acceptance, and strong in-house customer service and information
technology functions. In addition, we have a number of capabilities on which we can build, including
rewards leadership, service leadership, direct marketing expertise, a low-cost infrastructure in direct banking,
and strong credit, collections and online capabilities. Our plan is to build on these strengths in the years
ahead.
Direct Banking: In Direct Banking, our Discover card business has been the cornerstone of our direct
relationships with customers. Over the years, Discover has earned a reputation as a trusted brand, and
consumers have responded extremely well to the expansion of our direct-to-consumer banking products. Those
products include certifi cates of deposit, money market accounts and savings accounts, as well as personal
and student loans.
Because we have direct relationships with our customers online, by phone and through the mail without the
high overhead of a branch-based service model, we have a lower cost infrastructure. This means we can
pass the savings on to our customers through very competitive rates and fl exible terms. Being a direct bank
also allows us to focus on products with more growth and profi t potential.
Our direct banking products include:
• Our fl agship Discover credit card with cash rewards and no annual fee.
• Certifi cates of deposit and money market accounts that provide some of the best rates
and service in the industry.
• Personal loans structured to provide value to customers who want to consolidate and pay down debt.
• Student loans to help with educational expenses at many of the nation’s leading colleges and universities.