The Riverwoods, Illinois-based company stopped taking applications for its checking account last year after encountering too much fraud with the service, Hochschild said last year. The company shelved the product, which came with a debit card offering cashback rewards, just months after revamping it in April 2022.

The financial impact of the fraud was “manageable,” but it led service levels to deteriorate, which is why Discover pulled the product, Hochschild said last December. 

He said at that time that the product would be relaunched with “more advanced capabilities.” The company has declined to comment on the type of fraud the debit product was experiencing, the financial impact of it or the capabilities being added to the product.

Discover also expects to “put some substantial dollars” behind marketing the relaunch of the account offering this year, CFO John Greene said during the company’s first-quarter earnings call in April. 

The company is counting on the offering to give it a leg up against fintech rivals, Greene said in February.

“The relaunch of Discover’s cashback debit/checking account remains key,” William Blair analysts wrote in a May 24 note to investor clients, citing a May 23 meeting with Hochschild. “Discover believes the debit product can act as a second major potential entry point into the Discover brand, following the core credit card offering.”

Checking account balances “are expected to build gradually,” and the company anticipates opportunities to sell other services, including credit cards, savings accounts or loans, to those customers, the analysts wrote.

By Caitlin Mullen on June 2, 2023
Original link