KBW Talks Mobile Payments & More in New Study

July 11, 2019         By: Steven Anderson

Consumer finance is a strange market, and as such, it’s generated a lot of unexpected results over the course of its lifetime. However, word of a new report sent our way from Keefe, Bruyette & Woods (KBW) is going out on a limb and issuing perhaps the biggest surprise report of all: no surprises are expected this quarter.

Given that the title of the KBW report in question is “C2Q19 Consumer Finance Preview: Not Expecting Surprises,” it’s easy to see where that may be the biggest surprise of all. But looking at the highlights of the report sent our way, it’s clear that there actually isn’t all that much going on in the consumer finance market.

KBW goes right for the throat by leading off with the bottom line: consumer finance stocks are trading at depressed prices, but even these prices are still attractive, even though it’s somewhat late in the cycle for such purchases to go on. KBW even points out a few particular winners, including American Express, Alliance Data Systems, Capital One Financial, and Synchrony Financial.

As for the overall economic outlook, it’s a good news / bad news situation: the bad news is that the overall global economy is looking “cloudy”, but the environment in the US is reasonably good. There are plenty of potential issues worldwide—the ongoing Brexit issues, trade wars and so on—but the US itself isn’t looking half bad, and that’s one major market well in play. In fact, some reports suggest that US consumer debt is actually trending upward.

That’s just the start of what’s going on in consumer finance, and with a second report coming out targeting the mergers and acquisitions going on in the payments industry, it’s clear that we’re going to see quite a few new developments emerge in fairly short order. While KBW may not be expecting a lot of surprises out of this quarter—and this quarter was fairly straightforward—I look for this lull to be extremely temporary indeed.

There’s simply too much coming up to allow the consumer finance environment to stay quiet for long. Once these developments hit, we may well find ourselves longing for the good old days when there just wasn’t much to say.