DETROIT–Ally Financial is exiting the credit card business and instead will focus on point-of-sale lending, especially at medical offices.
As part of its new direction, Ally Financial has purchased a company specializing in loans for medical procedures that currently partners with three lenders, including Quorum FCU in Purchase, N.Y.
The company, which was founded in 1919 as General Motors Acceptance Corporation before being sold in 2006 and then rebranding itself after the financial crisis, said it is getting out of plastic cards because the business has been “stagnating.” Ally Financial partnered with TD Bank on credit cards. Its total cards portfolio was less than $100 million.
According to BankingDive.com, Ally Financial has paid $190-million to purchase Health Credit Services, a Charlotte, N.C.-company that offers unsecured loans to finance medical procedures. Ally CEO Jeffrey Brown said he wants to apply HCS’ point-of-sale lending capabilities to other retail sectors, BankingDive.com reported.
The Goal
The goal is to originate loans for Health Credit Services and hold them on its own balance sheet. In addition to partnering with Quorum FCU, HCS also partners with Cross River Bank and Meta Bank to underwrite its loans.
BankingDive.com reported that earlier HCS CEO Jennifer LaClair had said POS lending was increasing 18% to 20% annually.