Frank Bisignano has his work cut out for him.
Bisignano is set to become CEO of Fiserv, a core banking software company with 12,000 financial institution customers, in July, replacing longtime CEO Jeff Yabuki. Bisignano had been chairman and CEO of First Data, which Fiserv acquired last July, and then became president and chief operating officer of the combined company.
In his new role, Bisignano will need to fulfill the $1.2 billion of cost cuts and $500 million in new revenue streams shareholders have been promised will come from the merger. He will also need to cross-sell Fiserv's bank customers on First Data's payment technology.
Bisignano has been in banking for a few decades. He ran Citigroup's Global Transaction Services unit in the early 2000s. He joined JPMorgan Chase in 2005, and became CEO of its mortgage banking unit in 2011 when it was still recovering from the financial crisis. He rose to co-COO and,
In an interview, Bisignano responded to questions about the merger, Fiserv’s future and what the financial world will look like after the pandemic. He downplayed the pressure to cut costs, emphasizing his track record of producing revenue growth and the company's investments in technology like the point-of-sale system Clover that helps banks compete with Square and other fintechs.
Lately you have been leading Fiserv's coronavirus response. Can you tell me about some of the things you've been doing both internally, setting people up to work from home and such, and to help your clients?
FRANK BISIGNANO: At the end of the day, we're in business to serve our clients and our first and foremost concern is to protect our employees. Those are our two most important constituencies, along with our shareholders. Because we're a global company, we started our pandemic planning at the end of the fourth quarter and early stages of the first quarter. We have more than 40,000 people working remotely. We communicate to our clients every day. We invested heavily in our digital capability to deliver to them along with building a bunch of other tools, trying to help banks and merchants with the Paycheck Protection Program during this difficult time. We galvanized early, instituted our recovery plans, began our remote working and employees who needed to come into the office that needed our production facilities, we gave a 25% pay increase.
Was it a technology challenge to get everybody working from home, or did everyone pretty much have a laptop and the things that they needed to do that?
Getting 44,000 people working from home took a little work, but I wouldn't call it a technology challenge. We're fundamentally a technology company, and we had all the capabilities. I think the team came together. Sometimes in a difficult situation, things can go one way or the other. In our case it was selfless teamwork by all the team members.
Banks’ role in the PPP has been pretty controversial. There’s been a lot of criticism of banks giving loans to large companies and taking the most profitable route for themselves instead of the route that would help the people in the most difficulty. Do you have any thoughts on how that has gone down?
Our job was to be an enabler of small businesses and banks. We enhanced our technology, both at the point of sale, on our Clover platform, and throughout our community bank network. Our job was an enabler, and we were that for both small businesses directly and for our bank partners across the board. I think our bank clients are very pleased with how we performed.
What kinds of enhancements did you make to Clover?
The ability to interface so merchants could actually apply for PPP. And then we partnered with some [Small Business Administration] banks to get them the loans.
When you think about the Fiserv and First Data merger and what's happened in the wake of that, how do you feel that's been going and what outcomes are you most happy about?
Jeff [Yabuki] and I embarked on this journey months ago, and we've been working side by side. Our leadership teams and executive committees have operated together selflessly during this crisis. Jeff and I have worked very closely together every day, with the objective of having one team and enhancing what we do for clients and ultimately creating unique value for clients and shareholders. In terms of how that's all come together, we raised our revenue synergy targets because the team is working so well together and we're watching enhancements to service along with productivity while talking to our teammates as much as humanly possible. So I think it's going about as well as could be.
Fiserv has said it will obtain "cost synergies" from the First Data acquisition of $1.2 billion. How will you be able to cut $1.2 billion in this environment?
There’s the infrastructure of the company — that’s everything from data centers to real estate to technology infrastructure. There's procurement spending, which is where we spend with outside providers. That’s a very significant number. Then there’s corporate overhead. If you think about a merger of this size, that $1.2 billion is 12% of our expense base. And if you think about two big fintechs with corporate overhead, vendor spending and infrastructure, it has nothing to do with anything other than the opportunity to reduce that when we put the companies together.
How many layoffs have there been?
We've been fortunate. We use attrition as our friend. We've always had that philosophy. We also have a large contractor workforce. And we were able to convert some of the them and we've affected some of that in a large way. We've been working very hard on how we've taken expense out and not affecting people in a manner. We've had the benefit of having a lot of outside contractors and having a lot of outside spending. And that's really where our focus has been.
Are you saying there haven't been any layoffs?
We've reduced headcount in some sites where we shut down sites. And we've made changes, but this is not a number that we're counting, to be honest. We're working to get as much of the outside spend out of the company as humanly possible. And of course there's some redundancy when you take two corporate overheads and put them together. We also increased our revenue synergy, and we talked about $500 million in innovation investment spending. So we're reinvesting back in the business, and we're developing talents in the process.
Where is that additional revenue coming from?
It's coming from the combination of our bank partners and our Clover platform, our merchant business, how we take our capabilities and bring them together. We’re an excellent partner with banks, and we’re bringing them great merchant capabilities through Clover. We have digital innovation in disbursement and areas like how we deliver payments. So payment innovation is at the top of the list.
It probably wouldn't surprise you to hear that when I talk to bankers, they sometimes express frustration with some of the traditional core vendors. Some of them have had these cores for decades and they find when they want to adopt emerging technologies, it's tough. It just doesn't always work. Some of them are thinking about going to a cloud-based core vendor and a pay-as-you-go pricing model. What is your thinking about that?
I have a lot of thoughts about it, so I'll try to synthesize it down for you. We are a strategic partner to our clients, and we're going to continue to work on our engagement model, our service model, our innovation model and how we deliver value-added services that integrate well. We have a privileged position with our clients where we make them the centerpiece of our business. We're going to continue doing that, and we're going to continue working on how to deliver best-in-class service and products to them. The plethora of opportunity we have to help our clients serve their clients better is a very privileged position. This company was built on that, it has a long legacy of that and I believe we will continue exactly in that innovation space to be the best innovator for our clients. And that's why you see Clover and the banking relationships coming together in such a good way.
When you think about innovation, do you think mostly about payments or are there other types of innovation that you're thinking of expanding into as well?
I think innovation is transformational. It's transformational payments, it's transformational digital, it's how do we bring all the data we have inside of this company in a manner that helps clients. If you look at our earnings release, you'll see that we talked about using our SpendTrend product and distributing it to our clients, banks, governments and businesses, small and large. That capability to help them in their decisioning causes us to believe we'll continue to differentiate in the client's office.
What do you think the banking and payments world could look like when things theoretically go back to normal? Are there preferences that are permanently changed, or do you think everything will go back to normal in terms of what consumers want, what businesses want, what bankers need to provide?
I think the speed at which digital is changing things is going to increase — it's increased right now. And I think we're going to define a new normal. Who knows what we thought normal exactly was, because in transformational businesses, you're always recreating a norm. And now we've had an event that has caused us to see many different things. What you can count on from Fiserv is a value in moving information and payments at the speed of light will be what continues through as we go on this journey. We will be part of the digital transformation of our clients.
Do you see any new opportunities for Fiserv when the pandemic is over?
That's what our innovation spending is about. It's about investing in the future, investing in our clients, investing where we believe our clients can benefit most from a highly valued product set. It's the issues that we've talked about multiple times, how are we going to help our clients help their clients, whether that's at the point of sale, in an e-commerce fashion, in a software fashion, in a banking remote deposit fashion. All of those are going to expedite and we’re heavily invested in that and we'll continue to heavily invest.
What about things like open banking, virtual assistants and robotic process automation, some of the current newer technologies that people are thinking about?
Virtual assistants have been spread across our whole company. And it's one of these things that are enhancing value and ultimately will bring synergistic revenue opportunities because of the innovative technology. We used RPA and robotics to build engines to help move many things during this pandemic. So we've been heavily invested in RPA. We're heavily invested in artificial intelligence, and we're going to continue to use them to help our clients run their business.
You’ve been called a Mr. Fix It and a turnaround person in some of your roles at JPMorgan Chase, where you had to relocate a large team when the World Trade Center collapsed on Sept. 11 and where the mortgage business later had to be revived, and at First Data. What are the keys to turning a bad situation into a good one?
My career has been about growing. It was about growing the top line. It was about growing talent. It was about building a team. It was about, how we're going to have market-leading positions through technology, innovation and service. First Data had a bunch of problems and a bunch of CEOs, but ultimately what we did was build technology, grow the top line and delight clients. If you go through my career, that's what you would see. Sometimes it was a problem situation, but many times it was just building a business that continued sustained growth. You would see continued revenue growth, continued business building and strategic investing in innovation. Sometimes it was in a situation that needed more help than others.
Sept. 11 was a crisis. I was a role player and I happened to have 15,000 people. At the time I thought it would be one of the most unfortunate events in my life. Maybe it was. I later got throat cancer, which I thought was a byproduct of that. We’re in a pandemic now, and you could say nothing could be worse than what we're seeing for the safety and health of people right now. There are going to be these situations. You need to be able to grow business while servicing clients while delivering shareholder value while building a great team. And we have a great team at Fiserv.
