How did you get into the payments industry?
My career has been primarily grounded in technology and the use of data, with the last 15 plus years deeply rooted in payments and fintech. In the late 90’s, I saw the tremendous opportunity in payments. My entry into the space was with e-ClassicSystems, where, as head of sales and marketing, I helped grow the company into the market leader for ATM channel management solutions serving some of the largest banks, credit unions and ISOs in the country, including Cardtronics, E*TRADE and Citizens Bank. Our success led to an acquisition by Jack Henry & Associates in 2004. Following the transition of the business to Jack Henry, my wife and I saw the opportunity to deliver meaningful analytics to financial institutions on their customers’ behaviors. Saylent was founded to address this need, and we’ve been at it ever since.
The payments industry is a complex web of bank and non-bank players performing a multitude of functions for client and consumer stakeholders. Where does Saylent fit in? What is Saylent’s unique proposition to the marketplace?
Saylent empowers financial institutions with data-driven insights and business tools to create the profitable products and programs the market desires. We are helping our customers capitalize on the wealth of data and knowledge resident in their business to deliver sustainable growth in a highly competitive marketplace.
Specifically, we have two solutions, Card360® and Account360®. Card360 is a payments optimization platform helping to increase usage, drive interchange revenue and minimize fraud. Account360 is a relationship optimization platform focused on driving fee income, building disruptive products and increasing customer profitability.
Ultimately, our focus is on making data analytics real and actionable for financial institutions. It’s about delivering results for our customers through smarter, deeper insights on the financial behaviors of consumers and businesses, so they can win the day in their markets and with their customers.
Saylent has partnerships with some of the largest payment processors in the world, including Jack Henry & Associates, CO-OP Financial Services, Vantiv and FIS. In the next six months, we expect to announce another partnership that will increase our reach to more than half of the financial institutions in the US.
How do you see the payments industry evolving over the next five years?
Clearly, the rollout of EMV, its corresponding liability shift and the continued adoption of electronic payments including mobile are the talking points for the industry. And they are happening.
In looking at the next wave of things to come, I believe the combination of the Fed’s push for faster payments, combined with the ongoing regulatory push and its impact on banking profitability, will create a disruptive push from non-traditional payment providers. Payment data is an immensely valuable commodity, and there will be an even more aggressive effort to gain access to that data and to use it to adjust consumer behavior. Banks need to be ready to win that battle beyond the fee game they are used to playing. They need to become innovative in the ways they interpret and maximize data.
This focus will extend to nearly every type of provider in the market, driving access to actionable data and measurable results well beyond their current capabilities. The processing power and sophistication of analytics platforms will enable a new set of prescriptive solutions that will move the needle for retailers, issuers, manufacturers and consumers.
Being a data and analytics person I am sure that you see a lot of patterns emerge about customer behavior. Is there anything that you have seen lately that has been a surprise to you in what your data has shown?
Honestly, I continue to be surprised at how little most financial institutions have yet to tap into their data as a competitive advantage. The very largest players – the top five or 10 banks, and not even all of them – have started to invest in business intelligence and embrace it as a true weapon for differentiation. But most others do relatively little with their customer data, despite its massive power in enabling institutions to stay a step ahead, rather than a step behind, what the market desires. There is no doubt that the regulatory environment is the biggest culprit here – community and regional financial institutions simply can’t resource business intelligence teams when the regulators are constantly knocking on their doors asking for the next thing. But they are going to have to figure out how – insourced or outsourced – to start paying more attention to their data in order to keep pace with the changing consumer marketplace that they are operating in.
Here are some strong proof points that should get financial institutions thinking hard about what analyzing their data can do for them: For those institutions that are more active with analyzing their data, we are seeing that they are achieving significant benefits over those that are not. For example, on average, they are realizing 44 percent higher transactions per card, 41 percent higher spend per card and 45 percent higher interchange per card.
Additionally, these institutions are growing their portfolio must faster on a year-over-year basis than those that are not actively analyzing their data. They are achieving a 53 percent greater growth in volume, 42 percent greater growth in spend and 10 percent greater growth in interchange.
With risk of fraud being something that is always top of mind for everyone in the payments industry how does Saylent help their clients to stay one step ahead of the game?
Properly dealing with fraud is such an important part of the cardholder experience and one of the key drivers of issuer profitability. According to a LexisNexis study, “annual fraud costs reached $32 billion in 2014, a 38 percent increase over 2013.” And while some of this liability will shift to merchants with EMV, the industry needs to attack the problem from all sides. For our part, Card360 has some of the most powerful data sets in the market to layer forensics data on top of the overall fraud mitigation strategy.
As we looked at the problem, we addressed the two predominant situations. The first is a major merchant breach, which has the greatest exposure and usually makes front page headlines. With Card360, issuers can immediately understand the financial exposure and risk from these merchants well in advance of network alerts. It has really helped financial institutions reinforce customer confidence while controlling their losses.
The second situation is more complex one but happens frequently. When an institution sees a spike in fraudulent activity, they can analyze those impacted cards to identify likely points of compromise. By analyzing the activity patterns of the impacted cards, Card360 prioritizes likely areas of breach.
In addition to the aforementioned situations, the system is also adept at analyzing fraud rules, particularly with an eye toward customer impact. Proactively understanding the downstream impact of reducing daily limits or limiting transactions from certain processing countries leads to a better customer experience while solving the goal of minimizing fraud losses. Incorporating each of these areas are best practices for a comprehensive fraud strategy.