First Data Picks a Top Chase Executive As Its New CEO

Leading payment processor First Data Corp. reached outside the company over the weekend to tap Frank Bisignano, a veteran operations executive with experience at some of the nation’s largest banks, as its new chief executive officer.

Bisignano, most recently co-chief operating officer at JPMorgan Chase & Co., replaces Jonathan J. Judge, who unexpectedly announced Jan. 11 that he would retire for health reasons. Ed Labry, head of North American operations and First Data’s big merchant-processing business, has been running the company since late January as interim chief executive and will stay on, according to First Data.

Bisignano, 53, has headed global enterprises with as many as 170,000 employees, according to First Data. The company’s close ties to financial institutions and its parallels to his bank experience attracted him to the Atlanta-based processor.

“This is a company with an unbelievable customer base,” Bisignano tells Digital Transactions News. “I also think it’s the best workforce in the industry … I see it with a fabulous future and an incredible past.”

While First Data has the nation’s largest merchant-processing business through a number of alliances with banks and independent sales organizations and plays in virtually every corner of the electronic-payments space, it’s got plenty of challenges. Its business processing for credit and debit card issuers suffers from chronic price competition and slow growth. Also, the company still has $22.5 billion in debt on its books as a result of its 2007 leveraged buyout by Kohlberg Kravis Roberts & Co.

Some observers, meanwhile, claim First Data lacks cutting-edge technology in the fast-growing mobile-payments sector. Processor Fidelity National Information Services Inc. (FIS), for example, allows direct authentication and access to account credentials through its PayNet solution, says Richard K. Crone of Crone Consulting LLC by e-mail. In contrast, First Data uses what he calls “old technology” such as near-field communication (NFC) and trusted-service manager systems for mobile wallets from entities such as Isis and Google Inc.’s Google Wallet.

“They have completely missed the opportunity to bolster FDC’s most important stakeholders with their own mobile wallets, namely credit-debit card issuers and retailers with their own mobile wallets,” he says.

Bisignano declined to talk about specific technological or financial issues, including when or if the company might have an initial public offering. But he expresses confidence that First Data has a bright future. He sees his experience and First Data’s assets and position in the payments market as “a fabulous fit.” And his first job, he says, is getting input about what should come next.

“At heart, I’m a technologist … at heart, I’m a process engineer,” he says. Any changes at First Data, he says, are “going to be happening by listening to our customers and our workforce.”

Bisignano was one of JPMorgan Chase chief executive Jamie Dimon’s closest aides. He oversaw technology, operations, mortgage banking, and administration during his tenure at the bank, which began in 2005. Before Chase, he held a number of senior positions at Citigroup Inc., including chief executive of the bank’s Global Transaction Services unit, and at Smith Barney, a big investment bank that Citi acquired. First Data says he built Citi’s transaction-services business from the ground up into the largest of its kind in the world.

On Sept. 11, 2001, while at Citi, Bisignano was working in his Lower Manhattan office across the street from the World Trade Center and saw the Twin Towers burning after being hit by hijacked planes in a terrorist attack. Citi’s headquarters were a few miles north but the bank had 1.7 million square feet of offices at 7 World Trade Center, which also was destroyed. Citi appointed Bisignano to head up a recovery group responsible for relocating 16,000 employees.

Henry Helgeson, chief executive of Boston-based ISO Merchant Warehouse and a First Data client, says Bisignano’s experience in working with financial institutions should serve him well at First Data.

“We see the payments world moving in a direction that will include offers, loyalty programs, and discounts in conjunction with payments, something that will most definitely require a paradigm shift on the issuing side,” Helgeson says by e-mail. “First Data is in a strong position to capitalize on these changes we’re seeing in the industry, and by bringing in someone like Frank Bisignano who has experience on the issuing side—with strong ties to cardholders and merchants—alludes to the company’s plans.”

Helgeson also is happy that Labry will continue heading up First Data’s merchant operations. “The merchant-acquiring side will also be dealing with big changes, and having someone like Ed Labry continue to lead First Data’s efforts there makes a lot of sense,” he says.

First Data would not talk about why its board picked an outsider to head the company. Labry “stepped into the dual role as interim CEO at a time when we were unexpectedly without a leader at First Data,” a spokesperson says by e-mail. “Ed has done an outstanding job and we are grateful to him for his leadership, his long tenure at First Data, and his willingness to step into the interim CEO role. In addition to him managing the company’s largest business segment, we will continue to rely on Ed for support during the transition and as a culture carrier at First Data.”