First Data Corp. has had three CEOs this year, and corporate owners Kohlberg Kravis Roberts & Co. are surely hoping the third one's a charm as the company continues lose hundreds of millions each quarter even as its revenue grows.
Jonathan Judge, former CEO of payroll processor Paychex, took over October 1 for Chairman and interim CEO Joe Forehand, who in March replaced Michael Capellas, who had been First Data's CEO since 2007.
Capellas' departure came not long after a full-year loss of $1.1 billion was announced, some attributable to the loss of Washington Mutual's business after its acquisition by J.P. Morgan Chase & Co. [Only a quarter of First Data's $9.3 billion in revenue comes from financial services.]
Judge hasn't yet spoken about his plans for the payments processing giant, but during his short tenure, Forehand focused on how First Data's existing expertise could be exported across borders. "We're going to expand our footprints in the markets that we currently are in and have a good position, but we're also going to selectively grow in emerging markets, as the electronification of payments continues to grow," Forehand said on the company's August earnings call.
Steve Boehm, First Data's senior vice president of global product for its financial services business, came on in April, the same month Forehand began as interim CEO. Boehm, who spent 17 years with Wachovia Corp. and helped to lead the team that handles its integration with Wells Fargo & Co., said the financial services industry is currently undergoing changes that it very rarely faces.
"For the better part of 25 years, the payments industry has been fairly consistent" in terms of who were the dominant players and how the regulatory framework influenced trends, he said. Many of those longstanding truths are no longer so reliable, he said. "We're at one of those inflection points where virtually all of them are changing."
The financial institutions First Data serves have undergone "a significant amount of change" over the past two years, among them the rapid growth of debit card payments over credit card payments.
"We at First Data are in the process right now of understanding our clients' needs and beginning to modify our products" in the debit field, he said. He declined to provide specific details to First Data's approach for competitive reasons, but said these changes will become clear within the next year.
Boehm did spotlight mobile as an area where First Data hopes to stake a strong claim, particularly as the market for mobile banking and payments remains largely unsettled. "There are perhaps 100 different business models ... [and] every one of them purports to be the right one," Boehm said.
First Data aims to be the proponent of the few business models left when the dust settles, he said. Its initiatives in the mobile space include GoTag, a contactless payment sticker it introduced in 2008; a mobile payment memory card developed with Tyfone Inc.; and an expedited mobile payment service developed between Obopay Inc. and First Data's Star network.
Mobile payments is also a focus of Banc of America Merchant Services LLC, a joint venture formed with Bank of America Corp. in 2009 to serve the clients First Data kept after the split of its earlier venture with JPMorgan Chase & Co.
The structure of the B of A venture was different in that it used First Data's own platform instead of one owned by the venture. First Data spotlighted this early on as an example of First Data keeping to its own strengths during the recession rather than taking a chance on new technology.