One of the biggest challenges facing Equifax’s new CEO is regaining the trust of bankers who got spooked by last year’s massive data breach at the credit reporting firm.
Mark Begor, who started at the Atlanta-based company last month, said Wednesday that he wants to be transparent with banks and other customers about its efforts to improve its cybersecurity. Equifax first detected suspicious activity in July of last year, but more than five weeks passed before it publicly announced the breach in early September.
“We’re going to tell customers exactly where we are in the work that we’re doing,” Begor said during remarks at a conference in London that was sponsored by Barclays.
“When we get behind, we’re going to tell them. We’re going to tell them how we’re going to catch up. We’re going to show them our work streams, where we’re investing, and my sense is that’s building a lot of confidence in them.”
Equifax plans to invest roughly $275 million this year in response to last year’s breach, which affected an estimated 148 million U.S. consumers. Approximately $75 million of that cost is expected be offset by insurance payouts, resulting in net incremental costs of $200 million.
The $200 million price tag, which will primarily be used to upgrade the company’s information technology and data security efforts, is equal to 34% of Equifax’s net income in 2017.
Begor, whose hiring was announced on March 28, previously worked as a managing director at the private equity firm Warburg Pincus. Earlier in his career, he spent nine years as president and CEO of the General Electric unit that issued consumer credit cards and was later spun off as Synchrony Financial.
He succeeded Paulino do Rego Barros Jr., who had served as interim CEO since Richard Smith stepped down as CEO in late September amid the public uproar over the data breach.
“I wouldn’t characterize Equifax as a turnaround,” Begor said Wednesday. “But I’ve been in situations where you have to energize teams. I’ve been in situations where you have to win back customers. I’ve been in situations where you’re making massive investments in a business, so you have to be focused about where you’re making those investments.”
In February, Equifax announced the hiring of Jamil Farshchi as its chief information security officer. Farshchi the same role at The Home Depot in the wake of the retail giant’s 2014 data breach.
“When you’re going to invest this kind of money, we want to have the right people leading it,” Begor said.
Begor acknowledged Wednesday that Equifax’s brand has been tarnished by the data breach and said that he has yet to determine what the company will do with its U.S. direct-to-consumer business. Revenue from that business fell by 21% in the first quarter.
The products that Equifax has traditionally sold to consumers include credit scores and credit monitoring.
“We’ve kind of put that business on hold. We’re not advertising anymore. Post the breach, it was the right thing to do with the regulators and other constituents,” Begor said. “But I still believe there is an interesting business there. I want to spend time with the team to figure out where it is.”
Equifax reported first-quarter net income of $90.1 million, a decline of 41% from the same period a year earlier.
Shares in Equifax were trading at $114.76 late Wednesday, 18% below their level in late August, before the data breach was publicized. They have risen by roughly 29% since bottoming out at around $85 in September.