PYMNTS.com asked industry expert and author of Paying with Plastic, David S. Evans to profile industry thought leaders and executives to find out what's next in the world of payments.

In this edition of our Captains of the Industry interview Series, David sat down with Mike McCoy, President of Wells Fargo Card Services. Wells Fargo has grown to be the 12th largest private employer and the 8th larget credit card issuer in the country. They took on Mike as President of Card Services in January 2009 and Mike has helped guided Wells Fargo through the tough economic climate.

While government regulations can be restricting to credit card issuers, Mike and Wells Fargo rely on creative thinking and strategy to lead them to innovation in the payments space. In the interview, Mike talks about how Wells Fargo is striving to understand their customer's behavior and adapting to what he calls the 'new normal' to achieve financial success. Listen to the entire audio interview to hear how Mike plans to bring Wells Fargo to the forefront of the payments industry.

To listen to the interview, click here

Interview with Mike McCoy | President | Wells Fargo Consumer Credit Card

Evans: This is David Evans, I’m honored today to be able to talk to Mike McCoy, who’s the president of Wells Fargo card services. Mike, thank you all for joining us today.

McCoy: David, thanks a lot for the invitation, I’m looking forward to it.

Evans: Whereabouts are you sitting today?

McCoy: In Des Moines, Iowa, where it’s hopefully going to break 20 degrees, but I’m not sure I’d bet on it.

Evans: Well I’m in London, where it’s sunny and somewhere in the 30s, so it’s not to bad. Mike, can you get into the future of the payments business, which is what I really want to talk to you about. Maybe you could give us a quick overview of Wells Fargo card services.

McCoy: I’d be happy to David. Probably it’d be a good idea to kind of level set it first with what we call the new Wells Fargo, post Wachovia. We’re going to serve now over 70 million customers. We do business with one in three U.S. households, and we’re the fourth largest bank in the U.S. in terms of assets. We have more retail banking locations than any other U.S. bank, and more retail deposits than any other U.S. bank. We’re the country’s 12th largest private employer, according to Fortune Magazine, and we also happen to be the number one rated green bank by Newsweek.

Now, as we transition into specifically Wells Fargo consumer credit card, we’re proud to have approximately 10 million credit card customers, and about $23 billion in card balances. That makes us about the eighth largest credit card issuer in the country, and we’re a relationship-based acquirer, and really only offer our credit cards to new or existing Wells Fargo customers. Now, we offer a broad range of products, from secured cards all the way through our by-invitation Signature Visa card.

Evans: Mike, you became president of Wells Fargo card services in January 2009. What’s it been like running a card operation in what has to be the worst financial crisis in our lifetimes?

McCoy: Well, I think you got that right. First of all, I tell you, it’s been exhilarating, and at the same time, it’s also been pretty difficult. In short, it’s been an incredible experience. We’re in the midst of the most challenging economic and industry conditions since the Great Depression. Industry profitability has been materially reduced, and lenders have been forced to reduce credit availability, and increase pricing to reflect the risk in the current environment.

Fortunately, Wells Fargo remains among the strongest and most highly regarded financial services companies in the nation, and for that matter, the world. And our strategy remains sound. Customer engagement remains our key to success, and we’ve always managed our card business conservatively, and remained very committed to providing our customers with our services.

Evans: Mike, despite the tough times, you just have to look around and you see there’s a lot of innovation that’s going on in the payments industry, not just in the U.S. but really around the world. What do you think the one, two, three major developments are going to be in payments over the next three, five, ten years?

McCoy: Well, I think there are a number of exciting things on the horizon. I guess just briefly, I’d say we expect to see a lot of developments in the mobile channel, in the online space, certainly with iPhone and smart phone applications. And maybe contactless continues to gains traction as well.

Evans: So credit cards – I want to get back in a second to what Wells Fargo is doing in the innovation area, but those sound like to me some of the key things that are going on. But I want to turn to a slightly different subject before we get into some things Wells Fargo might be doing. Credit cards was subjected to some pretty tough regulation with the Card Act, and continue to be subject to a lot of scrutiny by the government, I think the last round of the Card Act is kicking in in a few weeks. How is all this government regulation affecting the pace of innovation?

McCoy: Frankly David, I think it brings it to a grinding halt, as it’s kind of all hands on deck to react to the incredibly short time frames imposed on card issuers. But after that, it really starts to spark creative thinking, and there’ll be, I think, a lot of innovative breakthroughs. Now, we’re all allocating substantial human and financial resources to become compliant with the Card Act. We’ve made sure that innovation hasn’t suffered along the way, and we know that we need to continue to innovate in order to succeed, particularly because our customers expect it.

Evans: Let me turn now to ways in which Wells Fargo is participating in innovation. I suppose really cool stuff that you guys have in the works is top secret and you’d have to shoot me if you told me about it, but is there anything that Wells Fargo is doing that could help transform the payments industry in the next decade that you can at least share today?

McCoy: Well, you know, we do have a lot in the works, and we spent a lot of time recently understanding how our customers behave, and how their thinking has changed as they kind of adapt to what we call the new normal. As a result of what we’ve learned, we see new opportunities to help our customers succeed financially, and are building towards that. Specifically what we’re going to do is proprietary, but we’re going to be really busy.

Evans: When people talk about innovation in payments, they often focus on things that are going to get consumers excited, like paying with your mobile phone, or your eyeball, or what we had with pay-by-touch two years ago, where you pay with your fingerprint. Are merchants going to benefit from the next wave of innovation? They complain a lot about a lot of things, and I’m wondering whether the merchants are going to benefit from the next wave of innovation, and how that might happen.

McCoy: I guess the way we look at is that merchants, customers and issuers are all partners. A new payment innovation must benefit all three, really if it’s going to succeed. And if one partner doesn’t benefit from the new form of innovation, it’s most likely going to fail. So there’s a lot of innovation right now that’s focused on customer convenience. The easier it is for a customer to use their Wells Fargo card in this case, the likelier they are to pull it out of their wallet, whether that’s an electronic wallet, inside a mobile phone, or a traditional leather wallet in a purse or back pocket.

Evans: And as a result of that, that means, the merchants, you think, are going to get incremental sales as a result of the consumer pulling out the card?

McCoy: That’s right Dave. We would think that merchants are going to benefit based on the ease of use for customers that will help continue to drive sales, continue to drive year-over-year increases in sales volume, credit card sales volume, and continue, too, with the march on reducing paper in favor of some form of plastic.

Evans: Mike, that sounds great. We really appreciate your time (inaudible), we’re at the beginning of 2010. We really hope that you have a good 2010 and that Wells Fargo does as well. So thanks again for your time today, and I hope it warms up there in Des Moines.

McCoy: David, thank you very much. It’s been a pleasure visiting with you.

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Executive Bio: As President for Wells Fargo Consumer Credit Card, Mike McCoy is responsible for the overall business and strategic direction of the division, and leads a team of more than 5,000 team members who manage approximately $20 billion in credit card balances, representing 8.5 million customers.

An eight-year veteran of Wells Fargo, McCoy was named executive vice president, Human Resources and Communications – including Leadership Development, Learning and Development, Compensation, Recruiting and Corporate Sponsorships – for the Home and Finance Group in 2007. For the prior 6.5 years, he was group senior vice president, Strategy and Business Development for Wells Fargo Financial where he led the Retail Sales Finance and Insurance Services businesses as well as Marketing for the Wells Fargo Financial enterprise.

In addition to his business line responsibilities, Mike was an executive sponsor of the Wells Fargo Financial Rotational Leadership program and an original participant in the Wells Fargo Financial Reverse Mentoring program. He was also a founding member of the Central Iowa Diversity Council.

Before joining Wells Fargo in January 2001, Mike led several national distribution organizations within Financial Services, including serving as general manager for ING’s Financial Institution Division and American Express where he was chief marketing officer and senior vice president for American Enterprise Life in Minneapolis, Minn.

He earned his bachelor’s degree in business management at Missouri State University and has completed executive education courses at Stanford, University of Southern California and at ING’s international business school in Amsterdam, The Netherlands.

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