Challenging The Payments Innovation Norm

Creating innovation that’s both meaningful and lasting requires more than just coming up with a great idea. In the latest installment of PYMNTS Commander In Chief Series, Todd Clark, President/CEO of CO-OP Financial Services, shared why challenging the norm and looking to solve real problems for consumers is so crucial to not only getting innovation, but also delivering the type of value that encourages those consumers to change and adopt new behaviors.

Here is an excerpt of the conversation.

PYMNTS: How would you define your company’s approach to innovation?

TC: Traditionally, we’ve relied on our partners and client advisory committees to help direct our innovation, which in a way made us a fast follower. We’re shifting our focus now to be more of a technology company with innovation in-house and challenging the norm, both of which are firmly placed in the core values of the company. I think it’s a little bit about setting and changing the culture of the organization, as we are now bringing our own viewpoint to the marketplace while still giving our clients the opportunity to have a great amount of input.

PYMNTS: What is the most innovative thing you’ve ever done?

TC: Personally, in my original company that started in graduate school with a college roommate of mine, we were in the prepaid card business for college kids. That’s not a new concept today, but in 1990 it was pretty farfetched and out there. It, of course, failed, and then it turned into the company we ended up being successful with, which also built one of the very first dial-up ATMs in the U.S. From the perspective of CO-OP, we are one of the first companies to think about and start to implement the use of machine learning in fraud detection on our card platforms.

PYMNTS: What do you wish you had more time to do?

TC: More time in any day would be wonderful. Outside of spending more time with my family, I wish I had more time to spend on just this type of thing — innovation and thinking about the future. It’s so easy to get so wrapped up in the operations and day-to-day management of the business that it’s hard to set aside time to just think about where you want to be five years from now. I think it’s absolutely crucial to have that type of time.

PYMNTS: What do you think that most people underestimate about innovating in payments?

TC: It’s probably innovating in general, but it certainly applies in payments, and that is consumers’ unwillingness to change their current behaviors. It’s pretty easy to conceptualize new ways of doing things, but shifting the consumer’s behavior is incredibly challenging. I’ll point back to that first company we talked about with prepaid card for college kids; it wasn’t terribly difficult for us to set it up and write the programming to accommodate it, but trying to get college kids to trust a company that was not their bank or their credit union with their money was incredibly difficult to do.

PYMNTS: What do you think is the best approach to shifting customer behaviors? 

TC: You can look to the payments industry and see how some of the more successful companies have done it. For example, Mastercard and Visa have both used a rewards-based system to put something in it for the consumer that is a direct reward to them. But even with that, it has taken several decades for credit and debit cards to be pretty prolific throughout the payments ecosystem. 

PYMNTS: What keeps you up at night? What concerns you most in the payment solutions space?

TC: If anything keeps me up at night, and not many things do because I’m typically so tired, it’s fraud and our ability to stay ahead of the bad guys. We as banks and credit unions have the money, and those guys are constantly on the attack. I worry about fraud and security probably more than I worry about most things.

PYMNTS: What trends and changes are you watching that are affecting the industry and your role?

TC: On a macro level, I look at generational shifts. Obviously, the move to digital, which is by no means even close to being complete, and then retail trends. In general, those are things for us to spend time on. If fraud is at the forefront of everything in my brain, then I am also following closely the most current attack vectors as well as where and how fraudsters are getting access to the money.

PYMNTS: What product has had the most impact on payments in the last five years and why?

TC: Consumers today are demanding everything to be now, fast, convenient and easy. The mobile phone and the advances with telecommunications, where there’s enough bandwidth to flow large quantities of data in a secure way, have really changed the way we think about payments and how we are going to think about payments going forward. There are certain countries around the world where they are skipping over the plastic completely and going straight to smartphones as the delivery mechanism.

PYMNTS: What person or company do you think “gets” innovation and why — and, conversely, who or what has missed it and why?

TC: Companies like Amazon, Apple, Google and Uber are really at the forefront of solving real problems for people. I try not to speak negatively of anybody so I won’t name any companies, but I think it’s fair to say that you can rest comfortably assured that those that don’t “get” innovation are out there doing essentially what they did yesterday and they’re not even really sure why. They’re just doing it again today because they did it yesterday, and I think that that is what’s leading to some of their difficulties.

PYMNTS: What advice would you give a young innovator in this space, and why would you tell them to heed it?

TC: I think the number one thing for any entrepreneur, innovator or business creator is to be curious. Ask questions, challenge the norm and think about things from a different perspective and point of view. In my mind and in my experience, curiosity is what leads to the most successful innovators and entrepreneurs.