The Executive Interview Series provides readers with exclusive insights from movers and shakers in the payments industry. The Payments Industry is under continuous transformation, as such this series provides diverse perspectives on everything from strategy to payments technology and to the future of the industry.
In this interview, TSG’s Market Intelligence team-member Alex Ferguson sat down with Jon Briggs, EVP and Head of Commercial Product & Innovation at KeyBank to learn more about his journey through KeyBank’s varying lines of business and how KeyBank is tackling merchant acquiring strategy differently compared to other large financial institutions.
Background: Jon R. Briggs is the Head of KeyBank Commercial Product & Innovation in KeyCorp’s Enterprise Payments business. He is responsible for the strategy, development, and the portfolio management of our Fintech partnerships, Core Treasury, Commercial Liquidity, Merchant Acquiring, Integrated Payments and Commercial Loan product capabilities. In this capacity he oversees all aspects of product strategy, management, development and risk management as well as partnering closely with our business development and client support teams to commercialize, implement, and support services. He is a member of KeyCorp’s Executive Council, Compliance and Qualitative Risk Committees.
Q: Alex F.
Tell me about yourself. How did you get your start in the payments industry?
A: Jon B.
I started my career with KeyBank almost 15 years ago, working in various capacities at the bank, from finance, accounting, risk management, strategy, and treasury. My introduction to payments goes back several years. It was a business that KeyBank hadn’t viewed as a growth business and was in its infancy of some seismic change regarding the talent going into the business, the strategy, and the growth. When Ken Gavrity, who currently leads the payments organization at KeyBank, joined the payments business, he started reenergizing its future. At the time, Ken needed a CFO, and I happened to work in our risk management business, and I was asked to join the team as we began to transform the business.
That was six years ago and my introduction to payments. Before that, I wouldn’t have been able to tell you much about the business. Looking back and thinking about my role in payments today, I believe a lot of our success is because of our team. When you look across our payments team, we’re not legacy payments folks. We all came from different areas – strategy and corporate development, capital markets, and investment banking. We were able to show up with a fresh perspective, which led to a lot of the innovative thinking that we’ve had as a business. In return, propelling double-digit growth for several years now.
Q: Alex F.
Looking at your background, you’ve had a nearly 15-year career thus far at KeyBank, holding a variety of roles. How has your extensive experience through these differing positions helped prepare you for your current role as Head of Commercial Product?
A: Jon B.
Payments at KeyBank is unique. Although, I would say more of our peers are following suit in terms of our model. We serve clients from small business dry cleaners down the street all the way up to Fortune 500 companies. Our goal is to provide solutions to help our clients run their businesses better. Our broad client base requires us to understand our clients’ needs and challenges and an enormous breadth of capability. It also requires us to organize around our targeted verticals, from sales and servicing to product and strategy. It allows the team to understand the nuanced needs our clients and to serve them in a way that is contextual to the industry they operate.
In our early days and still today, we spent a lot of time externally to gain prospective, which led to us being one of the early banks to adopt a fintech strategy as part of our core product strategy. First of all, a lot of the friction our clients experience exists around a payment. It’s in their workflows and systems they are using every day. Fintechs and software companies are leading a lot of the innovations that are solving client challenges. This making them great partners to deliver capability to our clients. In a way, our ignorance early on served as a strength because our fintech strategy allowed us to materially accelerate our roadmap and leapfrog the competition. This thinking in the market that which now a prevailing strategy for many regional and trillionaire banks today.
Previously, I spent a lot of my early career focused on finance, strategy, and credit risk in our commercial business, which gives me an appreciation for the challenges of our clients and how we serve them. Payments is a complex business with a complex value-chain to enable our client’s success. I spend a lot of my time not only making sure we have a strong solution set but also making sure all the functional areas of the business are delivering from the front of the process with our sales teams all the way back through to our back office, where things are executed. My time spent in different functional areas of the bank allowed me to see the value chain from a different lens and connect a lot of dots and understand broader banking and how KeyBank operates.
Q: Alex F.
Tell me about KeyBank’s merchant services offering. What makes KeyBank different from the other merchant services providers out there that merchants could utilize?
A: Jon B.
I view our merchant services offering as being one of the best in the industry. That’s relative to both bank and non-bank competition. What makes us unique against many of the banks we compete with is a wholly owned portfolio and business within the bank. We’re not in a joint venture relationship. These are our clients, expressly our clients, and we treat them as such.
As I mentioned earlier, we have a broad set of clients that we serve, and we’re able to do that by delivering two different back-end processing partners, a breadth of product capability, and leaning on our fintech partnership routes, with over ten different gateway partners as we look to solve the unique needs of our clients. Whether it be in the card-not-present space or in a unique vertical where specific integrations are required, we have a very client-centric model in terms of how we think of who we are trying to serve, what’s required to be able to serve them and make our clients successful in running their business every day. We do this by fully owning the outcome, from sales to fulfillment.
The most important part of the industry is servicing. I think that’s an area we’ve truly excelled. We’ve invested heavily in terms of people infrastructure, technology, and fintech partnership with Ovation CXM as part of our business. Ovation CXM has been a critical partner in helping us bring the best-in-class servicing experience that we own. It’s uniquely KeyBank, and I think it’s largely differentiating for us in this space.
Q: Alex F.
In May 2021, KeyBank announced the formation of a strategic alliance with XUP Payments. Now about 18 months since the announcement of that strategic affiliation, how has that pairing and the Ovation CXM pairing helped to enhance the Key Merchant Services offering thus far?
A: Jon B.
This gets back to what has made me be successful in my current role. I’m a CPA by training, so I’m financial and data oriented. At the time, I had just taken on responsibility for the merchant services business. I began to peel back the numbers and to understand what’s driving growth, the productivity of the teams, and the revenue that’s running out the back door because of attrition. I took a step back and realized our sales teams are productive, but we have an attrition problem.
We started to talk to clients that were attiring, and in those conversations, we began to get a sense of the holdover from some of the legacy joint venture models. In many cases, clients didn’t even know KeyBank was their merchant services partner. That was an eye-opening learning for us and it caused us to pivot our focus in this part of our business, which was as we described it, to take back that front-end experience, or the client-facing experience. That’s what led us to XUP and Ovation CXM.
Looking at the onboarding experience for many of our peers and partners, it’s not dictated by the bank, it’s typically dictated by one of the big processing companies and a manual process at that. That was the inception of our relationship with XUP. XUP was in the market with a unique value proposition of allowing partners to own and digitize the boarding experience for their clients fully. Shortly after partnering with them to help digitize our origination experience, we invested equity in them as part of our fintech strategy.
We realized the strategic importance of this portion of the value chain. That it can be pulled across our business to enable other small business or other products to be originated. It also has applicability in the payment facilitation space, which is a fast-growing portion of the acquiring market. For those reasons, KeyBank acquired XUP around a year ago.
Ovation CXM at the time helped to solve our other pain point in taking back front-end experience and the servicing experience. Clients were experiencing what I would describe as 1-800 ping pong. They’d have some sort of service disruption, and they would call a 1-800 number, maybe of KeyBank, and they would be told, “It’s not us call the processor.” The processor tells them, “Nope, not us. Call the bank,” or call your gateway, etc. We recognized that’s a terrible experience for our clients.
Partnering with Ovation CXM a couple years ago allowed us to create a unique journey for our clients on the servicing side and take back that portion of the value chain. There’s a white paper published that speaks to the massive benefit that it had on our NPS results and our client retention. We now have leading NPS and client retention statistics in the space. It is directly attributable to the investments we’ve made in that part of our business.
Q: Alex F.
KeyBank has become increasingly involved in Embedded Banking. This term could mean a variety of things depending on the entity and audience of its usage. What does Embedded Banking mean for KeyBank?
A: Jon B.
We’re seeing a shift happen in the industry of more traditional banking and financial services. This shift is moving away from services being directly provided by a bank, but instead through a platform. There are examples of this happening in the market, and many of them we interact with every day as consumers. At the highest level, what we see taking shape is a shift of banking or financial services out of the bank’s proverbial four walls and into platforms. Thus, those platforms could be verticalized SaaS companies. Software companies that have effectively built a unique value proposition, or a mini-ERP for a specific industry vertical.
Rectangle Health is an example of one of those companies in healthcare. It could also be a larger ERP company that provides more enterprise software that our commercial clients use. Embedded banking at KeyBank brings commercial clients’ banking capability to where the operational workflows are happening. This is their ERP, or the technology and software, that they’re using every day to run their business. Thus, we want to be the provider and bank of choice for these software companies that are building unique value propositions. The choice for the different verticals that are out there in the market.
An example is a software company that is a client of ours serving skilled nursing facilities. KeyBank is powering the embedded payments capability natively within this software company’s offering. It is being distributed out to their 22,000 skilled nursing facilities. Their software is a patient system of record to be able to manage the operations of a nursing facility, effectively a ledger of all patient activity. Patients are getting charged rent, being charged for meals in the cafeteria, or incurring costs by getting a haircut. Additionally, they’re being billed for their medical treatments. This software company provides a system of record for all that activity.
To accept payment from all their tenants for all the services, we’ve delivered a payment portal integrated into their software. This provides tenants and caregivers a system to understand the charges and a make a digital payment quickly. That’s an example of a SaaS company in a vertical. KeyBank focuses on helping power technology companies with banking and financial services strategy.
Q: Alex F.
Over the last decade, there’s been an observable decline in the proportion of merchants boarded through the traditional 1099 and FI sales channels and a marked shift instead towards emerging channels such as integrated. As merchants continue to rely on their software providers for more and more of their business operations, where do you see the future of the integrated channel going?
A: Jon B.
I believe this growth trajectory that we’ve seen over the past few years will sustain. I think it’s essential to unpack why that’s the case. Gone are the days where a simple terminal is the way that consumers make a payment. Businesses continue to digitize and automate their processes. They’re investing in technology to do that, which is coming with integrated or embedded banking and payment capabilities.
These SaaS companies are technology companies solving some of the unique experience and friction points that their end clients are experiencing. They’re winning the client experience and I expect that to continue. Because of that, I think it’s important for KeyBank to be a leader in that space and serve technology companies. These technology companies are also our clients in our broader commercial banking business as well. It’s a nice win-win from that perspective. We’re seeing the change happen within our own business. Because of this we see embedded banking as a massive near-term growth opportunity for KeyBank. So, I think over time for the industry, what we’ll find is it’s also going to be defensive.
Q: Alex F.
What are you most excited about for KeyBank’s Future? What should we expect to see with KeyBank five years down the line?
A: Jon B.
We’ve declared embedded banking as a priority. We’ve declared it, publicly and internally, and we are marshaling a lot of our time, energy, and resources up against it. We believe that for some of the unique needs of these technology companies KeyBank is uniquely positioned to solve them. We have the right approach and a modern set of technology.
I’m excited about what we’re building and what we’re bringing to market. I’m excited about the growth and engagement within our client set and within our pipeline. As we look forward to three to five years from now, KeyBank will be viewed as a leader in the space. I believe that because we have all the ingredients to be highly successful. It’s in our history with our fintech partnership strategy and our track record of building and delivering innovative solutions. We have all the right ingredients, coupled with the right size and scale, to be meaningful and nimble. This is being done in a space that requires all those things.