When Karim Ahmad arrived at TSYS last year as the new head of global product and innovation, he found a stolid company that still housed its data on the mainframe and was woefully out of step with the new era of digital payments.
“The company needed a significant technology and cultural transformation,” said Ahmad, who was a longtime financial services consultant and partner at Bain & Co. before signing on with TSYS to directly guide development of products and services for card issuers.
Huddling with TSYS CIO Patty Watson—another relative newcomer who joined the Columbus, Ga.-based payments processing giant in 2015 and was honored last year by PaymentsSource as one of the Most Influential Women in Payments—Ahmad rolled up his sleeves for a wrenching inside-out upgrade.
The result is an array of versatile, instant-response digital card services, which TSYS plans to launch in beta to its bank clients before the end of this year, he said.
Some experts wonder whether these changes—which also encompass new fraud- and risk-management tools—will be enough to rejuvenate growth in issuer revenue, which decelerated within the past year.
Given the slowing growth in the U.S.’s mature card-processing market, it remains to be seen whether TSYS has made the right moves with its investments and acquisitions in other global regions, suggested Eric Grover, an independent analyst.
The price tag for internal change has been large, forcing TSYS to spend heavily on salary increases, incentives and severance to change the culture, plus building a facility in Ohio build to handle new services, TSYS CFO Paul Todd said last month when discussing the company’s third-quarter earnings.
“We’re proud of the progress we’re making as we transform the company, and if we pull it off, this will be one of the few success stories like it out there, because it’s so very hard to change,” Ahmad said.
Some of the changes have indeed been painful.
“We needed to move away from old programming and bring on people with competency in distributed architecture; we needed programmers working in Java instead of Cobalt and people who were experts at cloud infrastructure, as we move away from on-premise operations,” Ahmad said.
Other shifts have been technically complex.
To modernize its core infrastructure, TSYS first wrapped its mainframe architecture in a more contemporary layer of software, which is now the basis for its product innovations, Ahmad said.
Next was a complete redo of TSYS’ data infrastructure, so data currently housed on the mainframe — where it’s harder to access — will be readily available to create new issuer solutions, he said.
Another critical improvement is pulling all 750 million business and consumer accounts TSYS currently handles from the U.S., Canada, the U.K. and Ireland into a single “data lake" to power new services. One is TSYS Foresight Score, a fraud-screening service the company launched recently with partner Featurespace. Two banks are going live with Foresight Score this fall, according to TSYS.
“We’re moving to an enterprise infrastructure that enables us to run processes and manage data in a completely new way,” Ahmad said.
TSYS is also introducing microservices, with support for a fully digital cardholder experience enabling banks to deliver a consistent customer experience across their entire digital footprint, including various social media and messaging platforms, all of which TSYS expects to roll out broadly in the summer of 2018.
"We're adding consumer controls through mobile apps to give cardholders the ability to turn their cards on and off, as well as messaging via the app or other media, for support in whatever medium customers are comfortable with," Ahmad said.
TSYS is betting that the first phase of its overhaul within card-issuing services will open more doors, enabling the company to leverage previously untapped data powers, including its role as one of the nation's largest providers of cobranded corporate credit cards.
The processor is adding analytics muscle to manage services and control fraud following the Equifax breach and similar incidents. One example is a new partnership TSYS has forged with White Plains, N.Y.-based Argus, a unit of Verisk, to create new data-driven analytics services..
“Where necessary, we’re leveraging other top technology solutions, and integrating them into our environment to create products we offer to banks,” Ahmad said.
The transformation isn’t fully complete—TSYS is still building out the digital layer on its platform—and its culture is still under scrutiny following the recent departure of Pam Joseph, a veteran payments exec hired last year as president and COO. Joseph unexpectedly resigned, accepting a $2.3 million buyout package, in September.
Asked about the high-profile executive departure, CEO Troy Woods told analysts last month when discussing third-quarter earnings: “Sometimes these things just don’t work out and the chemistry doesn’t play out.”
But Woods, who has said he plans to stay on as CEO for the next three years and will keep the president title too, vowed to keep pouring support into technology for new products and innovations as markets around the world move to open architecture with strategic partnerships.
“We’ve built over 200 open APIs in the issuing segment, and we continue to invest...It’s going to be a very big piece of our growth story for issuing,” Woods told analysts.