Citigroup’s managing director explains the benefits of digitising payments. Joshua Weinberger reports.

Once, the electronic payment field promised to revolutionise not just online banking but banking as a whole, and not just

e-commerce but all commercial interactions. Two players finally emerged: PayPal, snapped up by eBay in October 2002 for $1.5bn, and Ecount, a vendor of customised stored-value and prepaid card solutions, which was purchased in March by Citigroup for an undisclosed amount after reportedly heated competition within the financial services industry.

Paul Galant, managing director and global head of the cash management business for Citigroup’s global transaction services unit, helped spearhead the acquisition. He says the potential benefits of blending Ecount’s technology with Citigroup’s platform are manifold and derive directly from the people behind the technology.

Quality management

He also credits Ecount’s survival on the quality of its management: “In all of these businesses, [success] is a function of the people that manage and have a vision. We were extremely impressed with the management team at Ecount – they are a nimble bunch, and real entrepreneurs who we thought read the market extremely well.”

But being able to read the market is not always enough. Mr Galant suggests that sometimes, when it comes to technology, size does matter. Despite Ecount’s “very high-quality, scalable applications”, he says the developer probably faced scepticism from companies when it tried to move up the food chain.

“When you start with a medium-sized company, and you bring a great solution, the conversation is much more about what the solution’s going to do,” he says. “When you go to a larger company, the conversation is probably, ‘Yes, we understand you’ve got a good application, and it may be a great fit, but will [your] company survive? Can [you] scale with our growth and needs?’”

Now it is part of Citigroup, Ecount no longer faces those doubts. Stored-value cards have been on the bank’s radar for some time. Three years ago, it decided to get into the stored-value card space and started to build the technology, says Mr Galant. Then Ecount came along. “We said ‘This gets us into the market quicker – let’s work with them.”

This soon segued into ‘acquiring’: “When you find solutions like that – when you find people like that – it goes way beyond licensing of technology. Anybody can do that. We wanted them to be a part of the family here.”

He continues: “Technology, as important as it is, is just a tool, and a leverage point for ideas and for people with great talent and motivation. Anyone, candidly, can replicate the technology, it doesn’t take that much. Our clients don’t pay us to bring them solutions. They pay us to have a vision and to help them grow their businesses.”

Sometimes clients even end up helping to shape the technology. “Some of our greatest innovations and improvements come from our clients themselves, who open our eyes to different ways of using our products and services, or provide us with feedback,” Mr Galant adds.

White-label strategy

Some clients happen to be other financial institutions, often using ‘white-label’ solutions; that is, products that can be custom-branded. “It’s critical for the industry to always be able to distribute the best-in-class capability. It is so important that we never compromise that,” says Mr Galant. “We, for instance, white-label many of our platforms to people you would think of as our competitors – and they are, in certain segments, our competitors. Within certain target markets, we may have an easier time white-labelling to smaller financial institutions that focus on clients who are not our primary ‘clients-of-interest’. But you’d be surprised. Among the large banks, there’s a significant amount of sharing of capability.”

Mr Galant says the continued success of his business will depend on its ability to bring new and better products to the marketplace. “Innovation is, without any question, the single most important thing that an organisation like mine can do for its clients. It’s the hallmark of what our clients think about [us]. We’re going to have a different twist on just about everything, and it’s going to provide them with more access to live data, and to show them different ways of using that data to make their business better.”

Much of that future innovation, he says, will continue to come from without. “[Ecount] is not the last acquisition we’re going to do,” he says. “I’m going to continue to look for best-in-class people, first of all. Secondly, best-in-class brands; and thirdly, best-in-class technology solutions. None of it’s going to be ad hoc.

“One of the things I really love about my management team is that we’re extremely disciplined. There are many, many things that we look at that sound great but that don’t fit the strategy – and we pass on them.”

CAREER HISTORY

2003: Managing director and global head of the cash management business for global transaction services in Citigroup Corporate & Investment Banking.

2000: Global head of e-commerce and market data strategy for Citigroup Corporate & Investment Banking

1999: Global head of e-commerce and financial engineering in debt capital markets at Donaldson, Lufkin & Jenrette

1995: Head of financial engineering divisions at Smith Barney

1991: Head of Financial Engineering Divisions at CSFB

1990: BA from Cornell University

1986 President and founder of BTP Information Services, Inc

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