JPMorgan Chase CIO on Becoming 1st Data President | Straighttalk

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By Peter High, President, Metis Strategy

This article is by Featured Blogger Peter High from his column.

Guy Chiarello has been a towering figure at the intersection between financial services and technology for multiple decades. He foresaw the power of digital business as Chief Information Officer of JPMorgan Chase before digital was the term of art or a department within corporations. He and his team there were responsible for the award-winning Chase Mobile App Suite, which grew its customer base to more than 10 million users in its first two years. He was also among the first to usher in peer-to-peer payments at scale. Perhaps most critical to his success, at a remarkably early period, he understood the power of pushing his businesses to think of IT as a source of innovation, and he ensured that he recruited the kinds of people who could deliver on that promise.

Not so surprisingly, Chiarello has risen definitively above the CIO role, now occupying the role of President of First Data Corporation. As president of the $11 billion global payment technology solutions company that handles almost half of all US credit and debit transactions, he and his team have even more room to leverage technology to innovate. I was interested to hear him reflect on his rise, how he interacts with his CIO and CTO, now that he is their boss, and where his attention is focused for the years ahead.

Peter High: Guy Chiarello, You have been President of First Data Corporation for nearly three years. What is in your purview as president?

Guy Chiarello: If I simplify it, there are really three aspects of the job every day. One is really helping Frank Bisignano, our CEO, run the company: the day-to-day operations, making it work well for clients, and making it work well for the overall company and the employees that are part of it every day. The second is around clients. I spend a lot of time in the client space, not only helping sell our solutions, but, most importantly, understanding their experiences, their needs, and helping them focus on a forward-looking strategy where First Data can help them. This is a unique company, so explaining the company and helping them understand the value that it can bring to them and their business is key. The third function, which is really what I have really grown up prepared to do every day, is around the innovation, the engineering, and the technical operations of the company: engineering our products, solutions, defining strategy, which is really around not only innovation, but execution of the products and capabilities of the company every day, and then running the company from a technology perspective. I still have my hands in the technology function every day. I do have a CIO and a CTO inside the company, but this is a technology company.

High: What are some of your strategic priorities at right now?

Chiarello: The company is multi-faceted, so we have customers that are 4,000 plus banks as our customers. We are the outsourced party or the enabler for banks who are trying to deliver debit and credit solutions to cardholders around the world. On the other end of the spectrum, we have six million merchant locations where we deliver everything from point of sale and payment enablement. In between, we have the largest independent debit network—we are twenty-eight percent of the world’s e-commerce payment activity. We have a growing presence in “card not present” activity, so those are digital, mobile type payments, and, in a lot of ways as you bring those things together, really we are the go-to solution for people who either want to enable payments or deliver loans, credit or debit capabilities in the marketplace. That is in 100 plus countries on an everyday basis. 

High: Both here, as well as in your role as CIO at JPMorgan Chase, innovation has been part of your set of responsibilities. How do you define innovation in a variety of different ways—big “I”, small “i”? What are some of the metrics you use to determine whether or not the organization is innovating appropriately or not?

Chiarello: It is a really hard measure. You can talk about it as the big “I” or little “i”, but there is no “I” in innovation. Innovation happens in so many different ways. Innovation can be around a process, it can be around a new piece of technology; it could around the way you apply technology. In my whole career, my mindset has been around how do you bring new ideas to the marketplace—and that could be to businesses or consumers. To me, that is innovation.

At Morgan Stanley I got a chance to learn about what happens in Silicon Valley, Silicon Alley, and other parts of the world, and would look at 100 to 200 private tech companies a year to really understand where things were going. I would also spend time with the premiere CEOs in the technology marketplace certainly as a big buyer and began to glue those things together to say where is the marketplace going, how do I take advantage of it, how do I plug that into our company, and how does it create leverage for us going forward? My process for twenty years now has been to just study what is happening at the marketplace from small to tall and understand, learn, and pick the signal through the noise in those trends and apply it to whatever business I was part of.

High: Innovation is fundamentally about risk taking: if you are batting a thousand, you are not innovating. Security is about risk mitigation. You could see those as pointed in different directions and getting that balance correct can be a challenge for a lot of organizations. In this environment where security issues are becoming so much more complex, how do you think about that balance between risk taking and risk mitigation?

Chiarello: You could worry yourself to death. I think there is a saying, “Only the paranoid survive”, but at the same time you cannot stifle innovation. First Data handles forty percent of the world’s data transactions. That means that we have to be best in class at securing cardholder information, at securing transactions, but also making sure that they authorize appropriately because fraud and security could almost be looked at hand in hand, and at a lot of investments and numerous trends in the space. But the smartest thing is you have to have a great group of people who come from everything from agency backgrounds and technology backgrounds. You have to have a layered set of capabilities and defensives. You have to build state of the art systems that really use analytics to identify not just fraud, but trends that look like anomalistic behavior. I talk about it less and less as “security” now and more and more as “trust” because, at the end of the day, if First Data can bring trust to payments in all channels, then commerce will continue to evolve and we will be the player. Whether it is Apple Pay, Google Pay, Samsung Pay, MCX—you name the payment method—whether it is a card from a phone or from a computer screen, First Data does not care. Its job is to make sure that it is processed in a secure way on behalf of the bank, the brand, the network, or the client. So that is the mindset we take to it. It is a premiere focus, and you are never good enough at it. You are never good enough. You are never invested enough. But instinctively you have to figure out where the right medium is between being paranoid and insecure.

High: Among your many accomplishments at JPMorgan Chase was helping the bank think more digitally, rendering more of what it had traditionally done in a digital form. What you think about the whole topic of “digital,” and what do you think about the evolution of digital business?

Chiarello: I had spent most of my time building trading systems and when I got to JPMorgan, I had this great opportunity in the Chase bank to revolutionize the way consumers did business with the bank as well as the way institutions did business with the bank. When I got there, there was no mobile site. Zero. I do not know what the current numbers are, but I think when I left there were twelve million active customers on a thirty day basis using the technology to conduct their day to day activities. If you walked into a Chase bank, the teller probably only had about ten to fifteen percent of their transactions as digital in 2007. I do not know what the number would be today, but when I left it was well over eighty percent and probably well over ninety percent except for the small business transactions that happen in bulk.

We were the first to do the deposit-friendly ATM. People used to walk up to an ATM, check is in an envelope, drop it in a pouch, the Brinks truck would pick it up, take it to an airport, fly it to a processing center, take it out, people would re-key those transactions, days later funds would be resolved. All we did was we took the same scanner that was in the branch and put it in the ATM with some innovative companies, and bang! Brinks trucks went away, fuel for airplanes went away, thousands of people in processing centers did not have to do menial jobs anymore, funds were available immediately, and that was the beginning of a revolution.  Then smart phones came out with cameras and we said, ‘why not use the camera on the phone to take a picture of a check?’ It has got the routing number, it has got the account number, why not use that as the point of record so people do not even have to go to an ATM or go to a branch to cash a check, and bang! That happened- we got that to scale.

We did P2P payments, Chase Quick Pay, these were things that were a couple of years ahead of their time. People advertise them on TV today as “new”, but these were things we did back many, many years ago, and that was innovation. It was cool technology. It was not something that somebody else could not do. It was taking an idea, a set of things that people had in their hand every day, or had the capabilities to use every day, and put them into what we call a standard business process, or consumer process, and it took off like wildfire. And today it is the way people do banking: they go to a branch and do a certain set of things, but it is an omni-channel approach and if they want to use their phone, the web, or an ATM, it all works the same way.

High: You mentioned that even dating back to the mid-80s you thought about the role as a technologist as a business role. Today, even, there are still CIOs who if you ask them who their customers are they will say, “their colleagues”. That is sort of like declaring a distance between what they do and the ultimate value: how revenue is earned by the enterprise, for instance. What did you draw from your experience as a CIO in order to expand your areas of responsibility so far beyond the role?

Chiarello: You hit on the key theme which is I wish more people in the CIO role could be more commercial, and “commercial” can be more defined depending on where you happen to work. At MorganStanley, JPMorgan, and now at First Data—I live it. I am with clients every day. It feels like more hours of the day than I ever expected, but it is great because if you listen well, the key to being successful is listening, not talking, and I always considered myself an exceptional listener, so that was part one.

The second thing was Joe Plumeri, one of the directors here, wrote a book called The Power of Being Yourself and there is a chapter in there called “Playing in Traffic” and I always played in traffic my whole life. I was playing in traffic with clients, in this case with bankers, in other cases with technology leaders. Playing in traffic put me in a lot of scenarios that got me a chance to really think about different ways of implementing things. Most importantly, it taught me “can do,” and is really about when you put yourself in a difficult situation (a) you say what would I do if I were in the other person’s seat; and (b) what do I have to do to make it successful. Because technologists are often unbelievable debuggers so the first thing they will do is tell you why something will not work, instead of how to make something work.

The most memorable time in my life was at the Google IPO. Google wanted to do a Dutch auction, and it was unheard of at the time. Michael Grimes, who was the head of banking, called me on the phone and said, “I am going to ask you something. You have a split second to answer, but if you say yes you might end up being one of the most famous people in your role ever; and if you say no, you will never get the chance to be prominent. But let me also tell you that if you say yes and you fail, you will be the goat of Wall Street.” And it was: Are you willing to build the software to do a Dutch auction for Google and it has to be done in sixty days, we are going live in ninety days, and the requirements are not even defined yet? In a split second I said “yes, I am in.” The team embraced it; Ben Fried, now the CIO of Google, was part of that team, there were a few other people who went on to work at different companies, but we built the Dutch auction with Eric Schmidt at Google, and we did something that was unique, and it was really about the personality of Google. We did something special, and it was successful, and it worked in a variety of different ways. That is really the kind of person I want to personify, and I want other CIOs to feel that way, which is that even things that seem impossible are possible if you put your mind to it and you have great partnerships and believe in the people you are working with. That was a turning point for me.

High: You are wired differently. How did you recruit a team that was wired the same way? The average technologist would not necessarily be wired or have the experience to elicit information from across the organization, tap into the insights from Silicon Valley, and draw connections from what you are hearing and what is possible. Are there specific things you have looked for traditionally in hiring a team around you as an IT executive?

Chiarello: It is a great question. I was the head of recruiting for University of Penn/ Wharton when I was at Morgan Stanley, University of Delaware and Syracuse when I was at JPMorgan, but I also hired high school graduates, college drop outs, and also people from great division three schools that bred either good athletes who were not on scholarship or good military people who had good structure and discipline in their lives. Morgan Stanley and JPMorgan spend eight to ten percent of their net revenue on technology. They really are the closest thing to a technology company outside of running a tech company. So it was a great platform to recruit from, so I cannot take all the credit.

I look for people who are disciplined; I look for people who are inquisitive. I would often ask them questions that were, in a way, out of the norm of a standard tech interview or business because I wanted to know if they could think on their feet—could they create a winning situation out of a difficult scenario. How would they solve this problem? And then, most importantly, how much confidence do they have in themselves? If you want to be an innovator you cannot second guess yourself. You have to be willing to fail. But equally importantly, you have to be a team player. I played sports my whole life, but I always played team sports. It was not about the “I”. It was really about can you put combinations of people together to be successful, and then can they build on top of that, can they recruit?  So the team I had at Morgan Stanley was a completely different team than the one I had at JPMorgan, which is a completely different team than I have at First Data. This was about picking a group of people, making them successful, then picking another group of people, making them successful, and that was as much about me wanting to prove to myself that it was not about a crony scenario. It was really about a consistent pattern for developing talent and leadership which could then do the same for itself. And before you know it, you get transformation. First Data is a transformation story. It is always about people, process, technology, clients, and investors. There is transformation on every corner.

High: You are now the boss of a CIO, Chris Augustin. What are your own perspectives now in your relationship with the CIO after having been one?

Chiarello: Ten years ago I wasn’t necessarily the perfect leader because I was maybe too tough on the wrong issues. I really understand technology from the ground up—left, right, top, down— But my job is to teach Chris Augustin and Mike Manos, our CTO. It is to give them all the experiences that I have had. It is to teach them how to look around corners and give them the perspectives of how to partner with key people in the industry where they will be successful. What are the key capabilities to look at in software, and how to really get people to work efficiently and quickly as teams to develop new solutions? So I would like to think today I am good at it because it is about mentoring and leading and guiding, much more than being the puppeteer pulling the strings.

I also learned from it because my boss, Frank Bisignano, is similar to the way I operate today– he is a guiding hand rather than a force for day to day, minute to minute influence. If I attribute anything to success, it is really being around really terrific people who have gone on to be CEOs of companies and been successful in their careers personally and professionally.

High: Could you talk a bit about the rationale of targeting some universities and developing a special relationship with them, presumably for talent acquisition, if not other things?

Chiarello: First, I thought Morgan Stanley had one of the best recruiting programs in the world. The retention after five years in those days had to be still well into the seventy to eighty percent range, which was unheard of. We recruited great people; we taught and trained them; we fulfilled their career aspects; we paid them well. And it taught me the value of bringing a constant pipeline of cultivating people.

When I got to JPMorgan, jobs were leaving New York. Frank came to me one day and said, “Look, let us do two things: let us provide jobs for veterans and give back to the country, and let us put jobs in New York, even though they cannot be in New York City at the time. And what better place than Syracuse University?” We went up to Syracuse University, spent time with the chancellor, the development offices, and we said “Let us build an IT curriculum at Syracuse that could be exported anywhere to any university around the country—let us give back—and, equally importantly, let us build on campus—a presence.” And we built a cyber security lab, took over Lyman Hall , and did something that I thought was unique and special that had both JPMorgan’s imprint on it, but also Syracuse University’s imprint.

The reason for the University of Delaware is that most of our credit card and a bunch of our retail operations were based in Wilmington, Delaware, not far from the university. The President at the time was from Penn Wharton, the synergy was there, a lot of commonalities. For me, in this case, it is all about education and give back. I think bringing kids in early and teaching them the commercial components, or the commercial applications of what they learned in that curriculum, is really important in the future of this company, and those other companies I was part of as well.

High: You have started to list off a number of important aspects that allowed you to rise from CIO to your current role as President of First Data. Are there other aspects you would offer as counsel to a sitting CIO who has the aspirations to go beyond that role?

Chiarello: First and foremost, if you are the CIO, you have to feel like you are a business partner with the team that is assembled to lead that company. You have to feel that, you have to act like that, you have to fight your way into understanding every aspect of the business to be successful. I always felt that as the leader of technology I had to understand the business process better than the business because I had to break it into small components, program it, and make it work. Most importantly, I think the CIO just has to be a business person part of their day, has to be commercially thinking about everything that goes on—every dollar spent—and really has to be at the leadership table at the company. If they are not, I believe that, in this millennium, the company will fail. I cannot think of too many companies where technology, applied in the right way, is not an unbelievable lever for the company, and the right CIO, interacting with the right head of marketing, the right head of operations, the right head of client services, the right CFO, the right CEO—that combination is lethal in a positive way. Most importantly, I think it brings the CIO into the forefront of the company where you are not just talking about the human resource systems and the financial systems. You are really talking about the revenue producing systems, and then the innovation just follows because people believe in it. You have to be an evangelist, just like the CFO is an evangelist for funding and treasury and financing the company.

High: You mentioned that you keep your fingers on the pulse of where smart money is investing. Obviously you have the innovation agenda and development agenda on top of that within the organization. What are some business and technology trends that particularly excite you as you look three to five years out?

Chiarello: It has been right for the last few years, and still where I follow the innovation, is around cloud, mobile, social, data, and security. In those five aspects of the world, you can find innovation that is changing the way consumers behave, corporations behave, even economies, and social behavior. I also think about block chain and our digital gift businesses in the way we do settlement and clearing. It is really a next generation capability to manage consistency, fraud, security, just an infinite ledger of “the truth”, the record of truth.

I think if I took those first five things plus – forget early applications of block chain, just kind of what it represents in the future – I think those are key themes.  Another is in the area of trading systems and payment systems where there is a tremendous amount of similarity, and even in the revolution the way that you were issuing orders through an exchange, the way that you then crossed orders before they got to exchange, the time at which you got to liquidity pools, which in some ways had rendered exchanges a little less value or valued them a little bit differently because a lot of things can happen away from the exchange. It is kind of what happens with payments. Do you need all these intermediaries? What happens in the different aspects of authorizing a transaction, securing the transaction, providing loyalty to customers and consumers, delivering rewards, and all the analytics that go with it? It is incredibly similar, which is why I think I love this job so much because I loved financial services and trading systems, and I like payments because it is fast, creative, crowded, and it is where there is a lot of mind share and venture capital money going. It means that there is going to be a lot of change. If you love change, it is a great place to be. It you do not love change, do not be a CIO!

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