Following the sale by RBS of
its WorldPay payments processing arm under the conditions of the
government bail-out package, Louise Naughton talks to the company’s
new chief executive Ron Kalifa about the company’s ambitious new
development plans.
Go deeper with GlobalData
The Royal Bank of
Scotland (RBS) has had a turbulent time since the global economic
crisis forced it to accept a £20bn ($32bn) bail-out from the UK
government.
The funds that were injected into
RBS were not handed over lightly. The bank became 83% state-owned
and the government insisted on more power to control bonuses and in
monitoring the bank’s performance.
An order from European regulators
to sell off some of RBS’ assets proved another stipulation of the
bail-out. One of those assets was decided to be its payment
processing arm RBS WorldPay, or RBS Global Merchant Services as it
is also known.
It was announced in August this
year that private equity firms Advent International and Bain
Capital had been successful in their joint bid of £2.7bn for RBS
WorldPay, and the sale completed earlier this month.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataRBS will hold a minority stake in
the business of 20% but the dropping of the RBS prefix in the
firm’s name, to become simply WorldPay, signifies a break from the
troubled financial services group.
A new start
WorldPay’s
management team has been announced by Ron Kalifa, its newly
appointed CEO. New appointments include Floris de Kort who joins as
managing director of e-commerce from e-payment services provider
GlobalCollect where he was chief commercial officer.
Peter Smith will become WorldPay’s
chief human resources officer from Burger King in the US where he
held a similar role; Stephen Hart will continue as COO; Raghav
Prasad (pictured right) will retain his role as head of
the UK POS Streamline business; and Ian Stuttard will stay as head
of WorldPay US.
In one of his first interviews
following the deal, Cards International caught up with
Kalifa for a chat about his plans for the business and how RBS’
involvement will evolve over the coming months.
LN: What is your main
objective in the first six months in the CEO role to drive WorldPay
forward?
RK: The first goal
is to get the management team established and to ensure that we can
carry on servicing customers with the same degree of capability as
we have done in the past.
We are announcing a new
organisation structure. I have appointed several people to the
management team and there are still several appointments to be
made.
The second objective is to make
sure that we make the cultural change away from being a bank-owned
entity into a company which is much more flexible, nimble and
innovative in the way we deliver our services.
That will take longer than six
months to do but that is the path we are on.
LN: What will the
private equity firms, Advent International and Bain Capital, bring
to WorldPay through this purchase? Do you envisage them taking an
active role in strategising going forward?
RK: Advent and
Bain have got a long history of working with their portfolio
companies to achieve earnings growth.
Their strategy for building the
business is focused on new investment in new technologies,
infrastructure, people and new product development.
They are very supportive of the
plans that we laid out as a management team when we talked about
what we wanted to do with the business.
They describe themselves as invited
guests of the management and I think that is a good thing. What
that means is they are there to support me and others. They have
got great techniques and processes that have been used before in
other organisations in their portfolios in terms of analysis and
market depth.
That is the area where I see them
helping but they are principally investors and they are not
managers.
LN: RBS will retain a 20%
stake in WorldPay. How will its involvement in the business
change?
RK: There are two
aspects to the arrangement of the 20% share RBS hold in
WorldPay.
Firstly they will be generating
business in the form of referrals and leads into WorldPay under a
customer referral agreement. The second part of it is quite a
complex agreement surrounding WorldPay’s separation from RBS. It is
about extricating ourselves away from RBS’ systems and processes
and that will take a period of time.
I think the support we will get
from them will be quite considerable, both in terms of lead
referral and in the back office, to ensure that this operation can
stand on its own two feet as a business independent of RBS.
LN: Is the name change
of the business from RBS WorldPay to WorldPay symbolic of its break
away from RBS? Do you predict this to be significant in increasing
WorldPay’s client base?
RK: It didn’t make
sense to retain the RBS prefix. This is a business that RBS has
only got a 20% stake in and the ambitions that we have got means we
have to move away from RBS in a sensible and structured way.
RBS has got a portfolio of
businesses and WorldPay always acted as a supplementary business so
it hasn’t lost anything. I don’t see it as anything we are losing
and I don’t think RBS see it as anything they are losing – it is
about putting WorldPay into new ownership with an increased and
renewed focus in terms of investment and growth and being able to
achieve its ambitions. It will be a win-win for everybody.
We have not seen any negative
consequences over the last couple of years of being part of the RBS
group. I can’t think of any significant scenarios or situations
where we have not won business as a consequence of RBS’ government
bail-out.
We have a common and shared
interest with RBS as the client base will stay the same but we will
also have the opportunity to market to other customers that are not
RBS based. It doesn’t really change the dynamic in terms of what we
have been doing; it just gives us another dimension and another
capability.
LN: Can you elaborate on the opportunities you see in
e-commerce and emerging markets? What will be your focus for
2011?
RK: The reality is
that e-commerce is a new business that we are creating and the way
we are structuring the business is on the basis that e-commerce
will be run as an end-to-end business.
The whole idea is to create a
discreet and distinct business unit which is responsible for going
into market and accountable for delivering its own profit. That is
not the way we had the business operating historically simply
because it was run within a larger framework of the bank.
Over the next three months or so
the e-commerce unit will be setting up its own strategy and
targeting the clear market opportunities that are there. It will
start in Europe and as we build that strategy we will be looking
increasingly to other opportunities in emerging markets.
The increased attention and focus
in other markets outside of Europe is likely to commence in the
second half of 2011 – at this stage I cannot give you details about
that but will happily do so in the coming months.
The key point at the moment is to
build the team and make sure the strategy is clear and articulate
and adopted by everybody in the business and endorsed by the
board.
LN: High profile fraud attacks
and data breaches blighted RBS WorldPay’s activities in 2008. What
were the lessons learnt and how will you ensure tighter security to
prevent history repeating itself?
RK: The lessons
were that we needed to spend more money and investment in some core
activity and security aspects of the business.
The fraud that did take place was
probably the most sophisticated fraud attack known in the card
industry. It was very smartly executed and it was very cleverly
undertaken by the individuals.
We spent months ensuring that all
our systems were secure and all the merchants flows and monies were
secure – that was our priority.
I think going forward you can never
say never in these things but the reality is that we have to be
increasingly vigilant, as everyone in this industry is and has to
be, simply because fraud is a growing threat to the industry.
That is all behind us now and we
have got fairly robust processes that we have established as a
consequence of the lessons we have learnt, which are now part and
parcel of our daily business activity.
LN: What are WorldPay’s
biggest challenges for 2011?
RK: I think the
biggest challenge is that there are an awful lot of things we as a
business can do. The increased focus that we will have to have, and
will have, means that we will need to be selective about what we do
and what we don’t do as well.
The marketplace is changing so
quickly, regulation is changing, new entrants are coming in and the
propositions that merchants and customers want are increasingly
demanding.
We will go through some work over
the next three months to really eke out some big questions for the
business and we will do that across each aspect of our business –
front office, back office, technology, marketing and sales.
The priority is to make sure our
customers get serviced, but alongside that our strategy gets
defined in a way that is good – not just for the merchants and for
the industry – but also for our people.
LN: What aspects of the
WorldPay business do you feel are positive and will be kept and
what will be changed under your leadership?
RK: WorldPay has
the potential to become one of the global players in the payments
arena in the next few years.
The ingredients for success stem
from good capabilities in distribution, getting access to
customers/merchants, strong activity and relationships with the
schemes and a strong technology platform to build on.
The biggest change I will make is
to ensure that we bring all of these things together in a
management team that is focused and has a single perspective on how
to grow the business.
I wouldn’t say this focus was previously lacking but the reality
was that WorldPay wasn’t operating as an independent business and
therefore it was always going to have conflicting interests. Some
of the activities we want to do may have been in contention with
what RBS wanted to do but we no longer have to worry about those
issues in the same way.
