‘Not all fintech integrations are created equal’: Fiserv’s Jon Nordhausen

The following was produced by Tearsheet Studios. We worked with payments provider Fiserv to create a podcast series about open finance and the work of empowering fintechs, brands, and FIs to collaborate and innovate together.

In our fourth conversation in the series, we’re speaking with Jon Nordhausen, VP of product management for the fintech organization within Fiserv. As we continue talking about the evolution of open finance, Jon shares how cloud data integration is removing friction and enabling new capabilities for collaborations between fintechs and FIs.

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The following excerpts were edited for clarity.

Jon Nordhausen, Fiserv: My name is Jon Nordhausen, VP of product management for the fintech organization within Fiserv, where we focus on data and fraud. I've spent 25 years in the financial services industry. My career started in core processing and moved on into the data and analytics space, which provides solutions surrounding our cores. I've managed both product management and development teams that serve our financial institution clients. I'm currently leading a very exciting project within the walls of Fiserv and moving all of our data systems into a data cloud. That will enable new capabilities, which I hope we'll talk about later today.

In the series that we've had with Fiserv, it's clear that Fiserv has a unique position to talk about data. I'm thinking primarily of my conversation with Sunil Suchdev, who came on the podcast. One thing he said has stuck with me: Fiserv sits at the nexus of commerce.

Fiserv supports the core banking system of close to 40% of financial institutions in the country. It also processes roughly 40% of card transactions in the US. So it touches a lot of data and has the ability to see trends at a macro level. 

What are you seeing as the main opportunity with data for the financial services industry?

At the macro level, information combined with channel connectivity drives better experiences for customers, members, and employees. The organizations that have a plan of attack to innovate in this space have an opportunity to differentiate at an exponential rate compared to their peers. 

At Fiserv, our data and analytics teams are focused on three distinct principles that enable our clients to be successful. The first is connecting leverage information by pulling together systems that empower our users to accelerate their path to value. The next is to extend access and embed those experiences by facilitating channel-agnostic insights that provide context, benchmarks, or advice in the moment. Finally, we simplify the path to action by providing relevant consumable information or nuggets of data based on the end user.

From your perspective, what challenges have held the industry back from using data to its full potential?  

As we work with hundreds of thousands of clients over the last few decades, we've settled on three primary focus areas of challenges: 

Overwhelming amounts of information (as we continue to innovate and bring other solutions to our core platforms) makes it difficult to transform information into usable data for the end user. Fragmented sources and the aging of data are other key challenges. 

The ability to tie the core system of records around the customer with the activity that consumers, small business owners, and commercial banking do within the digital payment rails is one of the key focus areas our clients are trying to solve today. 

And finally, even if an organization has captured all this information in a central location, the key next challenge we've met is how do you present the outcomes of that information and those insights in a meaningful, consistent, timely, and actionable way?

We've been exploring the possibilities of open finance in this series with Fiserv, and recently we talked with Jamie DelMedico from your organization about how data aggregation is driving new capabilities and new experiences. I'd like to widen the scope of our conversation and talk about building an overall cloud-based data strategy. 

How is Fiserv thinking about this? What role are you hoping to play to empower fintechs and financial institutions?

The investments Fiserv has been making and will continue to make in this space are focused on making sure that we can deliver data at the scale, speed, and service levels that our clients expect, every single day. That allows us to stay in step with the innovation curves for fintechs and financial institutions and to drive those experiences as part of their customer and associate engagement strategies. 

Also, as part of this investment, we are quickly pivoting into a new plateau of 'integration as a service,' which gives us multiple options to consider around the integration options, depending on the experiences our clients are trying to drive.

Can you talk a little bit more about integration as a service?

As you're likely very well aware -- not all fintech integrations are created equal. We're working to transform or reimagine our intake processes to align with all those variations and to take as much friction out of that integration work as possible: whether the experiences are simply single sign-on (with a route from a digital banking platform as an example); API integrations within a digital app experience (that enable real-time movement of data through our event streaming platform to deliver insights in a real-time manner); whether the bank is building something; or whether the fintech that they're partnering with has a new experience they can deliver today. 

As I mentioned earlier, one of the projects I'm leading is around data cloud and taking (and I know I've used this word before) the friction of all the ETL processes that a bank needs to do with what I call the deep and wide datasets. A lot of these fintechs today are leading into the prediction business. If you don't have a lot of the information you need to feed into the models to provide those predictive outcomes or the scoring - you're unable to ignite the value of that solution. So, we're spending a lot of time on taking friction out, making it easier to drive to action the outcomes of what the fintechs are doing. 

I'm very excited about the options we're doing, both on the front end and back end, of enabling these fintechs for our clients that want to drive these experiences.

If you can get that right, it makes the partnerships between FIs and fintechs much more powerful. How can these fintechs and FIs make their data more actionable or create new experiences?

From the lens of the clients we work with, specifically on the financial institution side, our team categorizes them into three primary categories: 'do it for me,' 'do it with me,' and 'I'll do it myself.' And the approaches that clients gravitate toward are dictated by a few variables. The first is, how many resources does the financial institution have to execute on set strategy? The second is, what is their overall technology strategy? 

We've seen a shift in the last few decades of financial institutions moving from on-premise to data centers. However, we're starting to see a little shift back in a few areas of the industry where financial institutions want to control their own destiny. So, they're bringing parts of our technology stack back inside their own walls to access more data, create their own key API integrations, and create their own enterprise information delivery platforms. That's also a big part of what is driving this 'do it for me,' 'do it with me,' and 'I'll do it myself.' 

Next is how long they want the data stored to drive the prediction business or prediction insights as part of the ecosystem they plan to build. And finally, what is their fintech partnership strategy? Do they want to accelerate their experiences for their own customers? Are they looking to be a sponsor bank that will enable new fintechs that need a ledgering platform to do so? That's where we see the variations in what they want to achieve and how much they want to partner with Fiserv to close the gap on what they want to execute.

From your experiences, how are fintechs and FIS thinking about how they manage their data? 

Fiserv is working on hundreds of these types of integration projects. So I'll give you a handful of products and solutions we're bringing to market today. The first one is a solution that allows us to pull in real-time monitoring for potential account takeovers. Utilizing the event streaming platform, we've enabled our notified tech solution (powered by Kafka event streaming) to call our fintech partners within milliseconds and determine whether or not the address change requested by the bank or customer is legitimate. If it is not or presents yellow or red flags, a real-time alert gets sent to a banker or that consumer saying: "Timeout, there might be something going on." They receive this message in an email, text message, or an in-app message. 

Using that same technology, we're also in the middle of enabling some financial wellness fintechs. If you think about the world in which we're living today, the ability to have a more savvy household in terms of understanding where you're at in your financial journey is beneficial. We're utilizing the same capabilities to feed information transaction payments and balance changes into specific fintechs geared towards different fits and solutions. It enables proactive PFM for teenagers, young adults, seniors, etc. 

We're very excited to take that step towards providing more proactive financial wellness guidance within the Fiserv ecosystem, which we would all agree is something that the United States needs. So the last one that I'll talk through is our data cloud solution. It is moving away from traditional ETL processes, which require extracts, data movement, and encryption from network to network. Network defeat into a particular fintech in our data cloud solution will enable the sharing of information seamlessly for those from the financial institution to the fintechs needing that dataset. So specifically, one of our very first fintech partners we're doing that with is a company called SRA Watchtower. SRA Watchtower enables board members to have that enterprise regulatory and compliance capability. It provides the information in the data from the core systems that roll up to ensure the board has insight into the risks (of the organization) and the actions tied to it when that action is due. Furthermore, it assigns the senior leadership member responsible for seeing it through. So those are just a few examples of how we're enabling data to flow from our client financial institution clients to fintechs to create a more seamless experience that they couldn't even five years ago.

Before getting to the end of our conversation today, I'd love to know: what are your big priorities for the end of the year?

There are a couple of key things: One is to automate the new capabilities we have around integration options. I would say the face of what that becomes for our financial institutions, our fintech partners, and our Merchant partners is the rollout of two new capabilities around our app market capabilities as well as our Developer Studio. That will be the face or the entry point to all these integration options. 

Again, our goal here is to start in a crawl, walk, then run journey, where we end up at a point where we digitize a lot of the intake processes. So the time from a financial institution or a fintech or merchant contacting us if they want to be part of the Fiserv fintech family. We can close that gap from months into eventually days and weeks.