It’s hard to think of any CEO better qualified to offer guidance on how to navigate the pandemic economy, and prepare to sprint in the recovery, than Frank Bisignano. The newly named CEO of Fiserv, the fintech and payments processing giant, made his mark steering businesses through the most jarring upheavals of the past two decades. And in between the cataclysms, he was busy clinching deals while enduring chemotherapy and reviving laggards that looked too broken to be fixed.
Bisignano fought on the front lines through 9/11, the Great Recession, and the pandemic, and faced three other daunting challenges: battling throat cancer; rescuing a failing backwater at Citigroup that he transformed into one of the bank’s top money-spinners; and reviving a struggling also-ran, the payments processor First Data. After the first tower fell on Sept. 11, 2011, Bisignano led a parade of Citigroup troops located near the World Trade Center to safety in Midtown Manhattan. During the financial crisis, he worked alongside his mentor Jamie Dimon to salvage the wreckage of Bear Stearns, then waded into the mortgage flood by spearheading damage control on the subprime-laden portfolio inherited from Washington Mutual.
Last July, he sold a thoroughly reinvented First Data, to Fiserv for $30 billion, delivering shareholders a 100% return from the IPO price three and a half years earlier. On April 8, the Fiserv board named Bisignano, now 60, to succeed longtime CEO Jeff Yabuki. On July 1, Bisignano will take charge at this relatively little-publicized colossus that’s produced 20%-plus annual shareholder returns over the past decade and now boasts a market cap of $66.5 billion, the 16th-highest among U.S. financial services and data processing companies, exceeding Goldman Sachs, Morgan Stanley, and American Express.
In a series of interviews with Fortune, Bisignano discussed how his experience in tackling past crises shaped Fiserv’s strategy for minimizing damage from the pandemic, while at the same time keeping the people and investments in place to thrive on the other side. Among the measures he’s deploying: providing extra hazard pay for frontline workers, and marshaling the top brass to put all or a big chunk of their cash comp into a fund for the hardest-hit employees.
Bisignano: From blue-collar Brooklyn boy to Wall Street fixer
Bisignano rose to the top of financial services from an unusual place: mending and building mundane back-office operations and banking services. What set him apart from the typical manager who oversees Wall Street’s plumbing was a knack for rallying teams as a swashbuckling coach, and his record as a bulldog who could fix anything. Those skills translated into entrepreneurial flair that enabled him to squeeze big profits from neglected corners of banking. One snapshot captures his talent for flamboyant showmanship, fielding and branding: At Smith Barney, Bisignano organized a rowdy softball team of all Italian-Americans who called themselves “the paisanos,” and took to the diamond in floppy hats like pizza makers.
The ethnic pride reflects his upbringing. Bisignano grew up in Brooklyn’s working-class Mill Basin neighborhood. Both of his parents were born in Italy, and his grandfather, who was deaf and blind, lived with the family. His father worked as a customs agent, while his mother rose from bookkeeper at a stevedoring company to running the operation—a 105-pound dynamo who cowed or charmed the longshoremen as needed. Bisignano graduated from Baker University, a liberal arts school in Kansas, where he majored in finance and competed as a nationally ranked bowler.
In 1994, Dimon hired Bisignano, then in his mid-thirties, as chief of operations at Smith Barney. Bisignano stayed on board as the team of Dimon and Sandy Weill transformed financial services through a string of acquisitions culminating in the Travelers purchase of Citicorp in 1998. In 2001, Bisignano’s operations outfit encompassed 16,000 employees in downtown Manhattan, many of whom worked at 7 World Trade Center. Just after the first tower fell around 10 a.m., the workers at a Citi building in the financial district looked out their windows through the dust to spy their boss on the street holding a megaphone and yelling, “Go north!” Bisignano led a march of thousands of Citi workers up Sixth Avenue to an IT hub near Penn Station.
Impressed by how Bisignano smoothly relocated the troops and got trading up and running with barely a hiccup, Weill handed his operations chief the job that would prove his big breakthrough. Weill reckoned that the franchise, a troubled outpost called Global Transaction Services (GTS), was the perfect candidate to be reinvented by his empire builder in the waiting. When Bisignano took charge, GTS was losing $400 million a year. He transformed GTS from a processor that handled piecemeal transfers to a platform that clients used to outsource a wide range of treasury services across subsidiaries in multiple countries. GTS handled its clients’ foreign-exchange and cash management, parked their overnight deposits at the best rates, and provided a complete accounting of all of the day’s balances and transactions on a common system. By 2005, Bisignano had turned GTS into a star performer, generating $1 billion a year in earnings. It remains one of Citi’s most profitable units to this day.
Rejoining Jamie Dimon
In 2006, Bisignano’s old boss Jamie Dimon hired him as chief administrative officer at JPMorgan Chase. Trading a job heading a big profit center for his old role of running a big bank’s back office seems like a downshift. But the appeal wasn’t so much running J.P. Morgan’s real estate, procurement and IT as joining the legendary Dimon team, a group that included Bill Winters and Jes Staley, now CEOs respectively of Standard Chartered and Barclays; Charles Scharf, chief of Wells Fargo; Mike Cavanagh, CFO of Comcast; and Heidi Miller, who held the top finance jobs at Citi and Priceline. “It was the dream team of financial services,” recalls Bisignano. “We had unparalleled spirit.” When the financial crisis struck, Bisignano displayed his dealmaking prowess, helping to negotiate the purchase of failing Bear Stearns for just $250 million. As part of that package JPMorgan got the firm’s super-deluxe, 47-story headquarters on Madison Avenue that had cost $1.1 billion to construct.
In 2010, Bisignano suffered a personal crisis that changed his goal from serving as franchise player on an all-star team to running the whole show. He was diagnosed with throat cancer, the same affliction that would strike Dimon four years later. The exhausting treatments barely slowed the bulldozer. “I’d get radiation in the morning, then fly to L.A. on a deal, then take the red-eye back and get more radiation the next morning,” he recalls. “I did a lot of meditating. I never thought about being CEO before cancer. I was happy to serve with the Jamie crowd. It was beating cancer that gave me a sense of mission.” Today, Bisignano’s deep gravelly voice is a legacy of his successful surgery.
Bisignano recovered so fast that in 2011, Dimon tapped him to shoulder a second job, fixing the mortgage book, largely consisting of subprime loans issued during the real estate bubble to buyers who lacked the income to make the payments. Once again, Bisignano engineered a fast turnaround. But the notorious “London Whale” trading loss created discord among his cherished team, and most of the brain trust’s most valued members departed. Dimon named Bisignano co–chief operating officer and assigned him to install controls that would prevent another blowup. But as the camaraderie vanished, he pursued his destiny to become boss.
Floundering First Data
It was hardly a trophy job, but it was the kind of “mission impossible”–style rescue Bisignano had long been training for. In 2007, buyout shop KKR & Co. had purchased payments stalwart First Data in one of the largest LBOs ever at $6 a share. Six years and two departed big-name CEOs later, First Data was floundering, and KKR had marked down its investment by $3, suffering a $2.5 billion loss. At breakfast at a New Jersey diner, Scott Nuttall, now KKR’s copresident, pitched Bisignano on shouldering the hardest of hard cases.
Nuttall warned Bisignano that First Data was “too big for any one person to run,” reasoning that a smaller, more focused business would be more attractive to Bisignano. “Don’t sell anything!” riposted Bisignano, who judged First Data’s immense scale as its greatest asset. “Whatever you’re thinking of selling, I can fix it!” The leader whom Nuttall describes as “a force of nature” stepped into the CEO role for the first time.
Over the next six years, Bisignano transformed First Data from old-line processor to tech juggernaut. The old First Data was providing merchants with what Bisignano calls “dumb bricks,” countertop terminals that did little more than swipe credit and debit cards and send the charges to the banks. His big innovation was handing restaurants, delis, hairdressers, and all manner of merchants the sophisticated tools once reserved for big chains such as McDonald’s and Walmart. First Data’s key innovation, now a staple at Fiserv, is a terminal-cum-computer called Clover that manages inventory, tracks which waiters at which tables sell the most expensive bottles of wine, and signals when those connoisseurs are returning so waiters can remind them to order their favorite vintages.
The basic idea was upgrading merchants from the old knuckle-busters to supersmart Clover, offering lots of apps that run the gamut from preventing hacking to sending messages reminding employees of their shifts. And the wager on this iPad of point-of-sale payments paid off, as Clover won legions of both upgrades and new clients. From 2013 to 2018, Bisignano raised net profit from a $700 million loss to $1.2 billion and pared the gigantic debt burden imposed by the LBO from $23 billion to $16.4 billion.
The second-biggest fintech deal of all time
The comeback transformed First Data from a dog into a prime takeover candidate. At the closing in July 2019, Fiserv paid almost $32 a share, or $30 billion, twice First Data’s price and valuation on going public in 2015, and five times its level when Bisignano took charge in 2013. In the annals of fintech, the deal ranked second only to FIS’s $33.5 billion acquisition of Worldpay, which closed two days following the Fiserv–First Data merger.
The merger is a good fit because First Data was the industry leader with retail merchants, while Fiserv ranks first in “core banking,” processing for large financial institutions. In weighing the union, Bisignano says that an enterprise more equally weighted between the two sectors would smooth the stream of profits and revenues through big swings in the economy. He also believed that by moving to fewer, bigger data and call centers, pooling purchasing power, and bringing overseas processing in-house, the combined company could achieve giant cost savings. In fact, Fiserv now anticipates lowering its annual operating expense base by $1.2 billion or around 11% on the premerger run rate of just under $11 billion. It has pledged to save even more by greatly lowering debt and hence curbing interest expense.
Reward frontline workers
Along the way, Bisignano has learned a thing or two about navigating through troubled waters. Most important? Take care of your frontline workers. “Eighty-five percent of our workers are working from home,” says Bisignano. “But we need thousands of workers to staff our call [and] data centers and production facilities.” Fiserv added 25% to the pay of all its frontline workers for the duration of the pandemic. “We provide masks, and the workers observe social distancing,” he says. “But it’s also important that we say thank you for their hard work in these incredibly stressful times.” In periods of crisis, he says, few workers are more essential than the folks who sustain the economy by keeping everything from the PPP grants for small businesses to dollars for online purchases flowing––and Bisignano wants them to know it.
Cut pay at the top
When the crisis struck, the top two officers, Yabuki and Bisignano, gave up 100% of their cash compensation, and the next 18 highest-ranking executives took 20% pay cuts. But instead of using the money to hold down operating costs, Fiserv is putting the forgone pay into a “hardship fund” for employees and their families who are experiencing financial stress. He notes that workers need to apply for the aid but that Fiserv has already contributed millions from the fund to help out with such emergencies as an income shortfall because a spouse loses a job.
Don’t cut pay, reduce benefits
“We don’t want to hurt our people in the short run by either laying off people, or cutting salaries,” he says. “The world they’re living in has radically changed—we don’t want to change it more by hurting their livelihoods.” On the other hand, he adds, the pandemic is hitting revenues as merchants process fewer payments, although banks are asking for still more services from Fiserv. To lower expenses, Fiserv is suspending its contributions to 401(k) plans for now. That way, employees get the same cash income they depend on––frontline workers get even more––but Fiserv can still reap savings that sustain profits during the crisis.
Maintain & invest
“A major reason we can keep our people and maintain our level of investment in technology is the synergies from the deal,” says Bisignano. “My view was that from the very start, we’d generate the savings needed to do both even if we went into a steep recession. Of course, I never imagined anything on this scale.” Keeping employees on the job is critical, he notes, because it should enable Fiserv to sell customers all the terminals and software they need when the market rebounds, whereas the need to rehire or train new people could slow the start. Fiserv also pledges to deliver on its premerger plan to cull a total of $500 million from its annual cost savings for investment in the kind of new technologies that could hatch the next Clover.
See the opportunity
“The pandemic accelerated the trend to online shopping and electronic transfers that was already underway,” he says. “We’d invested to develop products in both areas, and those products helped offset the decline in in-person retail shopping.” Zelle, the industry service for sending money online, attracted eight times as many clients for Fiserv in the first quarter as in the same period last year. Another winner: Clover’s Order Ahead feature that enables customers to send in takeout orders online to restaurants, where they’re channeled to kitchens and suppliers, and customers are assigned times to pick up their dishes at the eatery.
Buy back stock opportunistically
Share buybacks have long provided a big boost to Fiserv’s earnings per share and hence its stock price. From 2017 to 2019, it spent $3.7 billion on repurchases, lowering its share count by 7.6%, and lifting EPS from buybacks alone by a like amount. Fiserv continued buying back lots of stock in the first quarter, though Bisignano says it will channel its cash flow for the remainder of the year toward paying down debt. He praises two masters for his approach to deploying capital: Dimon, “who taught me the importance of a fortress balance sheet,” and Yabuki, whom he calls “a great capital allocator.” Share repurchases are out of vogue for financial institutions right now, but Bisignano says he plans “to stick with buybacks” as a bulwark in the future.
That’s the kind of against-the-tide, unconventional thinking that built one of the great careers in financial services. Here’s why Bisignano thrives when the world goes crazy: He’s seen plenty of black swans, and he’s always ready for the next one.
More must-read finance coverage from Fortune:
- Shareholders dunked on CEO pay at CVS and Intel. Stock performance may be next
- 38.6 million have filed for unemployment during the pandemic—greater than the combined population of 21 states
- Here’s how far corporate profits could plummet in 2020
- M&A is showing signs of life in the healthiest and least healthy sectors
- What happens to an investor’s shares when a company delists?
- WATCH: Why the banks were ready for the financial impact of the coronavirus