Executive profile: One on One with Amit Parikh, Discover
New head of prepaid speaks on his multifaceted career, his view on prepaid and why living in the Bay Area gives him a unique perspective on payments.
By Loraine DeBonis, Editor-in-Chief, Paybefore
When Amit Parikh joined Discover as a college intern, he never anticipated that his career would take so many different and positive turns. In the nearly 13 years since he first set foot in the Riverwoods, Ill., headquarters, he has worked in technology architecture, infrastructure and investor relations, including a three-year stint as chief of staff to then-CIO Diane Offereins, who is now president of payment services. Parikh also was on the team that prepared for the 2007 spinoff from Morgan Stanley and subsequent IPO.
“Being on that core team was an unbelievable experience,” he tells Paybefore. “We worked so hard for seven months and got the deal done in record time, thankfully, before the economic crisis hit.”
You might say Discover and Parikh came into their own at the same time.
After the spinoff, Parikh spent the next three years helping refine the Discover story and finally getting Wall Street buy-in. “The Street really drives anything that’s happening in a public company,” he says. “And in 2008, 2009, [stock analysts] didn’t quite understand the full Discover story, so we started to change how we talked about ourselves.”
Although his background is in technology, Parikh says he’s known around the office as a storyteller. And it was his storytelling skills that helped win over the skeptics on Wall Street. “You can talk about the numbers all day—and those are important—but if you tell a story, that’s something people will remember.”
|Off the Cuff: Candid Comments from Amit ParikhOn differentiation: “We’re not the network saying, ‘Here are our rules, thou shalt comply.’ I’m not saying we don’t have rules. I’ve had to go deep into our operating regs. But we have the ability to be more flexible and faster when it comes to updates because we don’t have to worry about appeasing as many FIs.”
“We have a pragmatic view of regulation. Regulatory risk is regulatory risk. In any financial service it’s going to be there. We think we’re in a good position because we’re diversified. Whatever happens on the regulatory side, we’ll deal with it.”
On working remotely:
“I spend a lot more time pacing my kitchen floor. Seriously, it’s been great to break out of the four walls of Discover and be closer to current or future clients.
“The downside: I miss my colleagues. And, you can’t read people’s body language in a meeting. I don’t think anything compares to meeting face-to-face, whether it’s with co-workers or clients.”
On prepaid challenges:
“I’m amazed at the growth the industry has achieved, even with the partial authorization issue. So many merchants still aren’t able to handle partial authorization transactions.
If we want to be integrated into consumers’ everyday lives, the industry is going to have to do a better job pushing the capability and explaining to merchants why it matters.”
On merchants and mobile:
“If I bring up anything about payments to my dry cleaner, he’s probably going to spill wine on my clean shirts because he cares about dry cleaning, not mobile payments. We have to think harder about how much all this talk about mobile and offers is actually going to drive the dry cleaner’s business.”
By emphasizing Discover’s assets and what differentiates it from its competitors, Parikh says the investor relations team was able to communicate the company’s plan for the future more effectively. This message centered around becoming a leading direct bank and the most flexible payments partners in the industry.
The proof, in his eyes, is in the pudding. Discover’s stock has catapulted from a low of $4.73 in 2009 to more than $48 today. “We’ve delivered and we’re seeing amazing growth,” he says, citing the acquisition of Diners Club International; unique global alliances with companies like India’s national payment network RuPay, UnionPay and JCB; as well as relationships with PayPal, state lotteries and Facebook.
Prepaid as a Catalyst
Parikh, who now serves as head of prepaid and a director of global business development, has been instrumental in securing several of those high-profile relationships, including with Facebook and RuPay.
When he took over prepaid in March, the division was brought under the global business development umbrella. The reorganization makes perfect sense to Parikh, who views prepaid as a gateway and catalyst for emerging solutions.
“When you look at our strategic investments and relationships and how prepaid fits into the broader payments strategy, it’s the first phase,” he explains. “If all we’re looking at is prepaid, I don’t think that’s interesting for Discover or our clients. Prepaid is one of many things we can offer. We are a full payment network that’s flexible and friendly to do business with. In addition, we are a financial services company. We’re in mortgages, credit, student loans, personal loans—all the financial tools a consumer needs.”
Parikh sees prepaid as the launch pad for long-term alliances and customer relationships. And the key to success for prepaid and any emerging payment application that comes along is that it must integrate into what consumers already are doing, he emphasizes.
“We’re not trying to change behavior or create standalone prepaid solutions,” he continues. “We want to be integrated into what consumers already are doing but improve their lives in the process.”
Parikh points to Discover’s arrangement with Facebook on a restricted authorization gift card that enables the social network’s 167 million-plus active U.S. users to send gifts to their Facebook friends.
Although monetizing the massive social network has made many an investor drool, Parikh says the simplicity of the gift card is what will make it successful. “Within 60 seconds, consumers can give a gift that makes them feel good and it’s super easy. We’re not trying to introduce a new way of doing something. We are trying to keep things simple.”
Silicon Valley: Innovation and Investors
Parikh is only a 30-minute drive to Silicon Valley since he moved to the Bay Area more than two years ago. In addition to being closer to some of Discover’s West Coast clients, Parikh now has a front row seat to the payment startup and investment frenzy that is Silicon Valley.
“Silicon Valley is its own little bubble of money. And a lot of investors are trying to put bets on payments. From a valuation standpoint, it’s hard to justify some valuations we’re seeing based on limited customer relationships or transactions,” he says.
What Discover is looking for in its own partnerships and investments, which are still under Parikh’s purview, is the opportunity to build upon its established payment rails to make people’s lives better.
“We’re looking at investments where our current or new clients can benefit from the innovation and we can provide the startup scale and guidance … because payments are not simple.
“There’s so much you can do with the legacy rails and some of the innovation that’s coming,” he says.
“But no one has a crystal ball.” Ultimately, when he considers new payment applications, Parikh thinks of his wife and 6-year-old. “If my wife is in the store with my daughter at the checkout line, what is going to make it easy for her to pay and keep an eye on my daughter? If it involves taking out her phone and logging in just so she can pay, I’m not sure that’s the answer.”