Today, 2Checkout is proud to announce Shawn Budde as its new CEO. Budde brings a wealth of expertise and management cultivated over 25 years in the finance and banking industries. Mr. Budde has held executive roles at Citibank and Capital One and is also the co-founder and President at ZestFinance, a VC-backed technology company that merges big data with underwriting. To hep break the ice, Mr. Budde outlined some of his goals for 2Checkout and offered his thoughts on the progressive innovation that is currently storming the online payments world.
Can you tell us about your professional background?
I’ve been doing consumer finance for a little over 25 years at this point. I started when I was actually in college in New York. I found a job at Citibank in their credit card business. I got into this industry completely by accident, but what I found quickly is that I really liked the space: it fit many of the skills and interests that I have. I worked in both credit policy and in the fraud group. I actually developed the sticker on the back of your credit card telling you to activate it, and did a lot of other really fun things. I later went to CIT Group, which is an asset lender, and brought many of the techniques that I learned in the credit card industry.
I later decided to pursue an MBA at Wharton through a weekend program. My first daughter was born by that stage, so I moved back to New York and back to Citibank and did the 2-year MBA program. In the course of that program, I really looked at where innovation was happening in the credit card industry. At the time, most of that innovation was happening at Capital One, so I moved there in 1999. Capital One had already been growing very quickly, but continued to grow at a phenomenal clip during the eight years I was there. I ran the subprime credit card business, which produced the bulk of the earnings for the company. I was responsible for a debt collection business. I ran the operation that sent out all of the direct mail; that was a billion dollars a year in direct mail. Over the years, I became more and more interested in how customers reacted to the stuff that we were doing. Capital One has a reputation for being very quantitative, but at the time, it didn’t have reputation for great service. So, my last role at Capital One was helping to create a service culture within the organization, designing experiences from the customer’s perspective, rather than from an operational perspective.
What drives your passion in payments and banking?
It’s so central to people’s lives. There are a couple of different aspects to it. I like the marriage of the quantitative and the qualitative. You have so much data to work with in financial services. I enjoy spending time directly with customers to understand what their thoughts are, what their concerns are, and what they’re trying to achieve. Nobody wants a credit card. People want an easier way to exchange money, and some people want the ability to borrow money. A credit card happens to service both of those functions, but a credit card in and of itself doesn’t hold much utility. Payment service providers have demonstrated that you can deliver the transactional ease of a credit card without using a credit card. The interesting thing about this space, is that if you talk to customers and find out what they actually want, you can usually find data that either supports that people want something and are willing to pay for it, or that not many people want it at all. I completed research at Capital One and later at ZestFinance, and people would tell me that they wanted something, but it might have been novel — something only a select few wanted. The combination of the qualitative and the quantitative is interesting to me, and the fact that it’s so central to lives means that what you accomplish truly makes a difference.
For 2Checkout, the ability for people all over the world to tap in and sell to other people all over the world is a phenomenal engine for growth. As the world gets flatter, as the world becomes more connected, we need to give entrepreneurs better tools to participate in the global marketplace. 2Checkout offers that opportunity.
How do you think 2Checkout differentiates itself from other payment service providers?
2Checkout has reach. There’s certainly been a lot of activity in the US, with folks like Braintree, Stripe, and Square. Those companies definitely display innovation, but we’re seeing companies move globally much more quickly these days. Uber’s only been around for five years and is already in thirty plus countries. That’s just an amazing pace and it’s happening more and more often. 2Checkout is one of the leaders in offering people the opportunity to offer their product across international borders in a way that’s safe, compliant, and easy. There’s a lot of progress to be made, a lot of innovation coming, and we’re going to be a part of that. We’re going to have to be pretty active to keep up, stay ahead, and figure out what features customers really want from us to make payments easier for them to run their business.
Online payments is a fairly competitive space with quite a few players, especially domestically. How do you approach looking for new opportunities?
I look at folks like Capital One and First USA. When I entered the credit card industry, everybody thought it was a done deal. There were thousands of banks offering credit cards, but Citibank, Chase, and many banks that don’t exist anymore because they were merged really owned the space. That industry was very competitive, but people were focusing more on the marketing side than what they were able to offer to consumers. Pretty much all credit cards looked the same and had the same pricing at that time. Since then, the entry of Capital One and other players drove prices down and features up.
There was no such thing as a rewards card when I first entered that industry. Today, I can’t remember the last time I had a credit card that didn’t offer me some form of rewards. That industry was transformed by players coming in from outside. I think we’re seeing the same thing here. Some folks like Braintree and Stripe have differentiated on their ability to integrate more easily, and that’s great. It made things a lot easier for engineers, and for sites to set up those services quickly. 2Checkout is doing the same for companies outside the US. We are going to see that more and more on an international scale. There are certainly opportunities to offer better experiences to customers both in the US and outside the US.
On a related note, digital payments is also an area where some incredibly exciting, disruptive innovation is occurring. Why do you think this is happening now? What innovations excite you the most?
There’s a lot of enthusiasm for the space right now. I think it’s in part because of Bitcoin, and I think folks are afraid of getting left out of the cryptocurrency; but you also see that there’s an opportunity there. There are flaws perceived in the way that Bitcoin operates. If you can solve those flaws, maybe you can create something new. I’m a bit of a skeptic. The thing about currency, is that everybody has to agree on it. A US dollar has no intrinsic value — it only has value because people perceive it to be worth something. One of the challenges here is that you could create a bit of a cacophony if you create all of these alternative currencies. Whether its Apple or Google or anybody who creates a payment system, if they create a currency that’s unique and doesn’t connect well to other things, it’s not going to take off.
Interoperability, or the ability to move between currencies, is the key here. That’s part of what 2Checkout already does well. People buying goods in India don’t want to buy in US dollars, they want to buy in Rupees. They know that currency. Whether people want to buy things with Bitcoin or any other currency in the future, they’re going to want interoperability between those, whether they’re buying through their email address, checking account, or a whole host of the 50 to 100 payment systems that already exist. The ability for a merchant to accept all of those is just going to give that merchant a better reach. The ability for a merchant to adapt to what a customer wants to pay with is a huge advantage to the merchant. That’s where 2Checkout does and will continue to excel.