Beyond The Transaction: Data - The Problem & The Solution

In this episode of Beyond The Transaction, host Todd Linden, CEO of Woodforest Acceptance Solutions, sits down with Giovanni Diano, the company’s CFO, to discuss the critical role of data in the payments industry. They emphasize that while often overlooked, financial data presents both a significant problem due to its sheer volume and complexity, and a powerful solution for businesses striving for growth and efficiency. Diano highlights the long-standing challenge of obtaining clean, easily analyzable data amidst millions of records generated by various transaction types and customer interactions. They share their company’s journey in moving from disparate data sources like mainframe files and Microsoft Access to a modern switch-to-issuer platform, which provides more complete and manageable transaction data closer to the source.

The conversation delves into how this improved data accessibility has transformed their finance team into a strategic asset, leveraging financial planning and analysis (FP&A) to not only serve internal objectives but also provide competitive advantages for their partners. Linden expresses surprise that prospective partners rarely inquire about data accessibility or the strength of their finance staff, often focusing solely on economics. However, he stresses that sophisticated data capabilities are crucial for post-agreement success, helping partners and merchants understand performance, optimize payments, and identify growth opportunities. They clarify that their focus is on performance data for merchants and not on identifiable personal data or marketing to third parties.

Looking ahead, Diano envisions a future where payments data, especially for software companies embedding banking services, becomes a central tool for enhanced analytics. This includes correlating payment trends with external factors like weather or local events to provide deeper business insights. Both agree that the vast amount of payment data holds immense untapped potential for businesses to understand their own narratives, predict market trends, and inform strategic decisions for expansion and product development. They believe it’s an obligation of payment processors to empower merchants with their own data to inform everything from financial reporting and marketing to operational efficiency.

Key Takeaways:

Data in the payments industry is incredibly voluminous and complex, posing challenges for timely and accurate analysis.
Moving to modern payment platforms significantly improves data accessibility and usability, transforming it from a burden into a strategic asset.
A strong, data-driven finance team (FP&A) can be a competitive advantage for both payment processors and their partners.
Beyond residuals, prospective partners should prioritize a processor’s ability to provide clean, actionable data for merchant performance and strategic growth.
Payments data can help merchants understand their business performance, optimize strategies, and make informed decisions for growth and marketing.
The focus on data is for performance metrics and business intelligence, not for selling identifiable personal data.
ISVs and embedded banking platforms can leverage payments data for advanced analytics, correlating it with external factors to gain deeper insights and drive value for their customers.

Watch Episode: https://youtu.be/e18Iz1s740g