Disintermediation, Payments, and…Modo!

Originally published by Matt McBride, Modo CISO

The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second is that automation applied to an inefficient operation will magnify the inefficiency.

Bill Gates

Disintermediation is a term you may have heard of before. Its origins can be traced back to 1967, when consumers began to avoid intermediaries like banks by investing directly in securities such as mutual funds, hedge funds, bonds, and stocks rather than leaving their money in savings accounts. Today our digital economy is searching for inefficiencies and rooting them out. Companies that do this well lower costs and dramatically increase profits for their stockholders. Organizations that do not will be left behind.

Over the course of a technology career centered around payments, finance, and security I have seen a lot of inefficiencies. In managing $15 billion a month in payment processing at a Fortune 25 bank, I saw the impact on consumers and organizations. Outside of a bank, payments become even more challenging and complex. As you make any kind of payment (through PayPal, Apple Pay, credit cards, etc.) there is a lot of scrambling going on in the background. Someone must transfer the money accurately and reliably so that it gets to where you want it to go. Sounds easy, doesn’t it? The reality is it’s very messy and complicated, and large organizations like banks and airlines devote hundreds of people and millions of dollars to accomplish it each year. Other companies like merchants just want their money, but they pay a significant percentage of their sales for each transaction – which they would prefer to keep. The process is often fraught with structural challenges and attempts to automate the manual and time-consuming back office workflow can magnify the problems. Everyone wants to get their money as quickly as they can send a text message on their smartphone. Why shouldn’t this be the way payments work?

I have been mulling this over for some time now. Following a tour as the CIO of a nationwide financial services organization, I went into four years of executive consulting. What I found from working with other companies is that not much had changed. Time has passed, but payments is still an area ripe for disintermediation. Frictionless payments benefit everyone: the consumer, the merchant, banks, and national economies. That is where Modo comes in. In short, Modo has figured out how to make payments frictionless, benefiting everyone involved. 

A large part of my work at Modo will leverage my deep technical background as an architect and as an adjunct professor in graduate level cybersecurity at SMU in Dallas. Initially, much of my focus will be as our Chief Information Security Officer (CISO). Cybersecurity is another area where heavyweight approaches abound, and where companies frequently overspend to build a cyber system aimed at today’s threat vectors. We need to be flexible and adaptable to meet not only today’s threats, but also those of the future. In building a best in class security framework and system at Modo, we have leveraged world class platforms like Amazon’s AWS to protect our house. From a process perspective, we are leveraging the National Institute of Standards and Technology’s (NIST) risk and cybersecurity framework and industry best practices to meet tomorrow’s threats. Our approach encompasses best practices from a wide range of industries but is aimed squarely at the unique challenges of the payments industry. 

Modo has a great culture, and we are passionate about our mission. I have known Bruce and many of the people here for years, and we are all focused on simplifying payments. Many of us have lived the challenges, and we are thrilled to be part of the solution. We work hard, play hard, and are thrilled to be bringing the answer to everyone’s payments nightmare. And best of all, our frictionless approach to payments is working today! Stay tuned as we work to magnify the efficiencies this will bring to our customers, our stakeholders, and a global and diverse digital economy. 

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