A Transforming Industry: Exclusive Q&A With Financial Services Roundtable CEO Tim Pawlenty

The head of the industry lobbying group sat down with Bank Systems & Technology to discuss some of the major issues affecting financial services.

Since being named CEO of the Financial Services Roundtable last September, former Minnesota Governor and one-time Republican Presidential candidate Tim Pawlenty has been tasked with representing the 100 integrated financial services companies that make up the Roundtable to Washington policymakers.

Governor Tim Pawlenty

Pawlenty, 52, served as Governor of Minnesota from 2003-2011 and, before that, was a member of the state’s House of Representatives from 1993-2003, where he served two terms as Majority Leader. Though this chapter of his career represents a turn from his time as an elected official, Pawlenty says it is exciting to be working in an industry that has such a huge scope and impact on daily lives as does financial services.

"It was an appealing opportunity for me," he says of heading the Roundtable. "It's a way to stay in public policy and really lean into business and finance issues in a substantive way at the leadership level."

I sat down with Pawlenty recently to discuss a wide range of issues facing the industry. Here's some of what he had to say:

Bank Systems & Technology: What are your thoughts on Dodd-Frank, and the overall regulatory environment around financial services?

Pawlenty: Dodd-Frank is a helpful piece of legislation, but it needs to be implemented in a common sense, clear manner that reflects the needed balance between regulation and economic activity. And the bulk of the work in that regard remains to be done, because much of it has not yet been developed or implemented. There are many aspects of it that we remain interested in, such as the Volcker Rule and making sure that gets developed and implemented in a simple and manageable form. We're also interested in a series of mortgage issues, lending issues, and things like the CFPB [Consumer Financial Protection Bureau].

So far our relationship with the CFPB has been constructive, and we endorse [CFPB Director Richard] Cordray, but we'd like to see reforms in terms of oversight and funding. We think there should be a board of 3-5 members overseeing the CFPB and their funding. And currently, none of that exists. But overall, it's been constructive dealing with them.

Bank Systems & Technology: How can the industry best combat the ever-increasing cyber-security threat, and is more information sharing needed?

Pawlenty: It's obviously an emerging topic as applied to the financial services industry, and we're thankful for the executive order that the president issued to help fight cyber espionage and attacks. We also support the CISPA [Cyber Intelligence Sharing and Protection Act] bill that passed in the House, and we're hopeful the Senate will take similar measures.

The important thing to realize is that there is need for the government and financial services industry to share best practices, but that does not mean sharing consumer data. We need to share information about the threats coming in and the means and methods to fight back against them. Many of the attacks coming in have been DDoS attacks, slowing down access to websites, but we also need to remember to remain vigilant and diligent in preventing more low-tech crimes, like ATM fraud.

Bank Systems & Technology: What are your thoughts on how mobile technology has affected financial services, will the industry eventually move toward a completely mobile world?

Pawlenty: The world is just massively moving in that direction, you can't put the toothpaste back in the tube, so to speak. There is an increasing number of transactions taking place on mobile devices every day. It's an accelerating area of activity and measures need to be taken to make sure those transactions are protected and secure. None of these systems are 100 percent foolproof, including some of most established systems around, they all have some degree of risk of hacking attached. We have to make sure everything is as secure as possible.

Mobile will continue to evolve and transition, and where that ends up remains to be seen. I think you are always going to have a need for people to have personal interactions in their financial services relationships, and I don't think brick-and-mortar locations will go away.

Bank Systems & Technology: What about all of the new technology companies that have popped up in recent years offering payments and other financial services. Is there a threat banks get completely disintermediated in the future?

Pawlenty: Well, there's always going to be a need for banks because of the clearing functions they provide, but on the other hand they don’t just want to be clearing houses. They want to provide services. When you look at some of the companies emerging in payments and e-commerce, retail and other verticals, if you have the capability to store value and transfer it and accept it as payments those are the makings of a transformative set of disruptive competitors.

The challenge for banks is to be part of it, and they're working hard at it and making good progress. I anticipate banks will be vying to be service providers and will not cede territory and will compete to be a part of it.

Bryan Yurcan is associate editor for Bank Systems and Technology. He has worked in various editorial capacities for newspapers and magazines for the past 8 years. After beginning his career as a municipal and courts reporter for daily newspapers in upstate New York, Bryan has ... View Full Bio