In an announcement (PDF) on May 29, 2015, the Federal Reserve named Gordon Werkema as the new Payments Strategy Director tasked with leading the major payment system improvement initiatives outlined in the “Strategies for Improving the U.S. Payment System” (PDF) paper. Werkema’s resume makes it easy to see why he is the right person for the job. His 35-year career with the Federal Reserve is ripe with current and former leadership positions that not only include first vice president and chief operating officer of the Federal Reserve Bank of Chicago, but many other roles such as leading the development of network solutions for Federal Reserve Financial Services and his efforts as the Federal Reserve’s liaison to the United States Treasury on payment and cash management issues.
Werkema was gracious enough to take time out of his busy schedule to answer a few of our questions and give us some insight into his new role as Payments Strategy Director.
Q: What will it take for you to be successful in your new role as Payment Strategy Director?
A: It will take strong stakeholder support to achieve the desired outcomes we’ve outlined in the strategies paper. My immediate focus will be harnessing the energy among stakeholders around possibilities to improve the U.S. payment industry. It’s really an exciting time to be involved in the payment world – not only for the Fed, but for all those who touch the payment industry. This includes consumers to financial institutions to tech providers and also the new entrants into the industry. Harnessing the energy to improve the payments system means moving from the idea stage to the prioritization and action stage. We will take this energy to focus on identifying and implementing solutions that will further our desired outcomes.
Excitement has been building even before we launched the paper in January. In March the level of energy soared with the kick-off of the Faster Payments Task Force and Secure Payments Task Force. Over 500+ participants, ranging from consumer groups to financial providers and institutions, signed up and contributed their diverse perspectives to these industry task forces.
Q: Why is there so much energy around improving the payments industry?
A: We are at a critical juncture in the evolution of the U.S. payment system and technology is rapidly changing many aspects of the payment process. High-speed data networks are becoming ubiquitous, computing devices are becoming more sophisticated and mobile, and information is increasingly processed in real time. These capabilities are quickly changing the nature of commerce and end-user expectations for payment services. Payment industry stakeholders are ready to take the next step in using their expertise and perspectives to help us build effective solutions.
Q: Which aspects of your new role are you most excited about?
A: I’m most excited about the fact that we have diverse industry stakeholders coming together and rallying around the initiative’s desired outcomes. Several countries around the world have already developed or are in the process of developing a ubiquitous, faster payments capability and the U.S. is at risk of falling behind.
I am also excited about the benefits likely to materialize from innovation that can be spurred by faster payments, similar to experiences observed in other countries. Equally important to faster payments, there is the realization from chief executive officers throughout the payment industry that security threats are real and increasing in frequency. The trust, reliability and security themes that make payments in the U.S. what they are today need to carry forward into this faster, more electronic solution. We will spend the next 18 to 24 months working with industry stakeholders to clearly set us on the right trajectory to solve for the issues and gaps within the current payment industry.
Q: What do you see as the most challenging aspect of your new role?
A: The U.S. payment system is complex, involving thousands of financial institutions, millions of individuals and businesses, and hundreds of nonbank payment service providers, including many new and innovative entrants. This makes coordination and broad adoption of improved payment services challenging and difficult to achieve. Delivering end-to-end payment solutions will require action on the part of all organizations involved in payments and therefore, a collective and collaborative approach to payment system improvement will ultimately increase the probability of successful outcomes.
I believe the work groups that will be supporting the overall task force efforts will offer some really exciting opportunities to close gaps in the payment industry and present solutions to the challenges we face today. Our focus will be on forming a roadmap for the industry to move forward.
Q: In closing, can you share some thoughts with us on the payment improvement initiative as a whole?
A: Bringing together hundreds of stakeholders from different segments of the payments industry to work on achieving a common goal has never been done before, so the Federal Reserve feels honored to have the privilege of acting as a leader/catalyst. We will do our best to advance and support payment improvements that are in the public interest and will contribute to long-term financial stability and economic growth.