Banking

Even as banks take on Venmo, PNC executive seeks fintech partners

PNC executive Michael Lyons sees upstart fintech companies as potential partners, not competition.
PNC executive Michael Lyons sees upstart fintech companies as potential partners, not competition. rrothacker@charlotteobserver.com

While some might see emerging financial technology firms as competition, PNC executive Mike Lyons sees these upstart companies as potential partners.

As the Pittsburgh-based bank’s fintech leader, Lyons has spent the past couple years meeting with these companies and their investors, seeking new ways PNC can use technology to enhance its various products and services. So far, the company has invested in a handful of companies and launched an incubator that seeks to work with academics and other innovators.

“Since the beginning we have had a fully open-door policy,” Lyons told the Observer during a recent visit to Charlotte, where PNC Financial Services Group has 17 retail branches as well as other operations. “We have not viewed fintech as the enemy. We said we would meet every single one, and we’ve looked for ways to work together.”

In one of its more high-profile efforts, PNC is among the U.S. banks rolling out a new money-transfer service to compete with Venmo and other payment apps. Zelle works inside the banks’ existing apps and has the advantage of making transferred money immediately available to customers.

“It’s about giving our clients an alternative way to make payments that’s faster, easier and more secure,” says Lyon, who was in Charlotte for meetings with clients and employees.

PNC, which entered the Carolinas through the 2012 purchase of RBC’s U.S. unit, is one of a number of big banks that have invested in Early Warning Services, the company that developed Zelle. The service is currently available for PNC’s “Virtual Wallet” digital customers and will launch in late July for everyone else.

Lyons joined PNC in the fall of 2011 as head of its corporate and institutional banking group, a role he continues to hold. He came from Charlotte-based Bank of America, where he had been head of corporate development and strategic planning. He served as a key adviser to CEO Brian Moynihan, helping with asset sales and other efforts to bulk up capital.

Michael P. Lyons
Michael Lyons, head of PNC’s corporate and institutional banking group PNC

“I tried to contribute to the rebuilding of the balance sheet,” Lyons said. “I was confident we left it in great shape, and that has played out over time.”

Tech investments

As head of corporate and institutional banking, Lyons runs a business that provides lending, treasury management and capital markets-related services to mid-sized and large companies. In 2016, the business had earnings of about $2 billion, flat from the previous year and accounting for slightly more than half of the bank’s overall income.

PNC’s corporate business differs from its peers because it’s not trying to build a big investment bank, Lyons said. For example, it’s not in the business of selling and trading securities. That’s because PNC doesn’t want to have a conflict between a corporate client and an investor client involved in the same transaction, he said.

The bank, though, does have some capital markets operations, including Harris Williams & Co., a firm that provides merger advice to mid-sized companies, and Solebury Capital, which advises companies on initial public stock offerings. One Solebury client was Charlotte-based door and window maker JELD-WEN Holdings, which went public this year.

Overall, Charlotte has been a strong market for his corporate business, Lyons said. In its overall Western Carolina division the company has more than 600 employees, and Lyons said he expects that to increase, thanks to the area’s growth, the abundance of local banking talent and the relocation of some PNC executives.

“We think we have just scratched the surface here,” he said.

A couple years ago, Lyons added fintech duties that had mostly fallen on the plate of PNC CEO William Demchak. Much of the fintech world touches on the payments business, so it had a connection to his corporate duties.

“We felt strongly that fintech was not a line of business,” Lyons said. “It was a way of doing business.”

In recent years, PNC has spent around $1.2 billion to upgrade its core technology, including cybersecurity systems. Now it’s focusing more on developing new products and services for customers, such as Zelle, Lyons said. Another product it’s testing is a business-to-consumer payments system that would, for example, allow an insurance companies pay a claim directly to a PNC customer’s checking account.

In February, PNC launched its incubator called Numo, which gets its name from numismatics, the study of coins and currency. It’s based in an area of Pittsburgh where tech companies such as Google also have offices.

The goal is to get academics and other innovators to tackle technology topics that interest PNC, Lyons said. If the bank likes their ideas, it will help nurture the product and compensate the inventors, but hold onto the intellectual property. If the bank decides to commercialize the product beyond PNC, the inventors will get an equity stake.

“It’s very new,” Lyons said, “but the response has been very good.”

Rick Rothacker: 704-358-5170, @rickrothacker

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