Today’s business leaders must be nimble in this time of rapid change and revolution. That’s especially true in finance, as fintech and alternative investments are transforming the industry—and society—across the globe. The stakes are high, and that’s why Wharton has announced the launch of two vital new initiatives: the Stevens Center for Innovation in Finance, and the Joshua J. Harris Alternative Investments Program, both of which will ensure that the School remains at the vanguard of 21st-century finance and beyond. Here, seven alumni setting the pace in fintech and alts share insights into their careers, offer advice, and look to the future. Whether they’re acquiring and guiding Silicon Valley startups or setting blockchain in motion around the world, each of these trailblazers symbolizes what the Stevens Center and the Harris Program aim to achieve—by guiding and inspiring the visionaries of tomorrow.

EMBRACE CHANGE

Jacqueline Reses W92
Capital lead of Square; San Francisco

When Jackie Reses started at Square Capital in 2015, the startup was made up of about a dozen employees. (Square Capital is the business financing division inside payments company Square Inc., which was co-founded by Twitter’s Jack Dorsey.) The new job was a departure from her previous role as chief development officer at Yahoo, and from two decades of working on Wall Street—but it was a chance to have a hand in creating impactful change in the financial community. Plus, it was inherently exciting to help build something new.

Reses leads the Square Capital team and its development of a suite of lending products that unlocks credit for those having a hard time with traditional borrowing, like small businesses. By changing the risk paradigm and using machine-learning models to evaluate a broader set of data, like transactions, Square gets a real-time look at the success of a business. “Square becomes their entry point into the financial system. And from there, they can use tools across their business that give them the same analytical power as a large company,” says Reses, who also sits on the economic advisory council of the Federal Reserve Bank of San Francisco.

This fintech innovation is less about disruption and more about economic empowerment. Take, for example, Joanne Canady-Brown, who owns the Gingered Peach bakery in Lawrenceville, New Jersey. “She’s highly educated, with a successful business for 13 years, but she wasn’t able to get a loan,” says Reses. Canady-Brown received $25,000 a few years ago from Square to grow her company—and has already paid it off. Even sweeter? Last year, the James Beard Foundation tapped her as a fellow in its women’s entrepreneurial leadership program.

As of the second quarter of 2019, Square has extended $5 billion in loans; more than half go to women, and more than a third go to minority-owned businesses. “It’s enjoyable to work in an environment that’s pushing access for those who haven’t been included,” says Reses. “Sometimes you’re paving the way in a highly complicated regulatory environment, and it can be hard to do. Luckily, we had the resources to figure out where we can innovate.”

BUY INTO BLOCKCHAIN

Asheesh Birla WG10
Senior vice president of product at Ripple; San Francisco

There’s a new demand for instant payments now that companies like Airbnb and Uber have gone global, but something is getting in the way: an archaic banking infrastructure. “The people who need instant payments the most are also disadvantaged the most with the existing system,” says Asheesh Birla. “There’s got to be a better way.” In other words, family members sending tuition money or drivers living “ride to ride” shouldn’t have to deal with expensive transfer fees or lags in processing. Which is why Ripple, where Birla’s been since 2013, is leveraging blockchain-based technology and the digital asset XRP to both lower the cost and increase the speed of transactions—especially across borders.

Ripple may be in the cryptocurrency space, but it has always worked alongside global regulators to change the financial system from within. Birla recalls that when he was a product manager for startups in the early 2000s, the philosophy was always to build, build, build, and not worry about anything else—including regulation. “But at Ripple, and in fintech, you need to be educating regulators,” he says. “We started that journey early on at Ripple, and it’s becoming a bigger and bigger part as blockchain becomes more mainstream.”

Birla oversees the tech aspects of Ripple’s products, but he also spends a chunk of his time looking for the right partners in the right regions of the world to expand Ripple’s “payment rail” network. In India, for example, there are more than a billion mobile users—but many rarely use a bank account. So linking those users to the global economy could be a huge opportunity. Birla was particularly excited about a key partnership landed in June with U.S. moneywiring giant MoneyGram, which is already in 200 countries and territories.

Silicon Valley has suited the 41-year-old: He sold his own content management startup to Thomson Reuters in 2002, and Fortune has named him among its top fintech leaders. Yet he says there’s still so much more innovation ahead. “Blockchain is the new Internet,” says Birla. “If you look at entrepreneurs who do really well, they’re three to five years ahead of major trends. With blockchain, you’re still early on. And if you can be a few years ahead of mainstream, you increase your chances of success.”

BET BIG ON FINTECH

Rana Yared C06 W06
Partner, Goldman Sachs; New York and London

“Significant, humbling, and the culmination of a lot of hard work.” That’s how 35-year-old Rana Yared describes her feelings about recently being named one of Goldman’s youngest partners. She started as a Goldman analyst in 2006 and rose to managing director in 2013; now, as a partner in the firm’s new Growth and Venture team, she oversees investors in New York and London who specialize in fintech and other verticals. (Fortune ranked her number six among fintech leaders on its “40 Under 40” list last year.)

Yared isn’t just leading a historic firm into the digital age. She sees another purpose for the 80 companies that her group has invested $1.4 billion in. “Each one of them is addressing a real problem,” says Yared, “and it’s a chance for fintech to touch more Americans. These are applications that people can really feel.” Examples: New York-based Vestwell, which aims to reshape retirement planning, and Unqork, an enterprise software company that has a no-code (and no-fuss) platform to help financial service and insurance firms develop software. There’s also a secure messaging company from California, called Symphony, whose product improves workflow efficiency for industries with high security needs. (Think: Slack for Wall Street and governments.)

Her teams turn a profit on these investments—and often apply the technology, too, including the artificial intelligence of Kensho, which can be used by the firm for financial analysis. “What’s encouraging is that AI has the ability to augment the humans. It’s a misconception to say, ‘The robots are coming!’” says Yared. “I view it as a turbocharging of what a discerning sales professional is trained to do.”

Another trend in fintech investments, she says, is the focus on the banking needs of small and medium businesses. “They’re trying to disintermediate consumer and commercial banking in processes where there are underserved clientele,” says Yared. “Lots of businesses sit somewhere uncomfortably between, say, a consumer like you or me and companies like GE. There has to be an in-between.”

FIND STRATEGIC PARTNERS

Anré Williams WG90
Group president of global merchant and network services, American Express; New York

How does a 169-year-old business like American Express maintain its top spot in payments and financial services? “We’re always seeing what’s on the cutting edge,” says Anré Williams, who joined the corporation in 1990. “We look for ways to partner or invest in smaller companies so we can learn.” To do just that, it launched American Express Ventures in Silicon Valley in 2011—which so far has invested in more than 50 smaller fintech companies. “It’s a way for us to learn about some of the core things that are changing,” says Williams. “And sometimes, we influence their thinking as well.”

It also puts the company in a position to have first dibs on valuable acquisitions like a device authentication system called InAuth. “We started off with investment, then we used InAuth with American Express, and then we bought the whole thing,” says Williams. “Safety, security, and trust is the heritage of our brand, so if we find something that’s going to protect privacy, we’re going to listen.” The tech acquisitions are also a chance to enhance the brand. Amex recently acquired two platforms—LoungeBuddy, for navigating airports, and Resy, for booking trendy restaurants—that now provide unique benefits for card holders.

Change may be necessary, as it was last year, when Amex did away with credit card signatures globally in order to make the purchasing process easier for both merchants and card members. In addition to the evolving payments landscape, Williams sees a big focus in the future on regulation—the payments industry is governed differently around the world—and privacy, like the concern with data protections for Facebook’s proposed Libra cryptocurrency.

But adapting is an opportunity: When Square entered the payments scene, there was initial concern that it would be a major disruptor because it wasn’t following traditional models. “Smaller, entrepreneurial companies want to provide something different,” says Williams. “They find cracks in the industry, and they try to fill the cracks. And sometimes, big companies come out of those little cracks.” But as Amex learned more, Williams says, Square has turned into a valuable partner. And although the two may still compete in some ways, their partnership also helped Amex grow card acceptance among small and micro merchants.

SEEK OPPORTUNITY

Dawn Fitzpatrick W92
CIO at Soros Fund Management; New York

As head of investments at UBS Global Asset Management until 2017, Dawn Fitzpatrick managed more than half a trillion dollars, hundreds of funds, and thousands of clients. “I thought I’d work there until I retired,” says Fitzpatrick, who spent a total of 25 years at UBS. “But when you get a call from Soros, it’s very hard to resist.”

The $ 26 billion Soros Fund Management consists of the family wealth of billionaire philanthropist and iconic investor George Soros. It fuels an $18 billion family endowment, called Open Society Foundations, that’s the third largest in the world of philanthropy. “One of my mentors told me to work somewhere where you can make a difference in the organization—and also where the organization itself makes a difference in the world,” she says. As part of personnel changes, she made the overall team smaller for more practical, organic collaboration: “We really focus on uniting the team in ways that will allow us to play to the strengths of the platform to serve the family and foundation well.”

Fitzpatrick is the first female to run the fund. “Women look at risk, opportunities, and problem-solving differently than men,” she says. “It’s an advantage in what is a male-dominated world of global investors.” Fitzpatrick has been consistently named as a leader in the hedge fund space—Worth included her on its list of powerful people in global finance for the past two years— and serves on the Federal Reserve Bank of New York’s Investor Advisory Committee and the Barclays board.

“What’s really interesting and readily apparent right now in the industry is the edge, or alpha, in public markets that the hedge fund space has been mining for decades and decades,” says Fitzpatrick. “Markets have become more efficient, so there is less edge.” While the edge has decreased, she explains, the smart use of data to make decisions is becoming more of a necessity—effectively creating “moats” around scaled early adopters. She adds that the uniqueness of the Soros platform (i.e., a completely unrestrained investing mandate) gives it a competitive advantage: “We can use our scale and nimbleness across asset classes and geographies to access investment opportunities that are harder for others.”

 

RETHINK DEAL DNA

David Mussafer WG90
Chairman and managing partner, Advent International; Boston

When Walmart decided it wanted to exit from Brazil, Advent International—one of the largest global equity investors, with 15 offices worldwide—made an offer: Advent was prepared to acquire a majority stake of the operations. “It was challenging, because Walmart is one of the largest employers in that country, with more than 50,000 employees,” says David Mussafer. “But it was also exciting.” This was just one of several carveout deals that Advent closed over this past year in which it bought assets from big companies that have made a decision to “prune” in certain areas.

Advent, which has invested in 41 countries, looks for ideas and trends that can be executed around the world. Take, for example, the payment industry, where they’ve completed nearly a dozen investments from the U.S. to Europe to Australia. “While things are a little bit different in each country, this sector-based approach helps direct our investing globally,” says Mussafer. “Today, we’ve built a truly global platform.”

One of Advent’s most popular North American investments is Lululemon. Advent has been on a journey with the athletic apparel firm since leading a buyout of the company in 2005, when it had only around $100 million in revenue. Advent made a second investment in 2014, seeing Lululemon through a rough patch when its stock took a hit. Now? The apparel company is projected to be on track for $4 billion in 2020. “Many people think about private equity as only driving cost-cutting, but they don’t think about how PE shops help companies accelerate and adapt in very turbulent environments,” Mussafer says. “We’re focused on finding more techniques to help our portfolio companies grow.”

In addition to helping put together an “all-star” management team at Lululemon, including CEO Calvin McDonald, Advent is advising in areas like data analytics and navigating the digital environment, as well as enhancing relationships with customers by adding new services. (Lululemon’s newest —and biggest—location, which opened in Chicago this summer, has workout studios in which you can test out select gear, for free, during classes.) Mussafer notes that throughout the industry, every private equity group is trying to figure out how to be even more impactful with the companies it invests in: “We don’t say, ‘This is what an Advent deal looks like.’ Rather, we challenge our pros to help us figure out the new investment areas and deal structures, and to be the first one to figure out how to get it done.”

REDEFINE WITH TECHNOLOGY

Billy Quinn W92
Founder and managing partner, Pearl Energy Investments; Dallas

From the evolution of drilling to the discovery of hydraulic fracturing, technology has always reshaped the energy business. “We can now drill wells that are 20,000 feet away from the surface hole with pinpoint accuracy,” says energy investor Billy Quinn. He adds that even just 10 years ago, natural gas was more expensive to develop. “But as technology evolved, we learned that we have a very, very large and relatively cheap supply of a clean-burning fuel.”

The energy sector is much more driven by global macroeconomic events than other markets. “It requires the investor to pay attention to a lot more than the business itself,” says Quinn, who’s been doing just that for 25 years. When he started out at Natural Gas Partners in 1995, it was small—maybe a couple of $35 million funds—but over time, it evolved into a multibillion-dollar private equity firm. Pearl, which he founded in 2015, mostly invests in oil and gas companies in the lower-to-middle market, with $1.2 billion under management.

In energy, there’s always something new and different to contend with, whether it’s the ongoing depletion of oil and gas assets or slumping market conditions. “The flip side of a beat-up market,” explains Quinn, “is that it provides some unique buying opportunities if you have capital to deploy.” One recent Pearl investment includes the backing of Red Wolf Natural Resources, a new upstream oil and gas exploration company headquartered in Oklahoma, with which it partnered in March.

Looking into the next decade, Quinn expects technologies to continue to affect the industry—especially when it comes to cleaning it up. “Everything has an environmental footprint,” he says. “But I think over time, with technology evolving in a cost-effective way, you’ll see the oil and gas business improve from an environmental perspective.” Green tech could help in reducing overall wastes, treating (and recycling) wastewater, and finding a way to cleaner products. Adds Quinn: “We’ve realized some very large technological improvements over the past 10 years. With continued tweaking, I think we’ll keep seeing improvements, albeit more marginal. The energy business always evolves gradually.”

 

Published as “The Future of Finance Is Here” in the Fall/Winter 2019 issue of  Wharton Magazine.