Publications

- July 1, 2021: Vol. 8, Number 7

Profile: Souheil Badran COO of 164-year-old Northwestern Mutual

by Mike Consol

Want to send a chill through the executives sitting atop traditional banks and financial service providers? Flash them the resume belonging to Souheil Badran. It speaks of his stints at the likes of Alipay Americas (an Alibaba subsidiary), Digital River (a global e-commerce, payments and marketing services company), First Data Corp.’s ecommerce solutions group, M&I Data Services (a financial software and services firm), and Edo Interactive (which provides personalized offers and makes them automatically available through credit and debit cards). In essence, the sorts of fintech companies that have been disrupting legacy banking and financial companies for the past decade or more.

Fortunately for them, Souheil Badran (pronounced sue-hale bahd-run) isn’t on the loose anymore. That is thanks to John Schlifske, CEO of Northwestern Mutual, who convinced Badran to join the giant insurance carrier in 2019, initially to oversee innovation, Northwestern Mutual Future Ventures, Cream City Venture Capital and the Wisconn Valley Venture Fund, through which Badran was assigned the task of identifying opportunities for innovation by funding startup companies.

As it turns out, Schlifske, who diversified the 164-year-old insurance company into a major player in the financial planning and wealth management field with more than $200 billion in retail client assets, has an appetite for disruption as well.

“What got me excited about Northwestern Mutual is that as an industry we were one of the last ones that hadn’t been truly disrupted,” says Badran. “Yes, we are known for being a great insurance company, but the power is in the integration between insurance and investments. I look at that and say, ‘can we be the organization that is helping move that ahead instead of having someone jump in front of us?’ That is the exciting part about being at Northwestern Mutual for me.”

Badran, now the company’s executive vice president and COO, argues the financial services industry has not done enough to make it easy for consumers to manage their money and plan their financial futures, and that has left clients overloaded with incomplete advice — in part the byproduct of organizations that promote investment-only or insurance-only offerings.

He foresees a future geared toward hyper-personalization based on better understanding of consumer behavior, and forms of digital commerce that increase speed and integration. The goal is to give clients a more holistic approach by providing self-service tools while also encouraging them to turn to their financial advisers for continued professional guidance.

Badran also cites an outside study as well as the company’s proprietary research that concluded financial plans that combine permanent life insurance income and annuities with investment are more likely to outperform those focused on an investment-only approach.

“When we look at the insurance industry specifically, there has been a significant change that is modernizing the industry,” says Badran.

A BIT BULLISH

Badran’s taste for disruption can be found within his personal investment portfolio, which reflects his liking for bitcoin.

“I have always been bullish on bitcoin,” he says, “but the last year or so I would say that is probably an asset that is of most interest because I am starting to see it come to fruition. So, full disclosure, I am putting some money in both Bitcoin and Ethereum. Those are the two cryptocurrencies I’m really focused on right now.”

He also notes that Digital River, his former employer, was one of the first companies to establish a partnership with Coinbase (the operator of a cryptocurrency exchange platform) in 2014.

His excitement for cryptocurrencies includes the belief, shared by many, that the world is heading in the direction of decentralized finance, which would allow for more peer-to-peer financial exchanges and wider overall access to the financial system. Badran acknowledges, however, that we are several years away from that achievement, primarily because consumer adoption remains a hurdle. Then there is the associated cost. While credit card fees are anywhere from 0.8 percent to 2.5 percent, cryptocurrency wallets are charging 4 percent to 5 percent.

“As a merchant, why would I pay more to accept a specific crypto payment method when I can keep my fees lower and knowing that my constituents all have credit cards?”

But it’s a nascent asset class, says Badran, and is subject to evolution and government regulation.

COMING TO THE UNITED STATES

Badran hails from Lebanon, though he lived there only 1977 through 1983 because of the brutal civil war raging in the capital city of Beirut. Father moved the family to Kuwait where he owned and operated his own business, importing fabrics from Europe and reselling them to Middle Eastern clothing houses.

“He was definitely a well-dressed man,” says Badran.

He eventually sold the enterprise and returned the family to Lebanon, only to leave again a couple of years later as the war continued to rage. This time he moved the family to Malta, the group of islands situated between Sicily and the northern coast of Africa.

Badran had aspirations to earn a university degree in the United States, taking an English test and applying to U.S. colleges, which ultimately led him to Cardinal Stritch University in Milwaukee, in part because Badran had attended a Catholic high school and saw Cardinal Stritch, a Roman Catholic university, as an environment he would find comfortable.

“My parents stayed behind when I came to the U.S. They didn’t see a future for me to finish my education in Lebanon because of the war, so there was a period of time when I didn’t see my parents for three-and-a-half years,” recalls Badran. “They literally put me on a plane, I came to the U.S., and I saw them at graduation. I considered myself blessed to have parents who sacrificed so much for me to get to where I am today.”

At the time, Badran didn’t know a soul in the United States but nonetheless found the country and the university to his liking, graduating in three-and-a-half years. One of his extracurricular activities was playing soccer for the Cardinal Stritch team, something he doubted would have been possible at a larger and perhaps more sports-oriented university. Over the ensuing years, Badran also earned his master’s degree at Cardinal Stritch, and served on its board of trustees for three terms.

Computer science was his course of undergraduate study. He enjoyed software coding and creating games and other programs.

“I was either going to follow in my dad’s footsteps and be in business, or computers. I focused on computers and thought at the time that if I have that skillset in my back pocket, I can always leverage it later on in life. Ultimately, I realized I enjoyed the business side of it a little bit more.”

Post-graduation career opportunities took Badran to Switzerland, where he moved with his family. The problem was travel. He traveled globally conducting business for VeriSign,  and was leaving a wife and young children behind nearly every week. He decided to remedy that situation by returning to Milwaukee in 2006 with a commitment to establishing roots for his family and maintaining a less aggressive travel schedule. He continued to travel on a regular basis until 2018.

“I spent some time with John Schlifske, our CEO, and, in a nutshell, I was interested in finding an opportunity that allowed me to combine my expertise across ecommerce, big data, security payments, venture capital — but in a place where I can make an impact,” says Badran, who had been a Northwestern Mutual client since 1994. He joined the company’s effort.

SOMETHING VENTURED FOR SOMETHING GAINED

When Badran first came aboard at Northwestern Mutual, he led the company’s $50 million venture capital fund, Northwestern Mutual Future Ventures, that invested in startups in financial technology, digital health, data analytics and the future of the consumer experience. During his time in that role, Northwestern Mutual expanded the Future Ventures effort through the addition of a $150 million second fund. The venture investing unit also sought to make an impact in diversity, dedicating $20 million to a fund investing in companies founded by women. It did the same for black entrepreneurs, who traditionally receive less than 1 percent of U.S. venture capital dollars.

There are two criteria for the kind of venture investing done by Northwestern Mutual. One is the obvious prospects for financial returns. The second is the opportunity to learn or gain something valuable from the entrepreneurs being underwritten.

One example is Santa Barbara, Calif.-based Carpe Data which provides data analytics solutions to improve Northwestern Mutual’s claims process. Another is Splash Financial, which provides student debt refinancing. Say a graduate has $200,000 in student loans; he or she can refinance the debt while allocating a portion of the refinancing proceeds to buy a life insurance policy or start an investment account.

Northwestern Mutual typically invests in series A and B rounds, as well as follow-on investments.

“We wanted the investments to align with our thesis around consumers’ changing financial preferences, reimagining the client experience, the digital health revolution, and analytic technologies,” explains Badran.

None of the VC-backed companies have gone to IPO yet. Northwestern Mutual typically invests in series A and B rounds, as well as follow-on investments.

“You’re probably familiar with some of these companies, such as Chime and Betterment, which are unicorns in their own right,” he says. “The returns have been fantastic, and we have kept our shares so far because we still see that there is continued growth there.”

His VC investing activities were followed by a brief stint as head of the company’s technology function, until Neal Sample was hired as chief information officer to fill that role in October 2019. Badran was then elevated to his current post as COO, a position that can seem droll because of all the quotidian duties of the day-to-day running of an organization — especially in comparison to VC investing. Badran says that, though he does spend his time involved with the different functions and roles within the company, he is also focused on how the company can continue to grow, which involves working on multi-year strategic initiatives.

“I’m an advocate amongst the senior leadership team and the key stakeholders to promote increased understanding of how automation can drive sustainable improvement and deep, structural long-term economic benefit.”

DOING THE RIGHT THING

At 56, Badran has turned into a “saver and a giver,” devoting his time and money chiefly to education and healthcare organizations and initiatives. He sits on the boards of Children’s Hospital Foundation and City Forward Collective, a local organization focused on providing young people with greater access to quality education.

His push for social change also finds a home in Northwestern Mutual’s diversity and inclusion initiatives. The father of three daughters, boosting diversity is central to his work at the organization. The Fortune 90 company is making strides in that regard, touting a board of directors that is 60 percent diverse in terms of gender, ethnicity, race or some combination of the three. The diversity effort involves recruiting people to the company while also cultivating homegrown talent. Every open job must have at least one non-white-male candidate on its slate of finalists.

Badran adds, “I am a champion of advancing women in the workplace not because it is a cool thing to do, but because it’s the right thing to do.”

AN APP FOR THAT

In retrospect, Badran faults himself for being too paycheck- and title-driven early in his career, a time during which he might have benefitted by spending more time in a particular industry or at a single company. One of the companies that made an impression was Alipay, which Badran summarized this way: “The speed at which they were moving in China was unbelievable. I don’t think I have ever seen the equivalent in my career.”

Among the projects Badran worked on was making the Alipay wallet usable in countries around the world to which 120 million Chinese citizens travel annually. His focus was on the Americas and serving the 3.5 million Chinese tourists coming to the U.S. every year.

Beyond creating a digital wallet, Alipay is an ecommerce platform that created a super-app allowing Chinese consumers to do everything from banking, borrowing money and making purchases, to buying movie tickets, beckoning an Uber ride and applying for a marriage license.

One can imagine the super-app concept has crossed Badran’s mind a time or two, considering Northwestern Mutual’s ambitions for expansion and integration, as well as Badran’s vision for a decentralized and more egalitarian financial system.

Like most good innovation, we probably won’t see it coming — until it disrupts some industry.

Mike Consol (m.consol@irei.com) is editor of Real Assets Adviser. Follow him on Twitter @mikeconsol to read his latest postings.

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