Mastercard: a digitally disruptive organisation
When it comes to the operations at Mastercard, Mohammed Kamal, Senior Vice President, O&T, reflects on the history of the company. “Just looking at Mastercard's payment network, it has a unique architecture with triple redundancy built in, operating globally, peer to peer and with local AI decisioning. The way Mastercard and Mastercard’s network has been built over the years is different from some of our competitors, which I believe provides a quicker and higher quality of service for our customers. Beyond our historic payments network, I think Mastercard is in a position to disrupt itself. Where you typically associate Mastercard with credit card or debit card payments, being disruptive has taken us into areas such as account-based and bill payments, which have grown over the years. While we've been diversifying into services for some time, we're also diversifying into multiple payment rails that you typically wouldn't associate with Mastercard. For me this is one of the big things that makes Mastercard unique compared to some of our competitors.”
Kamal adds: “When I look at digital transformation and being disruptive, it is important to move from a place where the digital and core businesses are not separate to be successful. The core business itself has to evolve into being digital rather than adding a digital veneer and keeping the existing core processes in place.” This approach is something that Kamal sees as fundamental when digitally transforming business operations. “It's visible when you look at a company, which ones have added digital as an afterthought, versus which companies actually reinvented themselves to be digitally native. Much of the time the result is a hybrid. Sometimes you'll see competing products within an organisation, some that are digitally enabled but which obviously started off in more of an analog form, and then you have new products, built from the ground up that are digitally native. I believe for companies to be successful, it's important to really reimagine what's possible without the confines and design assumptions of the non-digital legacy products. If you build new products from the ground up, I think it opens up new doors when it comes to their flexibility and agility. There is, however, a tremendous amount of underlying infrastructure and plumbing needed to successfully pull off a digital transformation. Digital is much more data-rich, so it typically goes hand in hand with more advanced warehousing and analytics capabilities. In addition, digital tends to be exposed through web and application programming interfaces (APIs), which require their own sets of supporting infrastructure and security capabilities.
When it comes to the application of cloud, data and analytics and artificial intelligence (AI), Kamal states that “all are obviously important but for various reasons and applied across different industries. For our organisation, which accumulates large amounts of data, being able to draw insights based on data is extremely important and I would rank this the highest out of the three. A lot of our fraud engines and insight platforms run on aggregated data which is invaluable. We're also, however, enabling the exchange of data between participants in an ecosystem. Mastercard is very well positioned as a network where we bring together different parties - merchants, billers, acquiring banks and consumer banks - in a network. These new, digitally native products, one of their selling points is that they enable a richer exchange of data than their analog counterparts through ISO 20022 messaging standards. These standards provide the capability to carry a lot more information back and forth, driving value for parties in the ecosystem. This exchange of data enriches the whole ecosystem, and provides for a more symbiotic relationship between us and our partners.”
Reflecting on the capabilities cloud technology can provide, Kamal explains that “you can gain tremendous amounts of value. But first it is important to determine the best use case for this technology. Mastercard, for example, has a good footprint of data centres around the world in different regions. In some instances, cloud makes sense and other times it doesn’t, but the flexibility of cloud and the ability to leverage an OPEX model versus a CAPEX model provides scalability and flexibility. I think there are use cases, especially in the face of nationalism, where you may need to have something hosted in the cloud. For that reason, I have generally taken a hybrid cloud approach when going down the path of cloud enabling solutions. The greatest value I see, however, is that the techniques applied when using a hybrid-cloud enabling platform generally make the platform more scalable, agile and vendor agnostic, which in itself is valuable whether actually deployed in a public cloud environment or not.
Mastercard has been leveraging AI for its fraud services for over 10 years. “We have very advanced fraud detection capabilities that we provide our customers,” says Kamal. “One of the techniques that I think is interesting with AI is the use of assistive AI versus fully autonomous AI - or a mix of the two, depending on the use case. There's still tremendous value in having human intervention and making sure a human is kept in the decision making loop, but drastically empowered as a result of the AI. For example, fraud detection is sometimes one of those use cases where selectively involving the user in the decision making process can provide for a better, more confidence-inspiring user experience. But other use cases could be in the space of bill payments, where a manual enrolment process can take a consumer half an hour - if not longer – trying to identify and link with the different billers they have a relationship with. An assistive AI solution can bring this time down significantly, reducing friction for the customer, yet keeping them in control of their personal and financial data.”
Another technology trend Kamal has seen emerge is the use of open banking, “we’ve seen a huge amount of action in this space. I use the term ‘open banking’ loosely because it differs in different regions of the world, but it's the idea that the bank is opening their ‘walled garden’ in a controlled and secure way so that a customer can use the data for their benefit with other products.” In some cases the banks themselves are building new products based on this Open banking paradigm. The Consumer Application division here at Mastercard is helping our partners do just that. More generally, in the industry, I am seeing an increase in partnerships and collaboration between banks, which are well positioned with bank grade security and safety compliance built-in, with fintechs that are providing customers experiences the banks have not been able to provide in the past. At Mastercard, we want to support all members of the open banking ecosystem. We’re focused on delivering solutions that will enable these experiences, whether that is delivered just by a bank, just by a fintech, or in partnership.”
With many organisations around the world being affected by the impact of COVID-19, Kamal explains that “Mastercard has very rigorous business continuity plans that are tested regularly so we are ready to respond when an unexpected crisis happens, such as COVID-19. As you would expect, the teams are executing our operations very well. We work very closely with our customers as well as having our own VCP processes to ensure that as our customers encounter challenges within their business we are able to accommodate them. Our continuity plan not only looks at how our company could be impacted but whether our customers could be impacted, what policy changes we could make, what rule changes? And what can we provide to help them?” Since the outbreak Mastercard has been implementing a variety of initiatives in order to help its customers navigate the impact of the pandemic.
When it comes to digital transformation and adopting the current trends within the technology space, Kamal highlights the importance of having the right products and services to be able to capture the opportunities innovation provides. “I think that's the key message, it's not always easy to predict what the market will need in one go, but much of the time we are investing in flexible underlying product infrastructure, while the use cases themselves develop more organically. I think it's important to build with flexibility so that, while you may build a set of technology or products for a particular use case, or you have a business case in mind, you also need to be able to pivot the technology for different use cases if the need should arise.”