Data is really important.
That’s a simple declaration, but one that is core to MasterCard CEO Ajay Banga’s thinking around the credit card firm’s digital direction. It’s central to a philosophy of bringing increased smart capabilties that strenghten the provider’s relationship with its customers:
One of the things that my predecessors did many years back was to build a single unified data warehouse for the whole company and all our data flows into that and we’ve got a substantial warehouse where you can imagine people call it in terms of multiple size of the national weather laboratory.
What we have is data that does not include your name. I want to make sure people know that, because I’m not in the consumer business, I’m in the B2B2C business, not in the B2C business. So their names are not with me.
But when you get 50 billion transactions with account numbers and dollar value and merchant name and time of transaction, that’s gives you a pretty powerful set of data to play with. Then you bring Artificial Intelligence tools on that and you can do lot of interesting things with information and data, without crossing the line on who you really are as a company.
Assuming that data has been gathered and AI applied to it to identify trends and patterns, then that can guide decision-making. In pursuit of that sort of capability, MasterCard has recently bought a company called NuData. Banga explains:
NuData is a company that looks at the way you use that iPhone and how you hold it. So if you were to hold it differently from [one person], it will tell you this is not the same guy holding it. When he enters the password, the way he enters the password, it can tell you it’s a different guy entering the same password, and the fact that he types with two thumbs and then deletes 12 times, because you got fat thumb, is also something it will tell you.
As well as AI, Banga talks up an Internet of Things (IoT) angle on MasterCards’s strategic direction:
For most people, you kind of connect into things with your devices and you think that you’re safe and secure and you’re completely unsafe and insecure, if you’re not careful. You all go back into your beautiful cars and connect your phone and think that the Bluetooth is there and it’s great, because now you can call your wife and your husband and your child and shout at them. And you can shop for groceries while driving home and buy chicken and put on your oven to get to 350 degrees in the vision of the Internet of Things that every tech evangelist tells you about.
Banga it seems is none-too-impressed by such visions:
The issue is, first of all, why would you want to do that, whether in your house or whether in the car? Secondly, just a small matter, hacking into your Bluetooth is the easiest thing in the world for a kid of 10 years old. And from their [being] into your car, to then be able to change the way in which your car accelerates and brakes is not hard . If you don’t believe me, Google the topic and you’ll find real facts on that.
Ok, it’s a somewhat alarmist perspective, but what does it have to do with a credit card firm? Banga argues:
I’m saying that the Internet of Things is going to be a reality, because there is so much plus points around it from treatment of disease to managing older people, to managing the way your information is kept. There is no way you should hold it back. But you should go and enter into [the IoT] with eyes and ears open about the risk that comes with it and therefore the amount of data that will flow from every device. If your refrigerator starts talking to your toaster, well that’s a pretty large number of devices talking to each other.
Now, there is no reason why a stupid refrigerator [should] talk to your toaster, so if it does, you should know, that that’s a mistake and something is wrong and somebody’s hacked into it. Your refrigerator should be talking to Fresh Direct. If it starts talking to your toaster, you got a problem, or you don’t even know how to find that today.
All of this rather colorful preamble is bringing him round to his main point, which is the importance of authentication technology in a digtal world:
It will involve the specific identification of devices that are connected to the Internet, managing them in a way that their security is protected, managing them in a way, that when you put a patch on like your Apple iOS or your Microsoft software, you get patches updating security.
How do you plan to update the patch on your video camera that you bought eight years ago, that’s connected to the Internet? There is no way. How do you connect the patch on your refrigerator? There is nothing. You can’t live, this is not the way it’s going to be, it has to change. If this Internet of Things is going to become a reality, the rules of the manner in which technology works and gets upgraded for safety are going to come to reality.
That’s where authentication come into play, completely different from the physical world, where the systems have been built for that safety. So EMV [Europay Mastercard Visa technical standard] was built for that, chip and pin, chip and signature. My view is that tokenization, it just one step in creating EMV type security in the digital world, because it creates cryptograms and one-time codes, and it doesn’t allow the card number to go anywhere, just one aspect.
But the whole authentication topic is the much bigger topic than what a payments company in its payment space will focus on. I just think there is a whole digital footprint, digital ID authentication issue that to me is also business opportunity for companies like ours, if we use our skills and capabilities to extend into that space.
Nonetheless, it’s payments that are front and center for MasterCard, of course, and Banga pitches MasterCard tech offerings that address his concerns:
Selfie Pay, which is actually more reliable than even fingerprints being read, because you get more data points on a face. So when you get data points you can kind of actually do a good Selfie authentication or even further iris scanning, which Samsung is launching with us in their new Galaxy S8 phone, where not only will you will get Selfie Pay but you will get iris scanning capability to authenticate people.
There is a ton of these going on. Selfie Pay actually is gone live in a number of countries, starting with commercial payments and then headed into consumer payments. Biometric cards are being tested right now in South Africa and going into Europe and other countries, as we speak.
It’s important that MasterCard as a provider focuses on such concerns, adds Banga, as the customer won’t necessarily:
Most consumers value convenience over security, because they don’t understand the implications of this Internet of Things and the security needs that will come with it. I consider that to be a huge opportunity that will come up and also something that could be a drag on all our businesses in the digital space. If bad things happen, consumers lose trust and so it could be a drag as well.
This means that there has to be a standard ‘get out’ for consumers that is provided by the likes of Mastercard:
What I want to do is what we call digital-by-default for the issuers, which is the idea that the issuers should be able to enable 85 million accounts, 150 billion accounts, 200 billion accounts at one go and say, ‘These are just as [for]new, you used to get a card and your card comes in the mail, it has 1-800 call XYZ. You call them and when you call them and give them your home number or your social security number or something, they will enable the card and all the functions of the card get lies in that one call’.
It’s not that you got to make one call for purchase protection, one call for your credit line, it’s not that, it’s one time. The same way it should get live on digital, you should be digitally enabled with your wallet to run on MasterPass rails like that through the bank and that’s what we’re doing with these institutions rather than getting them to come to our website to sign up to use the wallet.
This is a competive differentiator, he believes:
It’s completely focused on the consumer experience, while leaving the bank in control of the relationships with that consumer, just kind of what they want as well. So, digital-by—default, multichannel and now what you got to do and now what we’re going to do is build new features into the wallet, build acceptance for it, and keep and sending consumers to use. It’s the stuff that we do for a living with our regular payments.
An interesting insight into the shape of things to come for digital payments, with just a touch of IoT paranoia thrown into the mix.