Innovation at Scale James Anderson Executive Vice President Mastercard
1 trends in digital 2 implications for retail banking 3 Mastercard s innovations
trends in digital Mobile Internet Usage mobile internet usage reached half the world s population 2.2m Apple users are able to choose from more than 2.2 million apps. 2.8m Android users are able to choose from more than 2.8 million apps. A majority of consumers in Colombia will own and use a smartphone at least monthly by 2019, when penetration will reach 50.1% of the population, or 24.4 million smartphone users https://www.statista.com/statistics/276623/number-of-apps-available-in-leading-app-stores/ https://www.emarketer.com/report/mobile-colombia-2016-updated-forecasts-key-growth-trends/2001863
trends in digital Smartphone Adoption 2.87B 2.87 Billion people will own a smartphone by the end of 2020 Colombia ranks 3 rd in Latin America in absolute number of smartphone users with 20 million. https://www.emarketer.com/report/mobile-colombia-2016-updated-forecasts-key-growth-trends/2001863
trends in digital Digital Disruptors are entering many industries Top 2017 Disruptor companies https://www.cnbc.com/2017/05/16/the-2017-cnbc-disruptor-50-list-of-companies.html 5
including Financial Services 6
implications for retail banking
what does this mean for retail banking? Our World is Changing Banking is being reinvented Expectation of personalized experiences rising Barriers to entry are falling Demand for automation is growing Everyone and everything is becoming connected Fintech and Regtech are on the rise 8
what does this mean for retail banking? Four Big Ideas In Retail Banking Be Where Your Customers Are By Using New Channels Digital brands are eyeing up payments but have so far struggled to make them work on their own. Integrating banking solutions into the platforms of big digital brands will extend a bank s market reach and penetration. Partnering with Fintech can Create Better Digital Services Fintech has the edge when it comes to user experience, technology and innovation. However banks have scale, money, trust and expertise; creating joint solutions offers banks a new role as disruptor. Security Methods Will Be Dynamic and Persistent Security needs will exceed banking ecosystems as open banking, the internet of things and persistent authentication become reality. Security systems need to increase security while reducing friction in the user experience. Drive Personalization by Combining Banking Data & AI Artificial intelligence is maturing and anticipatory banking is on the horizon. Banks who leverage data insights and artificial intelligence can create a new wave of truly personalized services and offers, giving them a competitive edge. 9
Innovation at scale Mastercard s approach to digital is founded on five core principles: Choice Integrity Security Transparency Privacy Mastercard provides an array of digital payment products to support consumer and merchant choice Protect the interests and commercial sustainability of our customers to preserve the value of our ecosystem Secure each transaction with EMVgrade security Ensure the network and issuer brand are prominent in digital experiences Protect users personal data 1 0
Innovation at scale Mastercard will enable our customers and our partners to remain at the forefront of digital payments by: Delivering the best digital experience everywhere Securing every transaction Digitizing all forms of personal and business payments Simplifying access to and integration of our digital assets Anticipating and building beyond the payment Best-in-market digital payment services across all channels and devices Drive EMV-level security & benefits through all channels Deliver near real-time ubiquitous access from all funding sources to all destinations, globally Offer best-in-class APIs across Mastercard services Identify and experiment with future technologies, start-ups and trends Mastercard Digital Enablement Service Mastercard Send and and 11
Mastercard s Recent Innovations
URBAN MOBILITY Hybrid Technology delivers convenience for travelers Issued by a banking partner, one card which combines credit/debit payment with pre-funded transit fares. Lower capital investment Shorter lines Lower cost of ticket issuance Increased customer satisfaction A SMARTER WAY TO GET AROUND YOUR CITY 13
URBAN MOBILITY (2) Hybrid card technology: The results in Bogota Working with Bogota s transit provider, SITP, and Bancolombia, dual purpose transit debit cards are now available to the city s 4.5 million daily travelers and fleet of 10,000 buses. Within the first year the city saw: Card usage at POS by type of card Percentage Hybrid cards Maestro cards 18,9% 19,9% 20.6 million trips completed 1.5 million cards issued 15,8% 14,5% 18,2% 17,5% 14,9% 14,8% 16,2% 15,4% 15,6% 14,8% 17,4% 17,2% 17,8% 15,5% 16,1% 2015 2016 A SMARTER WAY TO GET AROUND YOUR CITY 14
Mastercard s Digital Payments Stack www app Merchant Interfaces Browser Merchant Apps Contactless Masterpass Commerce for Every Device Merchant Card on File Android Pay Apple Pay Samsung Pay Consumer interfaces aka Wallets Token Mastercard Digital Enablement Service (MDES) Digital Infrastructure Consumer Identification & Verification, Tokenization, Digitization Mastercard Network Authorization, Clearing and Settlement 15
Innovation at scale Secure Remote Commerce What is the problem? Still too hard to use a card online and in digital channels Only getting worse as digital shifts so quickly to mobile from PCs Alternative approaches are emerging around the world and starting to garner consumer attention Residual concerns about security and lower approval rates than in person transactions What is the opportunity? Mastercard alone has more than 2.5 billion cards issued Consumers want to use their cards all other things being equal What is the answer? Secure Remote Commerce Standards-based through EMVco Incorporating the latest version of the 3DS authentication protocol Great user experience 16
Demonstration APRIL 30, 2018 17
Summary Digital is obviously a game changer for us all Mastercard has been working on digital payments for 10+ years We ve launched innovative solutions at scale for the benefit of consumers, merchants and issuers We re not done yet