As the financial services giant Mastercard continues to adapt to ever-changing consumer demands, the head of technology at the company has urged all companies to emulate Netflix when it comes to innovation.
As president of operations and technology at Mastercard, Ed McLaughlin oversees "all of Mastercard’s technology functions, including the global network, processing platforms, information security and technology operations", as the company put it in a press release last year. He was formerly the CIO.
Expanding on his Netflix point during a keynote at the Technology Business Management (TBM) Summit in London this week, McLaughlin - who sits on the TBM Council board - said: "It's hard to imagine they started their business mailing CDs, but they never thought that was their business. They were delivering content and to move that much content to where the consumer wanted to consume it made that the best way to do it.
"As the environment changed they were able to get into streaming, as they got into streaming they knew their customers better and were getting into creating content. So if you think of their journey, from DVDs to Stranger Things, we think that's really the journey that all of us are going to emulate. You stop thinking about your physical delivery channels, you stop thinking about the way you delivered it and you start thinking more profoundly about who you are."
In terms of applying these observations to his own business, McLaughlin shared how Mastercard has moved beyond physical cards to become a provider of 'contextual commerce', allowing its account holders to transact wherever they want to.
"So we said every device is a commerce device and our job is contextual commerce, so how do we get it right wether you are in your smart car, using a mobile phone or your game system, your smart speaker your IoT? Suddenly the realisation that if we are freed from the tyranny of the physical world we could unleash the power of our network in a way we never could," McLaughlin explained.
So instead of focusing on what the hot new technology is, Mastercard looked to set itself up to be able to bring commerce to that new device or platform as quickly as possible.
The answer to this, starting back in 2014, is what Mastercard calls the 'digital enablement service' (MDES).
"We are moving to device-based commerce so we presented an innovation, this is our version of Netflix," McLaughlin said. "It is saying how can we allow full, digital enablement of what we have to issue virtual numbers and it is called tokenisation."
This foundation allows Mastercard to enable payments for everything from Apple Pay to Google Pay and across various device types, both mobile and IoT.
"Over two thirds of our cards have now been digitised using this system, so literally any device can now be enabled for full contextual commerce through Mastercard. Whether it's a new Apple X release or a QR code-based solution in a developing market, we have a platform," he said.
So when does the last physical card go away? "The real answer is when the last person wants one, our job is to serve consumers in this new environment," McLaughlin said.
When it comes to product development Mastercard has two 'anchors' - building the most compelling and most secure consumer experience, and McLaughlin is aware of the balancing act at play. "You make things more convenient, you introduce fraud risk, if you lock things down no one wants to use the product."
And where does IT come in? "The regional teams and product teams are department of state, we're department of war. We'll give you force assessment, situation analysis, you pick the hill and we take the hill," he said.
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