MasterCard On Barcelona’s Biggest Themes

This year’s Mobile World Congress may have ended a week ago, but post-conference conversations on where mobile’s going next abound. Following exciting, game-changing announcements made by MasterCard and other key players in the space, MPD CEO Karen Webster sat down with Jorn Lambert, Group Executive for Digital Convergence, MasterCard to get his insights on the major themes and takeaways from event, and what he thinks will keep the mobile momentum moving.

KW: We’ve given you a few days to recover from your jetlag from your trip to Barcelona. Let’s get caught up on some of the observations you made at Mobile World Congress, and of course the things that MasterCard announced. First, which of the general announcements surprised you, and why?

JL: Well, what surprised us more than the announcements themselves was the intensity of the activity happening at the event. Mobile World Congress used to be a conference that was very Telco-centric. It has now morphed into something where the entire digital industry is converging, and where the big topics of digitization are coming to the forefront. Many of the most prominent announcements came from the industry leaders within the digital space.

From our perspective, one thing that is very clear is that shift to digital that we’ve talked about for awhile as a fundamental consumer trend is top-of-mind in many industries right now. We truly believe that the phrase that our Chief Product Officer coined, where “every connected device is a commerce device,” is really what is pervasive in anything we’ve seen at Mobile World Congress.

KW: I would agree with you – the possibilities are really exciting. Were there a couple of major themes or takeaways as you reflect on your time there?

JL: One major takeaway is that the era beyond the mobile phone has arrived. People have talked about wearables, the Internet of things and drones. This isn’t just about the mobile device, but about how commerce is conducted beyond the mobile device through a number of other things. We also see this as a very relevant trend because as we think about our payments architecture, we need to think about how payment credentials and tokens act in all sorts of environments and allow consumers to make payments and conduct commerce on the device.

KW: You mentioned wearables. I agree that there’s been a lot of talk about wearables, but they haven’t quite taken off in a mainstream kind of way. Early adopters will always buy the next “new” thing, but do you have a sense of what kind of wearable technologies you think are most promising and have the most potential to be adopted by more people?

JL: I think what’s interesting is that wearables tend to have a very specific function, be it to count steps or to pay, or something else. But multi-purpose wearable devices are still quite rare and not really integrated. I think this year, we’ll see a number of devices hit the market that have a comprehensive functionality set that combine health functions with communication and interaction functions, and with payments. As these become more useful to consumers, we’ll see broader adoption. And obviously, we’ll see a significant entry into that space with Apple.

KW: I think it is so interesting. We’ve focused on wearables as accessories or adornments that replace other things. But it may be that wearables become things that are embedded into clothing, for example for runners. That’s an interesting potential.

JL: Yes, and I don’t think everyone will walk around with wearables in the next few years. But I do see them becoming mainstream rapidly, as many of these new trends are adopted and people see how it all comes together. I think our role here is to make sure that payment is part of the functionality, and people can use it if they want to. Consumer choice is what we’re looking for, and that’s just one other way for people to conduct commerce.

KW: I sense a lot of momentum and energy in this space. You pointed out that it’s beyond the mobile device itself – it really is about a connected world, and a digital world. Do you sense the same kind of energy, and if so, what is MasterCard doing to keep the momentum moving?

JL: I think we have learned a lot over the years. We’re now at a point in time whereby we now understand what it will take for really scaling this. There are essentially three things we need to get right:

The first is usability. That is, the user experience and making sure that’s very slick and intuitive to the consumer.

The second is security – if you move into payments, you better make them secure. That’s not something that can sustain flaws.

The third is scalability. The payments industry is a fragmented industry – there are many intermediaries for any payments transaction. Where in the past some initiatives haven’t really blossomed, it’s because the entire industry has to come along.

Where we have done a lot of work is around security – making sure that industry specifications are in place, and that the infrastructure is in place so these solutions can scale. All of the work we’ve done around tokenization standards, and the digital enablement system that allows multiple banks and devices to be connected in a seamless way, has really built a platform to scale. All these innovations and entities that bring superb user experiences can actually connect with the banking industry through our rails. That’s probably the biggest change that’s occurring now – the mechanism is in place for these things to reach millions of consumers and not go bank by bank, country by country, as we were in the past. That, in combination with some strong players on the device and OS sides, puts us in a place to really win.

But sitting here in the U.S. and looking at this space, we obviously get excited about those experiences. One thing that also was very present at MWC and that we are also considering a major priority is looking at the less developed worlds – the estimated over 2 billion consumers now that don’t have access to financial services or transaction services. They also often don’t have access to digital data services – we need to make a collective effort to bring these people into the financial space as well. That’s just as critical.

KW: You make a good point that the three drivers of innovation now in payments – whether you’re solving a problem for the lesser-developed countries or for developed markets – are that it has to be something consumers want to use, is secure and can scale. 

JL: Yes, and as MasterCard is in a global environment with many banks, many banks, many players, we can play an important role in connecting the dots between all of those. It’s not our purpose to interact with consumers – others do that – but we’re there to connect all of the different parties and make sure products can be scaled as opposed to going bank-by-bank, country-by-country.

KW: You mentioned tokenization and tokenization standards. Is it your view that the way in which you’ve approached the notion of tokenization allows us to use it as a way of securing not just transactions but also consumer identity? 

JL: Yes, there are a couple of things we’ve set out to do with tokenization. The first principle is it has to be backwards compatible – it’s what we’ve done in all of our history. Tokens need to be backwards compatible because if you’re asking everybody in the industry to change all at the same time for the good of mankind, chances are it won’t happen. The rails are there and need to be respected.

The second point is that consumers’ identity is very important. As they put their credentials in a number of card-on-file systems and devices, you are potentially creating a number of points of compromise or weakness. By eliminating the tie between the consumer identity and the token, you are protecting them. The token is always specifically linked to a device or channel, so when it comes back to us, we can verify where it came from.

It is responding to an important consumer need and concern, but it also solves a fundamental problem or trend that’s irreversible. This proliferation of places where credentials go, so severing that tie between a consumers’ identity and the token itself is a key step.

Jorn Lambert
Group Executive for Digital Convergence, MasterCard

Jorn Lambert is group executive, Digital Channels in Emerging Payments.  In this role, he is responsible for the relationships with Digital Participants (MasterCard partners in the digital space, including Operating Systems, device manufacturers, telcos, merchant enablers, wallet operators and social networks) as well as the regional teams who deploy MasterCard’s Emerging Payment products across the world.  Previously, he was responsible for the management and development of Emerging Payment Products for European markets, including e-commerce, mobile commerce, person-to-person payments, contactless payments and inControl.

Mr. Lambert joined MasterCard in September of 2002, managing Core Products for MasterCard Europe, including consumer credit, commercial cards, debit and prepaid.

Prior to joining MasterCard, Mr. Lambert spent many years in the capital markets where he occupied various management positions in the areas of product development, product management and corporate strategy.

Mr. Lambert has a degree in Roman Philology at the University of Ghent and La Sapienza in Rome, Italy, and a post-graduate degree in business economics from the University of Leuven in Leuven, Belgium.

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