Financial digital transformation requires convenience and local solutions

JARED JOHNSON: You’re an avid traveler and are on track to having visited 90 countries in total by the end of this year. What are some of your favorite learnings that you’ve brought back to Mastercard?

MEYSAM MORADPOUR: Traveling is my big passion. I was lucky — when I did my sabbatical year, I was actually paid by Business Insider to provide country reports on payment and retail innovation, so that kept my brain working even while I was not working that year. With Mastercard being a global company and my role being in a global capacity, [my travels informed my thinking] about financial inclusion.

When you talk about innovation, when you talk about how people check out in one region versus another, there is a significant difference in [how each] market serves [its customers], depending on how mature the market is. You have the very mature markets like the US, South Korea, Japan, and most of western Europe, and you have a lot of these emerging markets like Africa and Southeast Asia. What I brought back to Mastercard was the understanding of how people in all these different regions pay, how they bank, and how they approach retail and e-commerce.

In South Africa, they have two or three local apps that are our Apple Pay version with a PayPal and a Stripe in one package and they have their local versions that are usually based on QR payments — so fairly cheap, easy, and approachable methods that work very well in those markets because most people don’t have a bank account. In Japan and South Korea, [they have] NFC tap and pay payments, universal wallets exceptions, VR and AR cafes, where people can spend half the day there.

JJ: Have you seen any immature market technologies or applications that could work in a mature market or vice versa?

MM: That’s a good question. Let’s take the M-Pesa example. It was really successful because most people who use M-Pesa do not have bank accounts or smart phones — they have simple phones that allow you to text or call. The whole mystique and appeal of M-Pesa is that you can transfer money through text messaging, so it’s very easy and not very advanced technologically. When we saw this, [we said], this is getting a lot of transaction volume, it’s getting a lot of popularity in this market, how can we replicate this in regions where we know people are under banked? I’ll give you an example.

We knew that South Africa has the larger adoption of bank accounts, though nowhere near where we are in the US or Europe. So what we said is let’s not use our Masterpass or digital check out payment options that we have in the US, but let’s go with something that we know works with other solutions and that was QR payments. We basically then came up with our MasterPass QR solution, which works very easily. Any vendor can pull up a little sticker where users scan the code and link it up with their bank account because they usually don’t have a credit card or debit card, and basically transfer money through that approach fairly easily. Usually, if you want to start with a whole new payment method, it’s going to take education and a lot of marketing budget, but if they are used to QR payments with other local vendors, then it made our solution very easy.

An example of that was we partnered with KFC in South Africa. KFC would paste huge QR banners everywhere in its stores and people went with their phone, scanned those codes, and made payments without having to actually bring cash with them. That was a solution where we saw it worked in other African markets and how we transferred it over to another African market with lower technology.

JJ: I think it’s interesting to think about the ways that incumbent players can use all their existing resources, the brand, and the footprint to do the things fintech can’t do. Fintechs can be agile, they can move quickly, but they don’t have the brand recognition or the ability to play in so many different markets and parts of consumers’ financial journeys. Do you feel like consumers are willing to have one brand own their financial life or do you think consumers are always going to want to pick and choose different brands?

MM: I like that question. The older generation grew up with a certain bank that they used to open up their checking account, to give them a house loan or even a car loan. [But] for newer generations, it’s just convenience that they really care about. They don’t care where their checking account is located. They don’t care which ATM [they use] or who will give them a house or car loan. If they can get it all in one place, it’s going to be more convenient for them. For the millennials of today, it’s all about convenience and demand. “I need whatever I need at that moment and I need it fast, easy, and cheap.”

I think for them it’s not necessarily about who is going to do that or what the brand is, but is there a one-stop shop that I can use for all my different needs? If you look at it, it comes back to the old question of how many apps can one person use or how many we can push them to use. Usually, the number of apps that a person uses on their phone is limited. For this service you’re going to have Mint. For this one you’re going to use Robinhood. For this one you’re going to use Lemonade. For this one you’re going to use Citi. At one point, people stop adding new apps to their daily lives, so I think it’s a valid point to say, alright, we’re going to help you with that by creating all these additional services, so you don’t have to have seven different financial institutional apps on your phone installed for each of these different things.

On top of those merchants and service providers is the data expedition to personalize the [experience]. No consumer would hate if you gave them a more personalized offer in terms of auto or car loans, or stocks that might be interesting [depending on] what they’ve invested in in the past. Anybody would appreciate that, but I think the main points here is convenience versus brand affinity.

I saw a commercial — I think it was Capital One — that said, “We’re changing our banks to make them into cafes, where you can just come, chill, drink your coffee, and no one is trying to upsell you. We just want to be consultants and part of your life.” I think that’s the way to go. Go away from the old school, “These are the five things I’m going to pitch you when you come into the bank,” and start offering them extra services, so they don’t have to have seven different apps but one partner.

JJ: Yeah, so it seems like convenience trumps all, and if you can give me something that is seamless across my whole life, folks would be open to it.

MM: Correct.

JJ: You start using these different apps because they’re faster, more beautiful, easier, and more convenient, but then you have to use so many different ones. I think I have 12 different apps that I check on three levels of frequency, but it’s overwhelming.

MM: Right. At one point you’re going to ghost them. You probably might not delete them, but you might not use them at all because it’s just too much.

JJ: I was interested earlier when you were talking about VR cafes. There was a report this summer that stated there are 50 million Alexa users in the US, but only about 100,000 of them have used Alexa to buy something with voice more than once. It doesn’t seem like voice commerce is mainstream yet, but from your global perspective, do you feel like voice is further ahead in other countries? When do you think voice commerce will become mainstream and where is it already mainstream now?

MM: That’s a good point because everybody brags about how many Alexas they have, but if you think [about] it, people only use it on three or four applications — weather, playing music, asking about traffic, and sports. I think those things might be easy, but there are a lot of security and regulation issues still left.

There’s not much voice commerce going on. I think one hard thing is voice commerce usually only works when you’re at home and it’s fairly quiet. You can’t really do it on the go because it’s too loud. It is hard to distinguish which voice it is amongst all the voices that we hear in a noisy environment. I think even if you look in Korea and Japan, where you have a lot more voice commerce than you have in the US, it’s usually in a one person household. The moment you have multiple people living in one place, that’s when it gets very dangerous or very difficult for Alexa to do multiple transactions and associate each voice to the right person.

I would say regulation wise it’s too early stage at this point. Most of the governments will not allow this [and] security-wise we’re not there. We don’t have the technology yet to make this wide stream. You want to see the product. You want to ideally taste it, smell it, at least see a picture of it, [and it’s] very hard to do this purchasing just on voice alone. We’re still miles away from doing voice commerce on a grand scale because it’s still a new technology and you see most people who use voice gadgets usually use it for informational reasons versus purchasing reasons.

JJ: It seems there are quite a few blockers from regulatory blockers to cultural blockers, and the mental model that people have around buying things still does not encompass using their voice — at least not yet in the mainstream.

MM: No, not mainstream yet. Even if you look at very advanced places like Korea and Japan, it’s not mainstream yet. It’s just in certain categories like gaming — making an in-purchase gaming, adding that sword and saying yes, I want that sword for $1 or $2. Those things work, but people don’t make their groceries or their travel bookings on voice commerce either. If you want to book a flight through Alexa, it’s going to take way longer than just doing it on your phone quickly because there are so many things that Alexa has to tell you because you can’t see anything. That’s going to drag the whole process and most people would give up at one point.

JJ: That sounds like a nightmare having to book a flight through Alexa. There are flights at 3:00 PM and 3:30 PM, and …

MM: Yeah, that would take forever. At one point you’re going to say, “I’m just going to book it on my phone.” With groceries, it would have to give you every single brand, the discounts — it would take a lot longer. Only certain categories [would work], like pizza. You have your default order, your default drink, and you’d say, “Hey, order me my default pizza.” Then yes, but everything needs customization.

JJ: Are there any customer experience or B2B trends that are under-hyped? Anything that you would tell a digital product manager, “Hey, this is something we should take a second look at. There’s more there than it seems at first glance.”

MM: When it comes to B2B, we see a lot happening in terms of streamlining APIs, reducing the number of APIs, how businesses work together, how they offer their product and services, and how they streamline different services to one mutual API. It’s sort of a given, but a good API should be very simple, with few lines of code. So if you want to offer something or bundle products together, make sure the API calls are lean and fast, and you reduce all the unnecessary code that you used to have in the past. Otherwise, you’re not going to be as fast and frictionless for those millennials or Gen-Z guys who are accustomed to business.

From a consumer standpoint, depending on the market and culture of where you are, there is this openness of doing the trade between privacy and personalization. That’s something people should be aware of — there are markets like China, where people are super willing to give up any privacy, but then get 100 personalization customization and personalization in return.