INTERVIEWS

TIM MURPHY

PARTNERSHIPS, PERMITS & PAYMENTS

TIM MURPHY, General Counsel & Chief Franchise Officer of Mastercard speaks to Bianca Ghose about moving to a world beyond cash, about balancing trust and transparency in the age of cyber threats, and how passwords and pin codes are (almost) a thing of the past.

Wool: The shift towards a cashless world has been in most parts encouraging. What are your views, though, on the inherent vulnerabilities that digital transactions bring?

Tim: Digital intervention has most definitely disrupted consumer trust. But I believe we are at a moment of inflection. For 50 years, Mastercard has connected people to financial assets and given them the capability to use those assets around the world. While we continue to take pride in equipping people with freedom and flexibility, it is absolutely critical that we continue to invest and create the most trusted solutions as we forge ahead with digital payments.

In some cases that might mean we invest and take care of defense and security measures; in others, it might entail working with governments or designing whole new payment solutions. We need to make sure that we have systems in place and that people can be assured of safety, security and efficiency of the environments they operate in. Trust, going forward, will most certainly play a pivotal role.

WOOL: In a sense, trust is now the basis of economic growth. But apart from building trust, what are the other key opportunities in the payments technology space?

Tim: We believe electronic payments can ramp up financial inclusion in an extraordinary manner. . We are very serious about this vision and Mastercard has made a commitment to include 500 million new consumers into the financial mainstream by 2020. To do this, we are constantly partnering with organizations, collaborating and co-innovating to make sure we reach that target.

In Kenya, for example, we have partnered with Unilever to enable and (financially) include small and micro businesses. We are leveraging technology to drive inclusive, sustainable and meaningful growth. A great example of this is our 2KUZE platform, a digital platform that connects smallholder farmers, agents, buyers and banks in East Africa. 2KUZE, which in Swahili means “Let’s grow together,” enables farmers to buy, sell and receive payments for agricultural goods via their feature phones. The platform brings the benefits and security of mobile commerce and payments to farmers in Kenya, Uganda and Tanzania.

This solution is a great example of the power of partnership. It was developed at the Mastercard Lab for Financial Inclusion in Nairobi, which was set up in 2015 and is working with East African entrepreneurs, governments and other stakeholders to develop local products rooted in the company’s global knowhow. There is no way we could have achieved what we have in Kenya without the distribution depth that Unilever has brought to the table. In order to move forward, partnerships are absolutely essential.

The future we see is one where consumers have control over significant aspects of their online digital personas and can opt in or out of services as they choose.
Privacy is going be essential to all that we do and it’s probably the core issue under the umbrella of trust that the ecosystem is navigating today

WOOL: You have outlined the role that multilateral collaborations will play in earning and keeping the trust. I want to touch upon the sensitive topic of data security and privacy; how you are managing the data that you are able to generate?

Tim: Privacy is an enormously important and relevant issue in the current context. We need to protect it in order to sustain the trust of consumers in this digital environment. Mastercard takes privacy extremely seriously and is constantly reviewing and investing in ways we can drive best-in-class behaviors and technologies. We are committed to a very strong consumer and privacy centric point of view.

And frankly I think the whole industry needs to evolve. We’d love to see a system where you and I can control our online digital identities better and more effectively. We might want separate profiles for different activities. If we are able to achieve this as an industry, it will be a change so mammoth that it is naïve to think any one company can achieve it alone!

The future we see is one where is data held in a way that there are no longer honey pots (of data) that bad guys can go after, where consumers have control over significant aspects of their online digital personas and can opt in or out of services as they choose. Privacy is going be essential to all that we do and it’s probably the core issue under the umbrella of trust that the ecosystem is navigating today.

WOOL: Apart from forming collaborative platforms and acquisitions, within the scope of the payments technology, what are the transformational innovations that are expected to dominate going forward, technologies that have the potential to transform the way things are done now?

Tim: I think blockchain and artificial intelligence (AI) are obvious discussions. We’re optimistic about blockchain Technology or Distributed Ledger Technology and the incredible power of rich data sets connected by smart analytics that will enable better security, better consumer solutions.

But I also want to highlight a couple of other technologies that are transforming the payments industry in extraordinary ways.

One is the EMV chip technology on cards that has been now deployed around the world and is a fundamentally superior and more secure payment system. We are now bringing that level of technology, driven by strong cryptology into the e-commerce space. Financial institutions creating and investing in technology to ensure a more secure environment in e-commerce today stand to gain.

Second, at least in the short term, will be biometrics. I think the historic method of using passwords and pin codes really needs to go. It isn’t working anymore. Biometric is already in play today and over time, will assume a more dominant position. It is without doubt, a key pillar of Mastercard’s security strategy to make digital payments secure and seamless. There is a big role for people in jobs like mine in making sure we get the policies right.

Technology is transforming lives of farmers in Kenya, allowing them to get & fulfill orders, and get paid at the end of the day digitally.

WOOL: When we talk about innovation, we cannot possibly not discuss the regulatory framework that we must operate within. Do you think the current policies are enabling enough because regulations have such a profound impact on innovation potential.

Tim: Regulation can be ruinous to innovation if governments and regulatory bodies choose one technology solution over another instead of neutral standards.

I am an optimist. I think that if you have an effective technology and build the right framework around it, most governments are ready to talk and engage. Most policy makers are interested in being well informed on issues and you’ve got an opportunity to convey a point of view and shape an outcome. For example, the second payment services directive (PSD2), in Europe, is a significant, regulatory intervention that opened up competition in the banking industry in a significant manner. Similarly the EU General Data Protection Regulation (GDPR) harmonized data privacy laws to protect citizens and also provide guidelines for organizations to approach data privacy. I think all of these will protect consumers and enhance innovation.

WOOL: So that’s innovation from an outsider’s perspective. How about innovation within the company, which is often, not a one off exercise. You have to keep at it consistently and make fundamental changes within in order to oil that culture of innovation. I wanted to ask you how you make failures a lot less punishable.

Tim: Innovation mandates failure. We want to make sure we give people space to fail. Another essential piece in innovation is nurturing diversity, bring together people from all walks of life, and making sure different geographies are represented because these steps lead to a culturally rich experience and better decision making.

At Mastercard, we think a lot about how we can create a better experience for our consumers who are already on a digital journey. We understand the need to keep pace with them. Every single process needs to be seamless, whether it is how one checks in at the front desk to how one accesses a mobile device or manages his/her travel services etc. We have made investments because we want to make sure that we can deliver the digital experience on point.

Innovation mandates failure. We make sure we give people space to fail as well as nurture diversity... to create a culturally rich experience and aid better decision making.

WOOL: What are your thoughts on talent crunch? From my interactions, it seems one of the main concerns among different stakeholders.

Tim: Finding top talent, when it comes to innovation and development and most certainly in cyber, is a massive challenge. We need to think in new and more creative ways about how to address this challenge.

For example, on one hand, we face an intense demand for cyber experts and on the other, we know that students are burdened by burgeoning loans. Is there a connection between the two; can we find a solution to bridge the gap? Is there an opportunity to look at how we incentivize the learning, for example, can we ask students to get a relevant degree, spend two years in the government and then come and work for us and we could write off an initial part of the loan immediately, like an old fashioned sign-on benefit but where you are incentivizing the skills you need? Could this be a feasible proposal? It is not something we have been able to do yet but we are working to assess its viability.

Contrary to popular belief, technological developments will create more jobs but I think they will be different kinds of jobs. We need to be talking with our governments about an aggressive agenda to retrain people. We really need to move that from the stage of dialogue to a stage of action.

WOOL: Finally, if you were to just list out two of your immediate goals, apart from the larger vision of a world beyond cash, what would those be and how will you get there?

Tim: A world beyond cash remains our rallying cry but I'd say there are two things at the moment that we are interested in.

One is making sure we create a convenient but secure system for our consumers to interact in and a new digital future where every connected device becomes a commerce device. 85% of transactions in the world are still cash but we think, as millennials come into the economic fold coupled with the rise of the middle class in developing markets, electronic payments are set to grow well in excess of economic growth.

Two, we constantly attempt to answer the question of how to use our capabilities to bring payment solutions to people who still don’t have access to basic financial services. A world beyond cash can truly be delivered when we see a rise in classes, in developing partners around the world. And that means finding systemic solutions, protecting identity, powering trust and privacy and building partnerships and innovation. Of course, removing cash from the economy is always going to be our north star.

Contrary to popular belief, technological developments will create more jobs but I think they will be different kinds of jobs.

We need to be talking with our governments about an aggressive agenda to retrain people.