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Mastercard: Unlocking the Open Banking Journey

The increased competition within the FinTech landscape has been driving more innovation and customer-centricity. Financial institutions that invest in differentiated propositions will become the front runners. Although we have not seen a big pickup in the Netherlands yet, all signs indicate that the market is steadily catching up with some other markets that are advanced in open banking capabilities and adoption rates. Read this interview with Mastercard to learn more about navigating the open banking journey.

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Where are we in terms of open banking and what to expect in the near future?

Looking at open banking I believe that there will be this “great equalizer” between traditional banks and FinTech companies which will drive more competition and most importantly, more innovation and customer-centricity. Looking at today’s world, consumers expect full transparency. They want to be able to utilize their data, but of course only if there’s a benefit and if they consent with data sharing. with their consent and if it’s beneficial for them.

In terms of the future of open banking, banks and other FinTech companies that invest in solutions and differentiated propositions will certainly come out as leaders one way or the other. Although we have not seen a big pickup in the Netherlands yet when it comes to open banking, I see us quickly catching up with some other markets that are advanced in open banking capabilities and adoption rates.

Do you consider Europe to be up to speed when it comes to innovation in open banking?

It differs from country to country. That being said, our research revealed that many countries have a set of characteristics to embrace in open banking ecosystems and that some countries and regions also are leading the pack. Just to name some interesting results, if you look at internet access, which is vital for open banking, the Nordics and the UK scored the highest with scores between 95% and 98%. Another important element is whether people use digital banking apps which turned out to be very common in the Netherlands but varied across different European countries. But then again, the countries that are leading, have impressive rates of 85% to 95% usage of digital banking apps.

The future of open banking in Europe by Mastercard

But if you ask, are we there yet? not where I think we will be in a few years as consumers are not yet benefiting from what's possible and what has been innovated at this moment. On the bright side, all the signs today show that we are in the right direction. Mastercard is helping banks with its Open Banking Connect solution. For example, to make sure that the connections can be made I would say we are on track but there is much more to come very shortly. 

Are there certain growth areas in open banking at the moment and what is Mastercard’s role there? 

Mastercard recognized the potential of open banking quite some years ago. We started investing in open banking solutions a few years ago and have always been playing a very crucial, central role with our data networks within the space. Having a considerable ecosystem of clients has been key in stimulating our growth within the open banking space. 

Not to mention that it's also one of Mastercard’s missions to provide everybody access into the digital economy where open banking is vital because it is meant for providing consumers and businesses with more options, more control, and more intelligence. 

Next to that,  we've done the acquisition of Finicity, last year in the U.S and we are constantly looking at how we can improve further growth in the open banking space. We now see more and more clients, wanting to work with us in this area. While that is a good sign, it is not, the end as open banking is on a journey, and Mastercard will be part of that. 

At the end of the day, Mastercard is a company that has innovation in its blood!

What are some ways the pandemic affected the payments infrastructure?

To say that the last year and a half have been like no other is an understatement. Comparing today to the previous decade, things have changed tremendously. I once heard a quote stating that: 

”Payments now have been made strategically important for basically every company.”

And it certainly was not the case pre-pandemic. Some of the most notable changes we have witnessed are large increases in online shopping frequency. As a consequence, many web shops have doubled in their volumes and went fully digital. Our research also revealed that more consumers now prefer to shop locally as opposed to large merchants.

“69% of the Dutch consumers said that they shopped more frequently at local shops last year than the year before.”

Contactless payments are a wonderful thing that went through the roof thanks to the support of the increased limits. In fact, in the Netherlands and more European markets, 86% of the payments became contactless, and over 15 to 20% of all payments are done with a phone or a wearable. 

The travel sector is slowly but surely coming back, international traffic is still in the early stages of recovery. But once we get back to “normal” we will see that we've changed the way we pay due to the pandemic. More contactless, more online, and also we'll see that online and physical channels will become integrated experiences.

Mastercard announced some exciting acquisitions of FinTechs such as Ekata, how do you integrate these new services within Mastercard’s portfolio?

Mastercard has done quite some acquisitions now for the past year. The common denominator between all these acquisitions is that they can improve the experience of either the consumer or the merchant. Therefore, Mastercard has done many acquisitions in what I would call the cyber, identity, security, or the fraud space to facilitate seamless transactions and boost trust. Looking at EKATA, which is a company that specializes in identity management, with that we can help merchants, acquirers, and even issuers in making sure that they authenticate the person they are in contact with. In a nutshell, we slowly integrate acquired companies into Mastercard’s ecosystem and introduce them to our clients, being acquirers, issuers, and merchants.

What is your take on the impact of collaboration and innovation in the merchant payments industry?

Looking at Mastercard alone, I can say we've been very active in partnerships with merchants and acquirers in the past year. Not only for contactless payments but also by looking at a digital debit card, which we are now piloting with some merchants and acquirers together with issuers, this can only be achieved by collaboration. 

"The payments industry as a whole wouldn’t be as successful if it wasn’t for partnerships."

What are some of the challenges you are seeing amongst some of the players in the industry?

While I can’t speak on behalf of other players, one of the challenges is making sure that the customer experience is smooth and attractive to both consumers and merchants, while complying with new rules and regulations. The payments system also needs to be seamless and secure by having Strong Customer Authentication (SCA). This has been a bumpy ride, but I'm proud to say that in the Netherlands, we are now at the point where the entire payments ecosystem is almost thereThe next step is making sure that all the exemptions are in place to ensure an even smoother way of Strong Customer Authentication.

Another challenge we are seeing is ensuring the balance of a fast time to market that's in line with consumer adoption. For example, Click to Pay, and the digital debit card are products we would like to roll out very swiftly. But from experience, there is no way you implement a new payment solution within a year, or even within a few years. People need to get used to it, see the benefits and then adoption will follow afterward. That being said, the team and especially myself are looking forward to facing, tacking, and fixing as we go!

About Jan-Willem van der Schoot

Country Manager at Mastercard Netherlands since April 2020. Jan-Willem has been with Mastercard since 2012 and in his previous role as Account Leader, he was responsible for maintaining relationships with Dutch customers. Prior to Mastercard, he worked at IBM, where he held various positions. Jan-Willem has a Master’s in Economics from Erasmus University in Rotterdam and an MBA from Warwick Business School.

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