Click and Buy: Decoding a Market Dominated by E-commerce

[Music] welcome and thank you we've got our timer which I know is going to go super fast so we're going to Jump Right In we're not going to do um long intros but I thought for the grounding purposes given everybody's background and having such a a different vantage point from everybody on the panel here we just do a brief introduction so Jose you want to just give a yes my name Jose Marin I'm the co-founder and managing director of FJ Labs which is a venture investor that focuses in what we understand very well previous which is marketplaces previously to that I've been the co-founder and serial entrepreneur of a couple of large online tech businesses that have dealt with a lot of the complexity of uh sorting out payments excellent hi everyone my name is prakriti I am um responsible for All Digital payments and e-commerce for uh Eastern Europe Middle Eastern Africa for MasterCard very excited to discuss today what's disrupting payments absolutely thank you Sarah hi I'm Sarah calano and I head up payments and commerce for Europe Middle East and Africa and I'm also the chair of JP Morgan's Middle East Bank located here in adgm wonderful and a lot of great news coming out of JP yes well so we have uh a wonderful disruptor early stage investor we have uh Bank rails and we have card rails all on one panel so wonderful I think uh what I'd love to start off maybe uh Sarah if you can talk to us a bit about Bank rails what's happening what JP is doing and especially in the region that would be super helpful yeah absolutely and I think it's really important for the Middle East because there's so much growth here and JP Morgan wants to be absolutely a part of it but the payments business is completely evolving and we saw in the previous presentation cashless societies are becoming real and from from our perspective one of the things and I think the title we were discussing is fintex versus Banks it I look at it as a single ecosystem it's not a bank versus a fintech it's how can we collaborate together to bring the ultimate best experience to our underlying customers whether that customer is a two-legged person on the street or a big corporation that wants to move money cross border that's where we play a role and what's so important to us here in in UAE and particularly in the adgm is helping fintex as they grow and manage their treasury business so creating in-house Banks using things like virtual accounts to really drive centralization across the GCC is an extremely important adventure for us and also we believe that the idea of having a lot of local bank accounts is really the time of the past and technology has really been able to essentially digitalize cash management and we're excited to be part of that Journey well Sor you're bringing forward a great point I think we're going to pull on that thread a bit uh throughout the panel uh kind of the uh fintech versus the bank processors mutually exclusive working together um PR Ry uh when we talk about e-commerce per payments and one click and how seamless maybe you can talk to us a bit about uh what's actually happening behind the scenes with all of that sure I I'm I'm actually going to build on something that Sara said which is Banks and Banks wor fex or Banks and fintex if you think about e-commerce and within this region um 10 years ago it was still quite nent and now we have come a long way in the development of e-commerce we're all converging towards a customer experience which is one click and which is completely seamless and what goes behind it is a fairly complex value chain that has schemes that has banks that has fintex on both sides on the consumer side as as well as the merchant side and so we're we're seeing the ecosystem really evolve when all these parties are working together to bring Simplicity security seamless uh experience for consumers and Merchants um and I think collaboration is absolutely necessary to move in that direction um but the one thing that I would certainly say is that all Innovation slash disruption that will take place in the payments ecosystem as far as this region is concerned is certainly going to be towards enhancing access for consumers towards digital as well as enhancing experiences uh of how consumers transact on e-commerce with the different payment methods that they may choose to so when you talk about that uh customer user experience and so seamless uh everybody achieves or or that that's part of their goal how much collaboration are you really seeing on the back end at this point or are you seeing it yet a lot of collaboration um I would say that we uh the way we look at um at Banks and schemes is we're good at running the infrastructure as well as providing the security and the protocols of processing payments where fintex are really strong is coming and doing the innovation in the front end you know for for um consumers or Merchants to get the experiences that they want that's where uh their strength lies and so I think that is a huge complimentarity in what each entity in the ecosystem does in a payments value chain and certainly I mean we're seeing a tremendous amount of collaboration happening we we ourselves um as Master Card we collaborate with anywhere between 200 to 250 fexs on an average across the world right so it's it's very significant to our business model to work together with fintex for sure absolutely thank you Jose big portfolio lots of early stage investor investment ments uh you're a bit of the disruptor agree disagree where do you fall in this value chain of collaboration are you looking to displace your fellow panelists no I mean I I mean payments have been an integral part of the development of e-commerce and marketplaces which is you know where we focus on uh when I started my first company one of the biggest limitans to be able to make our business grow was that we didn't have the right payment structures so you know there's been continuous innovation and continuous change in the space and I remember even since 20 years ago everybody was saying I no you know there's nothing else to do in payments because the large incumbents are the ones you know that have the distribution and it's going to be impossible you know to to disrupt that the truth is that you know some of these large incumbents play a very important role but you also have structures that sometimes Foster more or less Innovation so example in Latin America a lot of the banks sometimes own the distribution of cards and the payments so you know they have not necessarily the right incentives you know for someone external to come in and disrupt is actually very hard but you know you also see that ER new technologies continue to emerge all the time and it allows you to do things that you were traditionally not habituated to do or not able to do and I think that when you have large incumbent structures it's it's sometimes harder to innovate because you don't have the right incentives for some entrepreneurs to come and join sometimes you know it's very easy to say hey we're moving on this direction we don't necessarily want to change the Paradigm and we want to continue to build on a on on a on a world that we already control and dominate so you know H we continue to see a lot of innovation in the payment space and as investors we always look for things that can actually be massively disruptive from the perspective of how we can use information and regulation to do things differently no and and that doesn't mean there cannot be collaboration I think there is you know a lot of the big in combats have paved the road you know to be able to do a lot of the things that we do today but it's also true that there's been a lot of large players that have decided to do things slightly different operating under different paradigms uh you know that have been incredibly successful and I see a very strong trend of H providing a much more customized approach to product into businesses we like verticalization of services so when we think about specifical needs that you need for payments in marketplaces are not necessarily the same type of needs that you need in other sectors and some of these sectors start to be big enough you know to be able to H you know to sustain an enabler that is customized for the specific requirements a big enough Marketplace indeed needed uh Sarah you know you and I've have had this conversation a little bit previously uh what's the reality how much is really being disrupted or how much is it really just being laid on to existing rails yeah the the banks often already own the rails and when we see new payment schemes coming up like realtime payments in the US or realtime payments across the Middle East it's those incumbents that have that direct connectivity and that are actually moving the underlying money whether it's a bank transfer or it's the card schemes that the pipes are already moving the money it's what we're seeing is that Innovation on the front end and where the disruption is happening it's saying okay well we want to displace the card companies by sending an instant payment but then you ultimately still have the card companies involved and if I look at the US JP Morgan actually partners with MasterCard for pay by Bank we give the rails MasterCard essentially has the API infrastructure and the connection to the banks so we can then give that offering on top of that is where the finex play where they can give a better uiux experience or on the back end where they can give better reporting on fraud monitoring Etc but still an enormous amount of moving money is sitting within the the banks and the card card processors Brey would you agree that that this uh owning some of the infrastructure is much more of a uh perhaps Evolution than the revolution that's going to continue with the collaboration I think there are two uh there's two sides to this um you know the the disruption Nar that's why you're in the middle exactly I am I am in the middle um one part one part is you know as as payments companies and payments technology companies as we like to call ourselves rather than schemes we're we're and I would say as an industry we're investing into multirail we're not dreaming of a future where cards is going to be the be all and end all of everything uh and we very much recognize that new payment methods are going to come in and disrupt the ecosystem uh and to sar's point that certainly is an area where um Payments Technology companies have stepped into like ourselves uh driving account based payments open banking uh partnership with mobile money operators we're doing uh we're really touching um non-card payments in a very big way and it's a very very uh conscious part of the strategy the part which certainly is disruptive I would say for payment companies is uh anything that is regulatory driven and becomes non-participative in nature so I think you know um uh uh hos you referred to regulations and the and and the infrastructure um I think regulations as long as they are democra critic IE allows everybody to participate in that particular flow uh it is it is good because technology companies can come in and provide services and experiences uh but we do know that across the globe there are regulations that will be uh prohibitive for global companies to operate in and and there will be a uh nationalistic flavor to some of those Services uh and we recognize that that is a real uh threat of disruption uh going forward um so yes I mean we I I think that we have to balance uh where we can make a difference through technology and Partnerships and where we have to navigate the murky Waters and um you know find the best suited place for ourselves within uh let's say a nationally uh uh favorable policy framework maybe I'll stick with the murky waters for a moment as we close out here in our last two minutes maybe if each of you can uh close out with where are we in the cycle and how far do we need to get maybe to have a little bit Clarity in the waters I mean I in my case I I still feel that Emerging Markets or less developed markets can play a much a very interesting role in innovation in this cycle because um you know I'm not a very big believer of Regulation I think regulation in the fintech space has to exist but sometimes if it exists too early it doesn't necessarily allow some of the companies to develop so you know when I started my career there was no innovation coming from outside of the US today we see that there's a lot of innovation in business models uh that are coming from outside and and I think that's going to continue because companies will have much more flexibility to do certain things before they get regulated and I would just be thoughtful around not blocking that type of innovation sorry of of of of of development by regulating something too quickly because other otherwise you will not allow them to innovate and I do think that there's different paradigms you know that that that are going to be emerging that are emerging and they're going to continue to emerge that are going to be very disruptive on companies that are going to be doing things utilizing technology information and resources that were not available before and some of the systems that exist today were built on you know previous uh infrastructure and information so I do think that there's a lot of change that that we're going to see a lot of disruption at the same time I do think that some of the large incumbents will continue to play very important roles in making sure that some of these Innovation stabilizes M gry look I think I mean I I think you've said it all um just the only thing that I will add is we're still living in a world where 70 80% transactions are happening in cash so as long as there is an opportunity to digitize uh economies um there is room for everyone there's room for disruption and it should disruption Innovation I mean without that I think the industry cannot cannot progress so uh I I think that we are we're in a good trajectory and we just need to work together to to digitize more Sarah you want to close us out I think we're nowhere near where we need to be the session title is one click we should be completely clickless everything should be embedded our biometric should be pay paying for what we need our car should be telling us our coffee is ready and there's so much more we can do to really embed transactions into your day-to-day in a seamless no click going forward so I'm going to make the suggestion we reserve the same panel next year we'll just call it no click and we'll see how far we got that works abely thank you everybody wonderful panel thank you very much great to we here