After experiencing an unprecedented year, the next 12 months are set to be full of lessons and opportunities to reimagine and rethink business models linked to finance, to promote the economic recovery of the region, and continue to build bridges between consumers and financial services, says Mastercard’s head for Latin America.
The digital ecosystem must be prepared to take advantage of new opportunities, while addressing challenges, such as improving the experience and providing security in transactions, says Carlo Enrico, president of Mastercard for Latin America and the Caribbean, in this interview with iupana.
COVID-19 has greatly impacted many business sectors throughout Latin America and the Caribbean. What are some reflections you will take with you as we enter 2021?
2020 was an unprecedented year, full of challenges in many areas of our personal and professional lives. As our region re-enters a delicate phase of normalization, and the vaccine becomes more widely available, we have an opportunity to use our technology and this moment to rethink how we serve our customers and communities, reimagine our role and our business models, and reinvent our partnerships, so that they all lead to a more resilient future.
How do you see Mastercard’s role in the region’s road to recovery?
2020 has seen a massive shift to digital that is here to stay. This technological trend will continue through 2021, revealing new opportunities on our path to recovery. Enabling commerce through digital is core to our business therefore we have been leveraging our insights and capabilities to help our customers understand on-the-ground realities, so they can remain resilient as we enter a new year.
As the digitalization of our lives progresses, Mastercard will be a trusted partner in speeding up the adoption and usage of digital payment solutions across the region, help the industry manage digital transactions, the consumer experience, and provide the safety and security expected by all parties.
While the pandemic has forced Latin Americans to reconsider their relationship with banking and technology, we must make sure that no one is left behind. Therefore, in 2021, our collective efforts within the public and private sector should focus on fostering inclusive growth.
What will be the major changes in financial services in Latin America and the Caribbean in 2021?
The financial service providers operating in 2021 must have authentic empathy for their customers and a genuine desire to help them.
This year, we observed a strong surge in the digitization of how we work, live and shop. In 2021, I expect the industry to keep an increased focus on human-centered design for the new digital consumer and deliver a thoughtful approach based on the consumer’s long-term goals. Specifically, we know that if these first-time users have a negative experience, or if the products and features don’t deliver meaningful value, we risk losing them to previous cash-based behaviors.
This is especially important to the industry as approximately 40 million people across Latin America became banked in the last few months as a result of government subsidies, which caused a significant migration of cash-only users to online.
What are you most optimistic about for the year ahead?
Partnership and collaboration are both powerful and essential, and our business model was built on this belief. I do think there is a genuine collaborative spirit across sectors and a drive to innovate for good. As the digital economy increasingly becomes the economy, it is both our business strategy and our social responsibility to ensure that people and organizations have access to the products and solutions they need to achieve financial security in a digitally driven future.
We’re working to scale “Doing Well by Doing Good” by making commercially sustainable partnerships and solutions the new paradigm for our business-as-usual. This year, we renewed our pledge to financially include another 500 million people over the next five years after reaching 500 million this year. That’s one billion people we are going to work with our partners to bring into the financial system.
To do this, we launched private-private partnership programs including the Tech for Good Partnership and Aliados Digitales, which respectively, brought five tech and financial services companies throughout the region together to commit to accelerate inclusive growth and via “Aliados Digitales” or “Digital Allies” offered business recovery alternatives for micro, small and medium-sized companies to start or strengthen their digital presence.
What do you see as the biggest challenges for our industry in the year ahead?
Trust is the new currency and in a rapidly shifting digital landscape like the one we face today, consumers need to understand and trust that today’s digital solutions will work, and that their information will be safe. Earning and keeping consumers’ trust is our core business and we have led the way by establishing new standards and solutions that enhance the payment experience and align security with convenience. In the years ahead, all players of the industry will have to simultaneously focus on their role in building trust with consumers as technology evolves. This requires a commitment to invest not only in tools but also in education at all levels of any company and demonstrate that commitment to its customers by breaking down complex issues into simple, digestible terms. This includes being open when it comes to what they’re doing with the data, and the measures and processes they have in place for protection. Leading with knowledge and education will be key to growing and maintaining trust.
How will Mastercard work to solve those challenges?
Since our inception, we’ve securely moved information around the globe to facilitate faster, safer and smarter payments between financial institutions, merchants and consumers. We’ve also worked with people, governments, businesses and communities, lending our insights to drive policymaking and decision-making, all in a way that puts the individual at the center.
As the need for more efficient and accurate decision-making increases with the digitalization of everyday life, we’ve committed ourselves to ethical data practices, developing high standards in security, financial fraud prevention, data privacy and information governance and management. Now, more than ever, we’re dedicated to identifying useful insights to help mitigate this crisis and emerge from it with a safer and more equitable world.
2020 was a year of accelerated change for Latin America and the Caribbean. What’s still left to do when it comes to digital transformation?
Despite fantastic progress on digital inclusion and access to mobile money because of the proliferation of mobile phones in the region, there are still vast numbers of people in developed and developing economies who remain unserved. Although the pandemic has forced Latin Americans to reconsider their relationship with banking and technology, we must make sure that no one is left behind.
The adoption and use of digital finance could increase the GDP of all emerging economies by 6% or a total of $3.7 trillion by 2025, generating 95 million new jobs.
What can the industry learn from the challenges and changes of the past year?
We must place people and customers’ needs at the center of everything we do. This has been our North star at Mastercard and will continue to be. If we take care of our people and put our business at the service of our customers, then ultimately everything else will fall into place.
This pandemic left one critical lesson: regardless of who your customer is (the consumer, merchants, banks, governments, entrepreneurs) we all have changed our needs in one way or another. It is imperative that we understand new consumer behaviors through data, and then use that data to continue staying close to the consumer, to be able to address their needs.
What surprised you about how fintech responded to the pandemic? And the financial services industry more generally?
As we looked to unlock opportunities in an accelerated digital economy, we learned that the removal of entry barriers to banking and increasing the value of products and services to consumers, amounted to an improved overall user experience that helped build a foundation of trust among millions of consumers who adopted digital behaviors for the first time.
More than ever, fintech and traditional financial institutions are collaborating to bring new services and products to market and solve complex problems—ultimately benefiting the industry and customers in these collaborative efforts. As the partner of choice for fintech, there’s never been a more exciting time to help emerging fintech grow and scale their businesses, while solving real pain points.
What is the key thing that we should watch in 2021?
There is a new cycle ahead of us. While there are many things we still cannot anticipate, there is no doubt that this crisis will continue impacting consumer behavior like never before, including choice of payment—from cards to bank accounts to digital wallets.
More than ever, consumers and businesses expect to be able to pay for, and get paid for, goods and services whenever they want, wherever they are, using whichever device they choose. Mastercard’s continued evolution into a multi-rail company means that we are uniquely positioned to meet these needs and deliver value to our partners in new ways, through new experiences that keeps pace with the way we live, work and do business: invisibly, intuitively, intelligently.
This article is part of a special series on digital finance in partnership with Mastercard. Explore the full series here.