Podcast: Mastercard taps into AI to structure open banking data

Whitney McDonald 12:46:24
Music. Hello and welcome to The Buzz a bank automation news podcast. My name is Whitney McDonald, and I’m the editor of bank automation News. Today is July 2 2024 Joining me is Jess Turner, Executive Vice President of Global open banking and API at MasterCard. She is here to discuss how AI can be used to organize open banking, where open banking regulation stands globally, and how access to data can boost innovation. Great.

Jess Turner 12:46:50
Thank you for having me. Whitney, so my name is Jess as you know, I’ve been at MasterCard for over a decade, actually over 15 years. And prior to that, I spent time at Capital One and the small loyalty programs, my loyalty business. In between them, one of the things in my career that has stayed consistent is my love for data and technology and creating solutions that solve for real world problems. And so I’ve had the luxury of having some component of those things in every role that I’ve had over my entire career. I currently lead the global open banking team at MasterCard, as well as our API and developer team. And what that means, in plain language, is we work as a unit to bring consented data from a consumer or a small business to a third party, and to do that in ways that solve real world problems. And on the API and developer portion of my team, we work across the MasterCard enterprise to make sure that our products are easy to exceed, easily accessible, and so that our developer community can leverage all the assets that MasterCard has around the world, and so that’s what I do now. And I am based out of New York City, but do, do travel quite extensively to all of the different offices, which I very much appreciate. I’m having to Copenhagen tonight, actually,

Whitney McDonald 12:48:17
nice. Well, that’s, that’s key right now, right the data you can’t, can’t really accomplish anything right now without good, clean, quality data. And then, of course, using that data to solve problems is a lot of what we cover through bank automation news today. So I’m excited to dive into this a little bit more. And then also, of course, with what you do on the open banking front. Of course, data is a huge piece of that maybe we can kind of just start bigger picture before we get into the nitty gritty, tell us where we stand today with open banking globally.

Jess Turner 12:48:49
Great question. I think open banking globally is in different places, in different parts around the world, which is exciting and really how most, I would say, profound changes start. They start in different pockets, in different ways. And I believe open banking is a profound change in the way we do many things. I often say it’s a data revolution, and the reason I believe that is because if you think about data as almost like a currency for consumers and small businesses, where they can leverage their data and use it for purpose, whether that’s in a way that’s about financial inclusion, so they can have people look at data and be able to make different decisions, and they would on their creditworthiness all the way down to something that may seem more tactical, but even using their data just to have a better user experience, and for people who may be not as digital, also could be meaningful, right? And so it has, like, this very large tranche of things it can do, and that’s why I think it’s really different in different parts of the world. And I think it’s just getting started, but has, you know, a fairly accelerated horizon for how it will impact many parts of the world. Certain parts of the world are further ahead than others.

Whitney McDonald 12:50:09
I love what you said about data as a currency and allowing consumers to kind of leverage their own data, use it differently, and kind of have something a little bit more tangible with data, rather than something that’s a little bit more out of touch or maybe something that didn’t feel accessible before. With that, maybe you can talk through how your team approaches open banking. I know that you have a couple of different paths that you take there, but maybe we can kind of start with this data as a currency. What does this really bring to consumers when it comes to giving them some more options, more choice? Maybe talk through that approach,

Jess Turner 12:50:43
absolutely the way the team approaches open banking, really open data in general, which is focused on banking today, is, how do we take something that could be complex and make it something that consumers and small businesses can use, and how can they use it through Our partners? So MasterCard is a business to business entity, but also that focuses on what the end users needs are, and that’s our distribution model has been for, you know, 60 plus years, leveraging emerging technology. And so we can still use that muscle and open banking, and so that allows us to help our our partners. So. Globally in the markets that are ready. And so the reason I talk about it in that way is in some markets, open banking is regulated. Europe and the UK are a great example of that. It’s been regulated for a while, and it’s regulated kind of in different fashions, whether it’s the data elements that get sent over the standards in which that happens. Australia is a fairly new market, also highly regulated. The US today is not regulated, but it’s been commercially LED. The three things those markets have in common is they’re all working to solve consumer and small business needs the way they started. The approach is just different, and I think in time we’ll all become more unified. So what we look at is, how do we bring the markets that are ready for open banking to scale and commercialize? How do we bring those three different markets that are so sizable together, both through technology and solutions, with the right partners to help it scale and provide consumer choice. And so everything we do, we think about that. We think about, how does the scale who’s going to be the winner here on the consumer side? Are they getting something they need? How do you unlock the true potential of what this data and technology can come together and bring forward, even though those markets are in different places, whether it be regulation or consumer need? Yeah, I

Whitney McDonald 12:52:46
like what you said. Of course, the regulation is different, but at the same time, the the same idea is that you’re trying to solve for a consumer or a need, but a consumer need on this example. So consumer choice being one area, but innovation being another for MasterCard and open banking. Maybe talk through how open banking allows for innovation within your unit. A great that’s

Jess Turner 12:53:09
a great segue. So, you know, one example I like love to talk about is this idea of consumers being able to give third parties access to it to help them better understand their credit worthiness. So in the US, there’s a ton of people out there that are credit invisible, and it doesn’t mean they’re not credit worthy. It just means they’re credit invisible because of the model we’re in today. What open banking has done with innovation is allowed other entities to let consumers or small businesses say, Hey, look at my bank account data. You’ll see that, although I might not be in the traditional credit model world, I am credit worthy, and then you’re able to provide a loan that makes sense for them, some sense our capital for a small business, that allows them to live their life in a very different way and grow. That’s a sense of innovation that having this data connectivity, if we didn’t have that connectivity with the data and open banking, with safety and security embedded in it with data principles embedded in it. You wouldn’t have an innovation like that, right? You wouldn’t be able to have a different view on what’s responsible lending really mean. And so that’s a really impactful innovation, because you can imagine, especially in the small business space, if you can get responsible lending to a small business, they can make more money, therefore they can put more money into the economy, and it becomes this full circle of old boats rise. That’s one I’m going to give you another one really quickly. Another one I’ll focus on in the US again, is a partnership we have with Chase or pay by bank account. But the reason I talk about it is the bill pay segment is a little bit antiquated in the US, in some pockets, and a lot of people will type in a check number, for example, to pay the utility bill. And the experience is tough. The conversion rate can be low not people don’t always realize that ACH isn’t real time, like a carded product, and what can end up happening is somebody wants to pay their bill. They don’t have the money. When the actual ACH players, the person you know, the biller, is not getting paid, the bank has to provide some type of overdraft on it. And banks in the US don’t want to provide, don’t want overdraft, and the consumer who just didn’t understand is also in a bad position. So we’ve created a score called payment success indicator that can tell the consumer, hey, it’s not likely the money might be there in two days. And so that’s another innovation where old bullets rise, and that’s why I think open banking is so different. It’s a, it’s a phenomenon where everybody in the ecosystem and the chain really, really benefit. And there’ll be so many more innovations, but those are just two that came top of mind. Yeah,

Whitney McDonald 12:55:54
those are great examples, and thanks so much for talking us through those. Now, when it comes to open banking, you have to talk through data security. It’s, it’s a necessity. It’s something that comes up every time you hear open banking. So maybe we can talk through how MasterCard ensures data security within open banking. How do you solve for these problems on making sure that security is at the forefront? The

Jess Turner 12:56:15
MasterCard has had a big data responsibility voice for a long time. We’ve come out with principles well before regulation was put in place and. We talk about putting the individual at the center of all of our data design. So we always say privacy by design and our products right? Consumers, you own it. You control it. You should benefit from the use of it. We’ll protect it. That’s how we talk about things as a product organization, with our engineers as well. Why that’s it matters is because as we build things, we embed layers of privacy and security safeguards into the actual products as they’re being developed, so that they’re easy to use, because people want privacy and security, but not with not with a ton of friction. If you can prevent it, right? You want to still make it easy use. And so for those reasons, that’s how we start and we design the way we’re going after things. One of the examples is we have a product called like identity verification, where, again, with consumer consent, we can go in and say, Hey, you are. This is, in fact, your bank account, and you’re connected to it. And we have a slew of products that we can combine, and actually different data elements we can combine that. Can say, Whitney, you are who you say you are. You are on the device that is you’re typically on. And, oh, by the way, yes, you are trying to connect to your own bank account, and not someone else’s right? And so we can do that. We can embed that in the product design. So it is, in fact, the product. It’s not a product that’s sitting on top of it. And then when you can do that on the forefront, then you can connect to ACH real time payments, general account opening, because you’ve secured the front end of that right end to end, in an easy and friction free way. And so that’s that’s why we spend a lot of time on that and open banking. We think we have a lot of value to add for the entire ecosystem. And also because in certain flows right now, like ACH and RTP, there is fraud and there are things that happening. So we can add value into the ecosystem by creating the front end portion of those connections in a way that’s a singular product,

Whitney McDonald 12:58:19
yeah, ensuring that verification right from the get go, making sure that once you’re into the product or you’re leveraging, or you’re into the account, it really is who you say you are, then you can kind of take the steps from there, however you’re using your account. But we talked through innovation, we talked through data security, we talked through bigger picture open banking. But of course, we have to talk through AI and open banking as well. Maybe we can talk through how AI has been fitting into the open banking landscape, specifically for MasterCard, any use cases or places where it fits into the fold. But yeah, maybe we can kind of bring AI into the conversation.

Jess Turner 12:59:00
Sure. Of course, we have to, right, right? So MasterCard has been harnessing AI to protect over 125 billion payment transactions every year. We’ve been doing that by preventing billions of dollars from being lost to cyber criminals and detect detecting fraudulent activity. And so this isn’t new for MasterCard. We’ve been doing it well before it was a big buzzword, and we’ll continue to expand and do new different things there that are done in responsible ways. For open banking, we’ve been using it for a very long time as well. MasterCard acquired a company called finicity in the US and Aya in Europe, and then we’ve also home built many of our services and platforms in conjunction with the acquisition, but fenicity, well before MasterCard acquired them, was far into AI, and then we’ve continued to embed our expertise there and our data scientist group, and we use it for things like cleaning and categorizing data. So, you know, I talked about how I’ve always had a great love for data, which I do. But you know, we have connections to over 3000 banks between the US and Europe alone. And the access to these banks and the way the data comes in can be very different. And so being able to take these data streams and make that data usable so somebody knows what it is, is a powerful and meaningful behavior and activity, and we use AI for that as one example, and it continues to learn. And there are far others, but that’s that’s what I think people can understand. Like I always I say to my children, imagine getting a slew of information, but nothing matches, and then you can use AI to help it match, and then it learns again, and then you have human intervention and supervision to make sure it’s accurate. But then it allows a slew of data to actually say, hey, actually, that is someone’s income. We can verify it for you. And that’s where the power of AI is brought to life in a meaningful way in open banking today.

Whitney McDonald 13:01:03
Yeah, and I mean, that’s a great example, and a great way to put it for kids, or not kids. I mean, for anyone to connect the dots on how AI what AI can accomplish. So that’s great. Before we close out, I was wondering if there’s anything that you’re working on, or maybe you’re focused on in the short term, that you’re excited about, or maybe kind of just. Share a little bit about what your focus is today, what you’re paying close attention to. Absolutely,

Jess Turner 13:01:29
in our day to day, we focus on, you know, again, bringing, bringing all of these platforms together, and really being a game changer for Financial Inclusion, as well as empowering the businesses that we’re in today. And can expand into some examples that I would say are really leaning into the small business environment. We are a big believer that supporting small businesses and ways either to gain capital, pay more effectively, receive money in a better way and also reduce fraud, is something that we can have a core we can really help advance and help them conquer together. And so we spent a lot of time on that. We’re also very well situated in the account to account space to help reduce fraud, help validate who the bank account owner is, if there’s actually funding in it, like I talked about before, and being able to show risky behavioral patterns there. So we’re going to continue there. Deep believer in more data will help more fair lending around the world. And so we’ll continue that as well. We’re a CRA and the US so that we can do that in a way that’s responsible and help consumers and small businesses really lean in and, you know, have an ability to share the information that’s needed so that more wealth can be went out and provided there. So those are, those are some of the biggest areas that we continue to really, really lean in on. What I will say, as we continue to move forward in the open banking space, and we continue to see global expansion around the world is helping large enterprises connect best practices and really know, like, how can this open banking revolution really help your business, whether it is in a friction for user experience with better security, all the way Through providing capital, providing customer choice on payments, PFM, active PFM tools, right budgeting tools, giving you financial power. How can we do that, and how kids, as we work around the world, you know, as as really, the only global enterprise that does that today in a meaningful way. How can we share best practices to help accelerate the adoption of what is possible and capable, both with the data and the technology surrounding it.

Whitney McDonald 13:03:48
What takeaways or forward look on open banking would you leave the audience with?

Jess Turner 13:03:55
I think the only two things maybe I would leave with is I spend a lot of time trying to solve real problems with data and technology, which I love and enjoy. I do think that the best solutions is when there’s a unification of solutions. And so I didn’t talk a lot about that. But you know, combining open banking with, you know, blockchain technology, you know, possibly loyalty, identity, the things we talked about, carded transactions, that’s where you’re going to start to see like homegrown, combined solutions that connect a lot of different things. And so we spent a lot of time there, too, and that, what I left out is the only way things scale is if consumers and small businesses want to use that and you really have to have trust. Trust has to be at the cornerstone of that which I feel grateful that we are MasterCard, and people have been trusting our brand for a long time, but people aren’t going to give you access to their data for things that make their life better unless they trust you, and the only way you can do that is with a good brand that you’ve been able to stand behind, and doing that in ways that do require you to again, put data, privacy, safety and security at the heart of everything you develop. And I, you know, I often skip over that just because I work at MasterCard and I take for granted the trust and honestly, the rules that we live by across our entire business. But nothing will scale if consumers and small businesses don’t trust what you’re doing, right? And so that’s going to be a big, big driver and how quickly making scales

Whitney McDonald 13:05:35
go. You’ve been listening to the buzz a bank automation news podcast. Please follow us on LinkedIn, and as a reminder, you can rate this podcast on your platform of choice. Thank you for your time and be sure to visit [email protected] for more automation news. You.

Transcribed by https://otter.ai