Embed This: Finance's Really Big Opportunity

[Music] good afternoon and Welcome to our session on embedded Finance first of all I would like to thank Abu Dhabi I would like to thank Abu Dhabi Global markets for hosting this fantastic event so what is embedded Finance it was just mentioned it is the seamless integration of financial services into non-financial platforms what can it include payments Landing Insurance banking services and we will hear um a lot of other applications as well why is embedded Finance so relevant it's not only reshaping consumer and business experiences it's also emerging as a massive growth driver in the financial industry and for the financial industry however embedded Finance also comes with challenges it comes with complexities Market challenges such as consumer trust and seamless user experiences are very critical to the success and these are things which we just discussed earlier regulatory Frameworks also need to be looked at particularly across jurisdictions risk management is also a very important aspect how do we for example ensure data security how do we mitigate risks when financial services are embedded into non Financial non-traditional platforms we at The Institute of international finance in collaboration with Deo just recently published a note where we underscored the urgency of addressing these issues the need for clearer strategies a strong collaboration between financial and non-financial players and what we said earlier the introduction of innovative regulatory approaches Trina when we look at MasterCard MasterCard has has always been a champion in Innovation when it comes to payments embedded Finance is clearly transforming how financial services are delivered and also consumed what are the main benefits of this Innovative shift of this Innovative change and what does it mean for your company for MasterCard thanks W Wolf Gang um I mean look the opportunity really is right right for us to really meet customers where they are and so embedded Finance creates that opportunity across segments so whether you're consumer customers who are looking to pay and get paid or whether you're you know corporate orme customers across the kind of value chain there are many opportunities for us to to intersect and I think we take our uh responsibility in that ecosystem uh very seriously and it's a privilege for us to be a connector um whether it be through Merchants you know through fin institutions through the regulator as well too um as a way to kind of bring together all of those parties to ensure that we create much more seamless experiences that we also bring more people into the digital economy so um you know still in this day and age we still have you know almost 30% of people across the minor region who technically are not you know completely banked so for us you know by embedded Finance really becomes an enabler to help us close the gap when it comes to to uh driving inclusion for for those that are that are underserved um and of course you know it we then are able to lean into uh you know as I said bringing people meeting people where they are leaning into their passion points and making um payments almost invisible within within that experience so the opportunity is is for us as uh you know is in that kind of enablement space whether it be through technology through the relationships that we have across the ecosystem and being that you know kind of driver of of innovation and and creativity and collaborations uh with Partners uh like some of whom that are on the stage here and and who've been on on the stage earlier today pulit embedded Finance is changing many areas including Mobility how is in vgo your company adopting to embed Financial Services into broader digital ecosystems which we are you are already using thank you for that question so if you look at the automotive and mobility in industry within our region it's already a $50 billion market and expected to grow very fast over the next few years but if you look at it from the consumer standpoint it's still fraught with a lot of um hurdles hassles in getting a car imagine you're an expat that's just come into the country and you need need a car so what are you going to do you know jump from rental count to another compare prices uh compare availability it's painful and if you're a young Financial professional or you just entered the workforce you don't have a six month bank statements to get the kyc and loan application and all of that done through a bank so that's why we exist that's why we that's where we come in um getting a car from invigo is as easy as it gets um you can literally log into the app it's an instant kyc instant approvals process so no banks uh no financial institutions no insurance companies everything gets done through the app and the car gets delivered to you um literally like your food order so we exist for the same reason why a Netflix or a Spotify existed for let's say the music or the uh TV show industry it's uh much more convenient it's much more financially accessible um as opposed to buying each song or each Tv show uh we just scratching the surface uh subscriptions uh are only 1% penetration in our markets as compared to all other products so Mobil T still has a long way to go uh but we're there we at the Forefront we're leading that Revolution and there's a lot more for us to be done yet Tark you announced a very Innovative financial transaction this morning which you're going to be doing with City and a number of other financial institutions so congratulations again thank you Astra Tech when we look at the company it clearly operates at the intersections between technology and finance how do you priority and prioritize embedded Finance Solutions in your digital offerings so I I think one of the important things when we so let's park astrotech on the side for a moment I think if you look at household debt in the region right including the unbanked uh component right you're still at much lower levels than you are relative to most other developed uh markets right and so if you look at places like the kingdom you look at the UAE and others you have a massive opportunity to help people better understand what it is that they can and can't do with their financial situation right I mean people globally are you know discussing inflation salaries are not improving right but cost of living is going up different things are happening in different places so the way that we view this as very much a a function of how it is that we can help people be able to access the goods that they need be able to educate themselves on the financial instruments that they may not know about right in a very transactional but long-term partnership approach which is the way that we work with our partners MasterCard is a key partner for us in a lot of the growth that we've been uh undertaking I think when you look at that crossroads today if I look at the Advent of AI into everything that we do you're going to see as jash mentioned on the previous uh panel right to read a statement that simply or have that statement communicate with you a lot of people today they don't realize how much it is that they're spending right and so I think for us we create that savings environment we give people the product we're growing rapidly in terms of the user base that we have and the Legacy financial institutions are very important for the ecosystem but there's a large segment of people Andes that are left behind in that process who really are the engine of growth for a lot of what it is that we are looking to accomplish so I think for us we look at this very pragmatically how do we expand the product offering how do we create essentially stickiness within the platform that we have but to continue to scale we have to work with Partners we have to provide a platform where other entities can come startups can come plug into what we've built access our database either powered by BM or powered by that platform and help educate the consumers on what it is they don't realize that they could have access to but also do it in a very um eth iCal way I think it's very important you know you have for examp I'll give you an example the UK had this big crisis a few years ago right on the early wage access and the short-term loans and You' see the APR you ran out of time reading how long the number was in terms of the APR charged right we don't have practices like that here we follow the regulations The regul Regulators here are very Nimble but also very clear on what it is that we can and can't do so I think for us it's still very nient here in the region I think with the right partners and the right growth and now with that very powerful balance sheet that we've been given from uh City Group um we're going to continue to offer more uh Innovative products to people and uh and watch it grow Gina embedded Finance is being used in many Industries and across Industries how does MasterCard your company see its role in accelerate the ad adoption of embedded Finance particularly across Industries yeah I mean look across the entire um life cycle of a customer and you know as our partners continue to add more and more services Master Card has a role to play in each of those expansion opportunities so we become an enabler um a merchant May diversify and decide they want to issue cards they may decide that they want to offer crossboard remittances they may decide that they want to you know unlock acquiring Services Etc all of which are things that that um bottoms us actually um so in each of those new verticals that they unlock we provide Technology Solutions that enable them to take place but also that enable them to take place in a safe and secure way so MasterCard invests globally in Technology Solutions that you know cannot be replic replicated they you know cannot they're not easy for frauders to you know kind of uh to tap into and that sort of thing so we provide merchants and and you know kind of new part new players in the industry um the the assurance that they're you know able to embark on this new Journey from when it comes to offering Financial Services which what that does is it helps them build trust with their end users as well too because you know I'm comfortable you know taking a payment facility from a partner where I'm you know maybe more used to you know making an international phone call or what have you so um and we see that you know across Industries in the panel before we had you know weo and kareim these are you know all um institutions which are changing the way we do things whether it be through super apps or looking at you know being more of a kind of digital bank and they've been had to be in order to be able to do that uh they've had to rely on the safety security and brand reputation that MasterCard brings to the table so you know by having our you know kind of 60 years of experience we um create that you know trust in the market with you know tried and tested solutions that can enable our partners and then when it comes to actually growing the business then as well we plug into our partners not just with kind of you know uh technology and infrastructure based Solutions but you know we also then overlay Cutting Edge AI technology so for example Solutions like Dynamic yield uh which is a platform which allows us to help our customers grow from a marketing and advertising perspective so we try to bring our Global perspectives into whether it be you know kind of local and new em Merchants here you know maybe homegrown Merchants from the UAE right up to you know large scale global Global Merchants whether it be across Airlines or or fast food Etc and we apply those capabilities that we've invested in globally uh to enable you know Merchants to be able to really offer those Payment Solutions to their end customers PID when it comes to Partnerships and when we look at Mobility what kind of opportunities do you see what kind of role do you as a key uh participant in this market want to play where do you see this Market in a couple of years yes of course you have to drive value back to your partners um to grow um how we see ourselves is uh an integrated fintech Mobility Solutions platform right so we started with um all these frecking motor businesses and got them to move their cars more digital friendly uh process and um now we've been collecting a lot of data which is across consumers across the cars that they drive how they drive these cars how they make their payments how frequently they make their payment payments um whether they're incurring a lot of fines damages what not um the level of services our suppliers are able to provide so with all this data we're able to understand a lot better um what our consumers needs so one of the things that we are talking to one of the insurance companies about is um how do we move to usage based insurance right um if you're the kind of person who likes to bomb in on a roundabout at 100 km an hour versus another d driver um who's a lot more safer in that approach why should you pay the same amount you know um for your insurance product so how much you drive your car how well you drive your car how good your behavior is that's one of the opportunities that we've seen more on the financial side and even on the retail side uh what we're learning is there's a lot of appetite for um hyper localized um geospatial advertisement so let's say you're passing by a KFC and they want to advertise I don't know an offer for your car that's passing by that's something that we're looking at so at the end of the day everything comes back to the data that we're collecting at invigo right and our ability to make sense of this data to drive value to our end consumers and our partners tar sustainable Finance is growing strongly very strongly the MC was mentioning that we expect to see growth rates of 30% plus annually in the next couple of years in the UAE alone in this kind of context how do you ensure scalability and also sustainability so look I think it's a it's an interesting question because if you look at Wall Street today right we've gone from what was it 10 years ago if you were not focused on ESG you were not getting certain funds in and all those funds are going look just park the ESG for a moment right and it's it's it's been interesting because not all but a lot it's been interesting to see because when you look at the role the UAE has played recently on cop 28 and I know this is a bit of an angle here that I'm coming at that entire initiative was built around sustainability we will suffer the most in this part of the world from the lack of sustainable practices when it comes to everything related to energy to the way that we consume to the way that we behave right and I think that part of the driver for us and when we look at even our relationship with City Financial inclusion that for me is a core component of um of sustainability if you can teach people how to better spend and how to spend on product that they need right I think you will start to see a very different behavior um than this rapid consumer uh behavior that we currently see and so if I if I take for example some of the user base that we have at uh at astr through the BM platform these are lower income uh earners uh blue collar workers who are looking at really saving for the future and saving to take care of their families right I need to build product around that that enables them to be able to address the basic needs that they have and that their families need when they're transferring money to them but also to protect them they have left their home countries in some cases for decades and return back only to find out that they need to go back out again and work I want to change that behavior and we can only do it through sustainable practices through sustainable investing through showing them that they can still attain the things that they want but I can bring them up on the financial inclusion ladder right now one thing I think that's really important here and we have a massive consumer base in this region that stretches into southeast Asia and so on is the Islamic Finance component within the embedded Finance I currently don't have a product for that but if there are builders in this room that know how to address that I think that's going to be a massive opportunity to do something particularly when you look at Mobility MH if you look at the and don't get it too right because the traffic's already bad in the UAE sorry about that but I think if you look at countries uh across subsaharan Africa across the uh what they like to refer to as the global South the penetration of cars and vehicles to individuals in many instances it's less than one vehicle or mode of transportation for every 50 individuals we have a much higher I mean a much better ratio here right if you can start to improve that and change that ratio and offer products to allow people to do it so they can commute to places where they can work or be educated you start to change the trajectory of their lives right and I'm not saying this to be cliche but I genuinely believe believe that an ultra app with the financial power that we have should be delivering that and will be delivering that going forward and so that all of them can go home and retire when they get back home right China we talked about Partnerships financial institutions non-financial institutions and we all agree it is improving its strengthening and it needs to strengthen further you um mentioned a couple of areas where you already collaborating with non and non-financial and financial institutions can you give us a couple of examples where this kind of cooperation has also helped to enhance customer experiences yeah absolutely I mean look it's quite exciting when we work with non-financial institutions it's you know kind of a different ball game a lot of different conversations get had and there's a lot of different ways in which you know we drive a changing dynamic in terms of customer experience once such such example is uh we have a platform called the shopping Muse which essentially allows us with retailers um to leveraging the power of AI of course to help change the dynamic of uh finding what you're looking for on a shopping platform so we've launched this with some uh Global retailers whereby instead of you know writing that hey I'm looking for you know a red suit you might say I'm going to you know a wedding in India and I want a specific outfit that will you know kind of uh align to that so so it AES the power of the data that the merchant already has as well as you know kind of ingesting other data sources to allow the recommendations that then come back to Consumers to be much more targeted um and ultimately you know a strong driver for growth so I guess that's one example of how we intersect with Merchants at different levels not just in the context of you know I think historically people thought MasterCard was a you know card provider but we are not we are a Technology Solutions provider that enable businesses across you know kind of many layers so that's in the context of of you know sort of AI and how we're using those solutions to drive forward non-fi businesses but even with those nonis we're also working them working with them to ensure that their you know payments are being processed so maybe it's a small Merchant who actually needs a solution like pay by link or QR code payments uh to bring them into um you know a more digital economy so they may have been receiving cash payments and so on and so forth so there are you know kind of smaller everyday Solutions right up to you know very and Powerful AI solutions that Leverage The Power of the data that our Merchants are able to collect so for us it's it's quite fascinating and it's a different Dynamic to say you know when we when we work with the traditional Banks who of course have access to a lot of data and and payment uh uh information as well too and I think we're just you know to J's point on the earlier panel is that we're just scratching the surface with leveraging that data to its full full capacity so we've been investing heavily in you know kind of AI Solutions in open banking Solutions as well to to help be you know that connector across um whether it be non-fi right into financial institutions because at the end of the day an a non-fi still requires you know an an fi partner to help enable their solutions from a regulatory from a licensing standpoint as well too so we tend to work to you know bring together all of those platforms holistically you know to to be able to to drive forward their growth agenda across multiple verticals yeah poid I'm afraid the last last question of this very interesting conversation goes to you just looking at the time left the UAE is clearly a a trend Setter also when it comes to um embedded Finance Clear Vision uh clear legal and strong legal framework and of course also um a very Innovative environment nevertheless we see in embedded Finance also growing globally what lessons can we learn here in the UAE in our region from other markets please keep in mind the clock is ticking so I'll keep it very short I think I would have had a lot of things to say and to to request and demand and what not if we had the same conversation three years ago uh but just the transformation that the UAE has been having um especially from the point of bringing in fresh young Talent experienced Talent um that's had the global experience I think that's just been transformational for the region and uh the better people we have around ourselves ourselves the better we can build and I think that's something that the UAE has done very well and um so yeah I think uh would have been a different conversation few years ago but uh extremely happy with where we are and just getting started thank you this brings us to the end of our session please join me in giving our panelists a big hand of applause [Music] w