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As the Head of Fintech at Mastercard for the UK and Ireland, David Jones knows what makes a successful fintech company. He talks to The Payments Association about what success looks like in a crowded market and how the payment scheme decides who to partner with.
Companies such as Monzo, Starling, Revolut and Curve have used Mastercard’s partnership opportunities to become established. How do you choose the fintechs you work with?
We take a relationship- and technology-led approach to partnering with fintech’s whose mission aligns with our own. This means we use a tailored lens to solve for the needs of fintech companies regardless of size, scale and scope, and develop our best-in-class technology programs, products and services to address critical pain points that also align to a fintech’s ‘doing well by doing good’ mission.
The fintech sector is constantly evolving, and so are we. We know that our fintech partners are constantly innovating and iterating to address the evolving landscape, so we are regularly evolving and adding new fintech solutions to help meet those challenges head on. We take the view that when somebody comes along and speaks to us, and they have an idea, and they have a vision, our job is to enable them and help them to deliver on their vision.
If you look back at when Monzo, Starling, or Revolut began, some of their competitors didn’t have the same success or made the same scale. I’m not sure that you would have been able to pick, at the time, which ones were going to scale and which ones were not. So, we’re open to all of it.
We take a very open view that we are not the experts about who’s going to be successful or not. So, we’re going to try and work with everybody. Basically, we’re going to try and back all of the horses in the race.
However, there are certain things that will be indicative of potential success: How credible are the people? What’s their background? What things have they done? How much do they know? What is the idea or the proposition? What is it focused on? How big is that market? How transferable is that from one proposition to the next, or one country to the next, or one segment to the next?
So, there’s a lot of business fundamentals that you can consider but, in the end, we really just want to win everything. It’s that simple. That’s really what I say to the business development team: I don’t want to lose a single deal. I’m not happy if we lose any deal. If we win all the deals, then we will definitely win the ones that scale.
How have partnerships changed?
I think they have grown up a bit.
In 2015 or 2016 when the fintech explosion took place, the world was different. Maybe the world was a little bit nicer, and a little bit optimistic pre-2016.
Also, the way that a lot of these fintech companies were funded has changed. A lot of them are looking to the market for funding and that’s become a little bit more specific. In general, it’s less greenfield.
Some people came along and did something and had some success. Then that changes the parameters of what success could be for those that follow. So, what we’ve seen is a change from fintechs wanting to take over the world and saying they’re going to be the biggest bank in the UK, or in the world, and do all these incredible things. Now, we still see that, but it’s more driven towards specific propositions, such as solving a specific problem because it really matters to me, or I’ve seen that there’s an issue and I think there’s a business opportunity in it, but I get to also do something good too. That’s maybe the biggest change.
How do you manage relationship with the CEOs and founders of a new fintech business? How do you tackle the difficult issues?
We try to get on board with their plan because it’s their passion and their vision that’s going to make their business a success.
Now, of course, there are some practical things and there are some things that aren’t as exciting – normal business process problems.
Most of the people we work with are experienced people who have worked for other organisations. In the end, we try to focus as much as we can on the customer and understand what they need and how we can help them achieve that.
Also, sometimes, we have to leverage our experience in more complex areas like compliance to support founders and CEOs to find their feet in a new market. We have to reign in ideas a little bit for everyone’s benefit because there are things that require a more process-driven approach. Generally, we’re able to find a nice balance.
What would be a deal breaker for you?
I’m not going to go into the commercial aspects of it, because sometimes we find we can’t quite do a deal, because commercially, there’s no middle ground that we can find. So that happens, but not often.
The approach to some of the really fundamental things around risk and compliance matter a lot. We have a brand that we need to protect and we need to ensure that our partners have good processes in place to deal with those types of things. That’s very important.
Most of the new programmes we bring on, though, end up working underneath the BIN sponsor. So, the BIN sponsor is effectively the Mastercard principal member in those cases. So, in the main, those functional things and compliance matters are already in place. So, that might become an issue later when that program grows to the point where they want to operate on their own. Then, there might be some teething issues to work through. But, by that stage, they’re an established business and we’ll find a way through it.
The other thing is that we’re not interested in partnering with businesses that have propositions that run counter to our values. If we were approached by an organisation that didn’t align with our values around things like inclusion and diversity, and, treating the planet well, etc., that would be a deal breaker.
Read about David Jones talking about how fintechs must be customer-centric to survive here: https://thepaymentsassociation.org/article/fintechs-must-be-customer-centric-to-survive-says-mastercards-david-jones/