Name: Fortune Global Forum 2023: Cross Border Payments And The Path To Financial Inclusion
Uploaded: 2023-11-29
Duration: 15 min 37 s
Description: Emily Chiu, Co-founder and COO, TBD, Block, Inc. Dimitrios Dosis, President, Eastern Europe, Middle East, and Africa, Mastercard Moderator: Jeff John Roberts, FORTUNE

Emily Chiu, Co-founder and COO, TBD, Block, Inc. Dimitrios Dosis, President, Eastern Europe, Middle East, and Africa, Mastercard  Moderator: Jeff John Roberts, FORTUNE  

Fortune Global Forum 2023: Cross Border Payments And The Path To Financial Inclusion 

Conferences

Welcome to the stage, Fortune executive editor, Asia Clay Chandler. Hello everyone and welcome back. Um For those of you that are watching out in the in the foyer in the lounge, please come back in and join us. Uh We look forward to getting our uh great program for the afternoon uh underway. There's little doubt that digital technology is reshaping the future of finance by leveraging innovation to create a more inclusive and sustainable financial future. According to the World Bank, two thirds of adults worldwide now make or receive digital payments. Technology is empowering individuals. It's broadening access to financial services and it's driving efficiency and competition in the financial sector, but there are still some clear obstacles to overcome. Please welcome Fortune crypto editor Jeff John Roberts to discuss these obstacles and potential solutions. Joining him will be two leaders in this space. Emily Cho is chief operating officer of TBD at block and demetrios. Dois is president of Eastern Europe, Middle East and Africa at mastercard. Please welcome them to the Fortune Global Forum. Jeff. Hello everyone. Thank you so much for joining. Uh I'm Jeff Roberts. Um I'd just like to open with a quick couple of questions. Um Who here uses mobile banking. How about Google Pay or Apple pay? How about Cryptocurrency, Bitcoin or anything else? Not so much, but everyone uses the first two. And the reason I'm asking this are payments have changed a lot in recent years and have made it a lot easier. We benefit from it. More time, more connection. There's a lot of people who don't have access to this. And for me, access to finance and payments is sort of like access to infrastructure, like roads, like education, like health care. It's something that can really help people, but there's a lot of people of populations who don't have access to it at all. And I think that really limits what they can do and where they can go. So that's what we're going to be exploring here today. How to get these technologies into the hands of more people. Emily, I'd like to open with you. You are part of the division called TBD, which is part of block, which used to be called Square. I think you probably all know it, this little pa rail thing, you know, a farmers market might have it to pay a company run by Jack Dorsey. But Emily, tell me what is TBD and how are you expanding finance to people? Sure. So TBD is the newest of four businesses at block, formerly known as Square and we founded the business in 2021 in response to one of the most pressing global financial challenges that we saw at the time. And this is when the World Bank had just come out with a report, citing that 1.7 billion adults in the world lacked access to a basic bank account. And yet two thirds of them actually have access to a mobile phone and internet connectivity. And so the problem that we saw was that while the internet had given us amazing infrastructure to connect everyone to information. Um Clearly the world of money and payments hadn't kept up. And this is the problem that TBD is looking to solve. The internet is missing an identity layer and it's missing a native value layer. Um And through the power of decentralized technologies, we believe we can make sending money as easy as sending um an email in the world. Um And uh this is actually something that we think is really exciting through the protocols that we're building where we can allow any individual and institution to send money and value cross board in a way that's much more inclusive and affordable. Give us an example of this in action, you make it a little less abstract. Who are you helping? Yeah. So there's a lot of different people and small businesses that were already helping take like a person who's trying to send money across borders for your average like remittances, use case sending money to a country such as Nigeria is incredibly fraught, you know, many times like you don't have a US dollar banking account to even receive these funds. It's expensive. It can cost upwards of 20% using a traditional remittances provider. Um And often times, you know, we actually ran an experiment, you went to four different branches only for them to tell you like return to sender, right? Um And through the power of uh digital currencies and for us, it's Bitcoin and stablecoin that we're really um really focused on investing in. You could send it at a fraction of a cost. It goes through, we actually sent a transaction in 40 seconds and through our protocol, we're bridging the world of digital currencies and legacy finance. And so not only did we use the digital currency as a bridge, but it landed in someone's mpesa account, it landed in someone's bank account, it meets people where they are today and this is primarily in Africa, right? Today. We are in Africa. We are also looking to expand into Latam. The Global South is a big focus for us, Tame. I want to bring you in here, mastercard. I'm sure we all know a very famous brand, you know, in the U. Anyways, it's my credit card, but I think a lot of people are not aware, Mastercard is a lot more than that. So how is Mastercard promoting financial inclusion? I assume you're not running around giving credit cards to people in the Global South I mean you are but like what's you know, what else are you doing? Sure. Thanks Jeff and thank you also for having a Mastercard. That's great. That is your credit card. So Mastercard is all about connecting people. It's about connectivity. So for connectivity, you first need to have a digital identity without an identity. There's no connectivity in the last World Bank report, we saw that over 850 million people in the globe are still without an identity. That's not good. So we need to fix identity. That's number one on top of identity. As you said, we need connectivity rails which I think we started little by little building up. We have car rails, we have ach rails, we have um your radar that you're building up. So this is connecting people. But I think for this to be successful, there needs to be value, there needs to be value for the end consumer. There needs to be value for the for the sme behind it. Let me give you an example. In Ethiopia, we started a program which is the farmers, the farmers connects the farmers, the rural farmers to a marketplace so they can have a much better price point for their product. So they don't need to go through intermediaries. So you have a direct connection to a marketplace through those rails and you add value. That's why people are connecting to them. I think this is very important rails without uh, value are not worth it. Yeah, that makes no sense. Let's step back one sex though. I mean, suppose we have a farmer, you know, who has money, they might keep it under their bed and, you know, unfortunately, you know, inflation might destroy its value. It's prone to be stolen and so on. But they probably do have a phone. Right. Almost everyone's got a mobile phone. Right. So, how do we kind of get it to the point where they can have, you know, something on their phone that will work and solving that identity thing too. You know, because the bank needs to know who they are. So Emily, just take us through the process of someone who's, you know, in a very kind of low technology, low income place. Do you get that first step? That seems like a pretty big hurdle. Yeah. So we're all familiar with physical credentials in the world, right. So, if you have a driver's license, it's a physical credential that gives an attestation of your ability to drive or operate a motor vehicle. If you have a university diploma, it's an attestation of you having graduated from a university. Unfortunately, we don't have a great layer of identity on the internet and scanning that physical driver's license or faxing that physical diploma is not really a great tamper proof or privacy preserving way, right? And a farmer is probably not going to have a driver's license or a diploma Exactly. And the fact that so many people are missing the basic credentials is a huge deterrent to actually being banked in the very first place. Right. And so through a lot of new standards being set by the W THREE C, which is open standards set by the World Wide Web Consortium, there's actually really great ways to now represent your physical credentials in a digital realm in a way that's scalable in a way that can reach the farmer in a way where he can independently represent who he is in a way that is independently verifiable privacy, preserving tamper proof and allows him to actually access the global economy. So that's something we're really excited about is bridging trust, identity and financial access and bringing all these things together demetrios. How does mastercard solve this problem in terms of, you know, this person can't, they might not have an ID. How do you get them to use the financial, you know, if they can't prove who they are? So here's the reality, many people already have a mobile phone and this is a great starting point because mobile operators are actually able to at least identify you. OK. So there is, if you want a basic identification already, the question then becomes is how do you first add value to those mobile rails? Uh Remittances is one of them which I think is a great use case because similar to you, I believe they cost too much they're too slow and they're kind of archaic with the time they take to solve. And, but then the problem also becomes, how do you make those closed loop wallets effectively interoperable? If you go to Africa, you, you mentioned mes a, uh MP ESA uses one wallet, but then there is another wallet from another mobile operator. How do you make them into operating? But I think this is going to be super critical if we want to make sure that the Pharma and the people who are using those wallets can, can operate in the proper way. That's interesting. So using the sort of the mobile carriers recruiting them to be part of it. And I think standards to a common standard, where does governments fit into this too? Because my, you know, covering crypto, one thing I've learned, governments are very good at identifying you, you know, they know that's what they're best at. They're terrible at technology. So how can governments do a better job to, you know, facilitate this or who is, you know, what's happening on that front? Well, one of the things we're really excited about is actually partnering with different authoritative sources of credentials. So that could be your DMV, um to issue verifiable credentials where your driver's license is actually represented as an identity credential that can unlock banking access um or different forms of, you know, your passport can actually be represented as a verifiable credential also to unlock financial accesses or services. Um And that's something that we're really excited into bringing into the digital realm for us. Governments are true partners and one of the things which for partners like our governments are very important is safety and security. What Master Card does is we're using A I. People only talk about A I with J GP T but you know what A I drives also a huge benefit. For example, the last two years, our A I solutions have have covered over 30 billion in fraud globally. This is a huge number that would have gone through. So with the government, we work together to make sure that we make safe and security in our all in payments across all our race. I think that's number one and the other one is obviously also making sure that when people identify themselves, that they are who they are and we also have um cipher tools to make sure that when a transaction goes through through, for example, through a crypto wallet that let's say the end side of this are not dodgy and they are the ones who they say they are. I think those tools A I and making sure that the crypto transaction is being passed through the right methods is, is, is, is what we're trying to help governors with. Basically listen, let's go back to remittances for a sec because I've covered Cryptocurrency and payments for a decade. And that's something that means. So hard. It still seems like Western Union. No offense to Western Union. But this notion of showing up with some cash at a store and then waiting three days and some goes to another store and they get it, you know, I think the margins like five or 6% maybe it's getting better. But it's why is that so hard to solve, you know, if you want to, you know, I've heard some people say, maybe start with the B to B that will figure it out and then trickle down. But where are we? I'm going to stick with you, Demetrius, you know, where are we on that? You know, how is, is the technology improving? What is missing to make that happen? So let me give you a real time example. I'm I live in Dubai and I came from Germany. So seven days ago, I wired the money from my bank account here to my bank account in Germany using traditional methods. And both of them were, let's say seasoned banks. It took five days for the money to arrive between, I didn't know where the money was. So I effectively called both banks and nobody could tell me where it is. The only thing that told me is I need to have uh an investigation run uh to understand and it would take me two days to understand where the money is. Luckily it arrives. So it's archaic, the system of remittances with um correspondent banking is archaic. That's, that's the problem because the rates are just not interconnected. You need to have, as you correctly said, correspondent banks in the other part of the world that is holding the funds. I don't think this is the way to go. I think the way to go is to use other rates to use. For example, your ra to use the card races to use interconnected. Ach R I think this is the only way because the race exist. You do not need to rely on your correspondent banking. You can go down to the other ras and really try to make sure people understand the value which is safety and security, which is speed and also cheaper. Yeah, I mean, Jeff like the the term global payments is a lie when it comes to the legacy financial system, these are systems that were built largely in the seventies, they're inherently domestic and you know, it's a ledger system that allows you to think that your money is actually moving across borders. This is the real, real innovation when it comes to digital currencies and Blockchain. Bitcoin is actually an internet native currency. It's 24 7, it spans borders. Um It's really the first global payment system and I think those who are focused on the speculative aspects of it. Miss that, that is the true innovation of this technology. Yeah, I entirely agree with you. I cover crypto, it has a dodgy reputation in some ways, but I honestly believe the technology is superior because swift messaging system, you know, ac great in the seventies. But, you know, just like, you know, airports built in the seventies are badly out of date. This stuff is too. But you know, how do we persuade companies, consumers and governments to use Blockchain? You know, especially through a more conservative company like mastercard, you know, do you guys touch Blockchain at all? Yes, absolutely. We do. And for us, it's about giving the consumer choice. We want to give the consumer choice to use Blockchain. We want to give the consumer choice to use the car ras to use. Ach, that's all it is about. We are invested in Blockchain. We believe it's a future proof technology. It needs to come with the right guard rail, the guard rates in terms of safety and security, but also in terms of data protection for us, data is in the center of whatever we do. We need to make sure that if it's about you, the consumer, you own your data, you control your data, you should actually benefit from the data. And that's why you might be using some of the rails that we talked about and we need to keep it secure, you own, you control, you should benefit and we keep it secure. I wish we had more time. We only have less than a minute. But I want to ask you both really quickly what friend or product? Are you most excited that we're going to start seeing, arriving in the next year or two that you think is the most interesting thing to watch Emily. So for us, we're pioneering work around verifiable credentials and in particular, bringing verifiable credentials that can prove KYC and AM L. And when you talk about what it's going to take to bring institutions into the fold, actually establishing a layer of trust and compliance is what I think is going to unleash like activity and liquidity like we haven't seen to date and that's something we're really excited about. Makes sense and Demetris very quickly. I think we'll see much more biometrics. I think biometrics is what will make the consumer experience easy. I'd like to call it Pay with a smile. That's what we introduced now and I think this will be the future. Yeah, I can't wait to have this talk in five years. I think we're going to be a very different place. So please give a hand for the panelists. Thank you very much.