How the Internet of Things is Changing the Approach to Technology and Business

By: Ed McLaughlin, CIO, Mastercard

Ed McLaughlin, CIO, Mastercard

With the ongoing and accelerating changes in the technologies available to your (and your competitors’) business, it is certainly an exciting time to sit in the Chief Information Officer seat. The changing technical landscape creates great opportunities, but introduces considerable new dangers.

“The line between online and offline is progressively being obliterated–every device can now be intelligently connected”

It is a tremendous responsibility you have to help your organization comprehend the transformation that’s happening, and how it must translate into longer-term strategic planning (all while accounting for the unforeseeable). You must understand the impact this transformation is having on consumer behavior and expectations, the potential changes to the very fundamentals of your business, and, of course, navigating a disruptive and rapidly changing competitive landscape.

For Mastercard, one of the most exciting new developments is the ongoing expansion of connectivity to everyday devices–automotive, home, industrial, and municipal. By one measure (according to Cisco), more than 50 Bn connected devices are projected to be in place around the world by 2020. The line between online and offline is progressively being obliterated–every device can now be intelligently connected. This Internet of Things is evolving rapidly, and with it, consumers are more connected than ever before. And, they have a larger voice in how they want to see things evolve.

That’s powerful. From your dishwasher automatically reordering supplies, to your self-driving car paying for its own parking, the ability to make things more integrated, more convenient, is in front of all of us. And we all have to think about how this works–not just the potential benefits of connectivity, but with many more implications in mind:

Security. Now is a time of insecurity for consumers–we are more dependent on our devices, but are beginning to trust them less. They’re seeing news of attacks each day, and it makes them a bit bewildered and justifiably concerned. So, it’s our role and responsibility as chief information officers–to place security at the forefront of everything we do. We need to be relentless in how we solve for this. Consumer trust is everything when it comes to establishing and maintaining your business and brand.

Complexity. For both consumers and our technology teams, this explosion of connectivity introduces new complexities. One of the strongest signals we see from our consumer research is the desire for it to be easy, and ‘all just work together’. My mother does not want to be the SysAdmin for her toaster. The services we deliver to these new environments can’t be beyond the care or comprehension of our customers. And for our business systems and infrastructure, every new connection becomes a point of vulnerability. We now have to be especially vigilant around the ‘insecurity of things’.

Privacy. Connected devices generate an incredibly rich trove of information. The protection of this data, ensuring appropriate use, and compliance with regulatory and commercial considerations are ever more important as the world moves to digital.

Data, within proper privacy guidelines, is playing an ever more important role in how we operate. The insights we can gain from data are key. As the technology we use each day becomes more intelligent and connected, the data and insights generated can help us anticipate and understand our customers’ needs and desires in ways we couldn’t in the past. We have to put that data to use in ways that will help us enhance the consumer experience, and continue to get better. They expect it, and we have to deliver it.

At Mastercard, we look at every device as having the potential to be a commerce device–it’s what people do. Paying for what matters for you with a phone, watch, chatbot, in-home voice assistant, car, refrigerator–these aren’t just concepts anymore–they’re happening! It’s not about what device you’re paying with–it is how being able to do so makes lives easier. And, it’s about all the things that are on the cusp of becoming a reality and how they’ll continue to help us engage and relate with consumers as their needs change and evolve.

We need to change how we are thinking about the consumer. It can be very easy to think that the only digital consumers are millennials, who are constantly connected with their devices. But really, each one of us is a digital consumer. As technologists, we have to stay attuned to this. Consumers have more decision power than ever before. They’re the only arbiter– they’ll make the choice if your solutions are helping them, and making their lives easier–or if they walk away because you haven’t taken the ‘what and the why’ into account - what they want to do and why they want to do it. A great example of this shift is the work we’re doing with an electronics manufacturer and a refrigerator they’re producing. Together, we’re partnering to enable auto reordering of food and beverages directly through the refrigerator itself. Imagine the transformative difference this can make on the new mom who is exhausted and trying to figure out when she’ll get to the grocery store. Or to a senior citizen who may have trouble getting to the store in bad weather. We’re solving for those challenges – making life easier in the process. Removing friction from the commerce experience and offering something better.

Of course, this goes beyond the refrigerator. Automation is driving unattended payment opportunities–having your car be able to automatically pay for a congestion surcharge, for example. It may seem like a small thing–but if it saves a consumer a trip to the DMV, from standing in line, who wouldn’t consider that a win? It’s those transformative experiences that make a difference to consumers.

We’re at an inflection point as technologists. Today’s consumer expects the technology around him or her to work, safely and securely, all the time. They also expect that the different systems around them will work together, for a consistent experience. You have the same wants and needs whether you’re in store getting a coffee or shopping online. And we must deliver on these expectations.

Our research shows that as the technology around consumers change, so does their perspective. It’s no longer things that matter–it is experiences. In a world where consumers already feel very busy, but at the same time are looking to social media for thoughts and opinions from friends and colleagues–because sharing what they’re doing socially is helping them build status.

This changes everything for technology companies. No longer is technology just a factor in the business model, nor a cost center–it’s the primary asset. What we’re creating each day is a consumer experience. We have to design products and solutions with the consumer experience at the forefront. The technology solutions we create are only as good as the needs they solve for consumers.

The challenge we face going forward, as devices continue to connect us–is that we don’t have to make a fundamental shift in who we are as companies. In fact, I think it’s more critical to become more of who you are to them–showing that you’re continuously committed to offering them a better experience, listening to the feedback they’re giving you, and making changes.

It is the only thing that’s constant in life - change. You have to strive toward being progressively indispensable to consumers, or else you risk becoming irrelevant. Here’s the challenge for you - embrace the changes in technology; continue to focus on the customer experience, and course correct as needed!

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