No one would call MasterCard‘s innovation strategy minor.
Not only has MC stepped up its internal innovation — most notably through the global launch of its MasterPass mobile payments initiative — but it has invested mightily in repositioning the payments company as an innovation leader. The best and most recent example of that was its acquisition of C-SAM just last February to turbocharge its MasterPass roll out.
And then I read the transcript from MasterCard’s earnings conference call yesterday. I wonder whether MasterCard has too many innovative initiates. Let me explain.
Ajay Banga, president and CEO of MasterCard, described the company’s innovation strategy yesterday as agnostic to any particular technology or strategy. Here’s how he explained it:
But at the same time, as I’ve said in my remarks, we’re also working on different ways in which the mobile payments industry will develop. It could be through secure elements, it could be through postcard innovation. And there are different levels of interest from banks, merchants and hardware and M&O [ph] providers on those two elements.
And then there’s of course the more old-fashioned way of mobile payments which is really more for transfers which is the SMS or simple wallet-based transfer of money. We’re playing around with all of those, from Telefonica which was more in the simple transfer of money to the conversations that you’ve had – you know we’ve been having with more sophisticated players who are trying out different ways of doing mobile payments. So that’s the whole range.
And as I said in the past, I don’t want to pick winners and losers in this. I believe that one of the things we need to do as a company is to be a strong participant in these alternative ways in which digital payments will evolve. And I actually don’t know that mobile payments is the only way digital payments will evolve. It may be through wearables.
Not “picking winners or losers” means that there are several innovation bets on the table at any given time. With all those bets taking place concurrently, there is the possibility that not one or two innovations get the full energy of MasterCard. And that could mean no innovation succeeds, rather than even one or two of those innovation bets.
Don’t get me wrong, Banga has been, er, banging the drum loudly on innovation since he took over MC in 2010, but this kind of universal bet on every innovation has risks that I don’t believe have been fully recognized.