The Business Year

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J.K. Khalil


J.K. Khalil

Country Manager, KSA, Bahrain & Levant, Mastercard


J.K. Khalil is the Country Manager of Saudi Arabia, Bahrain & Levant at Mastercard. He has over 16 years of banking, strategy consulting and technology experience, having held a number of roles across multinational banks, top tier consulting firms and tech start-ups. In his previous role at Mastercard, he was the Middle East Region Lead for Mastercard Advisors, Mastercard’s data-driven strategy consulting practice that enables and supports banking, merchant and government partners around the world. Prior to Mastercard, J.K. was a senior manager with Strategy& (formerly Booz & Company), based out of Dubai where he was a principal in their financial services practice, where he focused on the wealth management, risk and digital verticals in particular. Before joining Booz & Company in 2012, he held a number of positions at Barclays Bank including strategy, transformation and at one-point derivatives sales. He had also, prior to his MBA, served a number of financial services institutions in Europe in his capacity as a senior IT consultant, including names like BNP Paribas and Munich Re. He holds an MBA with distinction from the University of Chicago (Booth) and is the President of the GCC Alumni Club chapter. He also holds a Computer Systems & Networks Engineering Degree from the Saint Joseph University in Beirut.

“We cover all the bases, and 2020 has vindicated us, establishing a strong foundation for future growth.“

What did 2020 mean for you, and what changed in terms of volumes and patterns?

The biggest impact for us was the acceleration of awareness at the consumer, corporate, and merchant levels. Awareness of the benefits of electronic payments versus cash has exploded. Many businesses realized their current setups were unsuitable for a zero-contact economy, while consumers realized how convenient, quick, and, more importantly, hygienic it was not to handle cash and to use electronic payments instead. We did a survey in Saudi in 2Q2020, and 90% of respondents had already used contactless in April and May 2020, many of them for the first time. Around 80% also said they would continue to use electronic payment features such as contactless as much as possible, regardless of COVID-19. From the merchant perspective, it was more a case of survival as they had to accept payments through a secure, seamless, and safe way online so they could deliver goods to customers. Interestingly, these are solutions that Mastercard has been working on for the last 10 years. The biggest win for the digital economy was the crucial need at this point in time to change behavior. This will have far-reaching implications.

Has the volume of individual transactions risen while the amount of money spent in each transaction has fallen, and what other trends have you seen?

This pattern is what we call cash displacement. When cash moves from bank notes to electronic, you see vastly increased transactions, but lower individual amounts because small purchases are being converted to digital from cash. While cross-border spend plummeted in 2020, actually electronic spend on domestic categories shot through the roof. All the volumes that we lost in Q1 2020 because of the systemic shock to the system started coming back. We definitely saw a massive boost that will continue because consumer behaviors will not return to where they were, and all indicators say they will continue to be the way they are now. This cash displacement has set up a new baseline, so once the second recovery starts to take place, and economic activity returns to 2019 levels, this new baseline will be set to the new level of spending and will take into account new behaviors that will no longer happen at cash points going forward.

What is your strategy in a market that is so innovative and changing so quickly in terms of regulations and new products?

In Saudi Arabia today, we have cashless payments, cross-border remittances, account-to-account transfers, QR payments, which are quick response code payments, and e-commerce. We have done about 85% of all e-commerce flows in the market across all schemes. These are all different payment rails that we have brought to life in these markets in the Middle East and the GCC specifically. When regulators like the Saudi Central Bank (SAMA) open up to embrace the future and bring all these multi-rails, they are so hungry to unlock the digital economy across all levels and provide choice to consumers. It makes us excited because this is the ecosystem that we have contributed to globally. In terms of regulatory change, when we look at the upcoming open banking regulations that have already been announced, those will bring a new layer that will enable many use cases that will fit with other innovations, such as QR and real-time payments, which we are rolling out in Saudi with Saudi Payments. We will have a market that has so much to offer and we will be up there with the likes of Singapore and London in being at the forefront of pioneering new technology. We shed our legacy skin many years ago as a company, and we are really embracing change. Instead of being afraid of the future or betting only on one technology or rail, you have to bet on a future that has choice.

How will you shift your strategy to deal with this new reality in the coming year?

The pandemic has taught us to be resilient in the way we operate at Mastercard, both globally and in markets. We have already gone through significant changes that allowed us to accelerate the way we think about our business. The whole organization has really accepted the fact that you cannot survive on one kind of technology. This year has justified the challenge we took five years ago and believed would reap dividends in the next 10 or 20 years but has instead happened now. What we are trying to do is learn to be a multi-rail company instead of only focusing on the one thing that we have been doing for over 60 years. We offer a plethora of assets ranging from loyalty to data and analytics to cybersecurity. Our new portfolio of business also pushes us to engage differently with different stakeholders. We do more work with governments, especially on smart cities, transit, and G2C or C2G heavy sectors, as well support many commercial flows. The entire B2B space is ripe for disruption. It is about how to support all of our partners across government and different segments of merchants and private sector, as well as the banks that we have served for the last six or seven decades. That is the biggest challenge and is what we are trying to change.

Where do you see growth coming from, particularly for the Saudi market, in the coming year?

With the digital economy, you have to think about how things are connected because a digital economy means more transactions. We have not even started talking about IoT and other transaction flows that will happen eventually. Typically, the ticket size of transactions will go down, which is an indicator that you are really displacing cash. When these little payments start getting out of the ecosystem, that is when we will see a large uplift on the number of transactions. The average transaction size will go down, and the number of transactions will go up. If we look at data from the US in 2020, fraud outpaced transactions by four times, which means every time you grow 20% on transactions you grow 80% on fraud. That is why we invest so much in cybersecurity, which is essential because you cannot have a sound, secure, seamless, and safe transaction ecosystem for consumers to trust in if you cannot offer security and safety. Services becomes increasingly important because with more transactions there is more data, and with more data there are more insights. We are no longer just a network connecting point-to-point; we help our partners by smartening and protecting the network and our partners. We cover all the bases, and 2020 has vindicated us, establishing a strong foundation for future growth.



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