Transcription:
Penny Crosman (00:03):
Welcome to the American Banker Podcast. I'm Penny Crosman. For years we've talked about the possibility of cars that are connected to our bank accounts and money to do things like pay for parking with a tap on the dashboard. Is this concept becoming a reality and if so, what are the pros and cons of it? We're here today with Rob Abrams, CEO of J.P. Morgan Mobility Payments Solutions, to talk about the evolving trends that are turning cars into digital devices. Welcome Rob.
Rob Abrams (00:32):
Thanks for having me.
Penny Crosman (00:33):
So you've been working on an in-vehicle wallet system with Qualcomm. Can you tell us a little bit about this project, how it came about, what the collaboration has looked like?
Rob Abrams (00:43):
Yeah, absolutely. So it started as some of the best ideas out there I guess do one of the leaders from JD Morgan Payments talking to one of the innovators at Qualcomm, thinking about where's the future going, what's the next course? And the idea was hatched if you will, in a conversation at an industry conference and then it progressed from there to what does it look like, how do we put the technology plus the payments piece together and how do you build it out? So today we've got a pretty nice partnership where they're doing everything from the in-car, from hardware to the display piece, JP Morgan payments, orchestrating the payments end to end financials with it and it works as one integrated platform between us. So CES you would've seen a demo from them. Running end to end has the JP Morgan payments piece, the dash that's actually there with third party merchants, a complete end to end user experience as a partnership. So from one little conversation in an industry conference to something that's pretty cool in reality,
Penny Crosman (01:57):
So unfortunately I didn't go to CES, but can you kind of paint a picture of, okay, someone's in their car, they've got the Qualcomm system and they've got I guess a merchant that's working with JP Morgan payments. What can the driver do with that setup?
Rob Abrams (02:19):
So on the dash, which is then branded by whatever automaker you're driving, you have the same thing you have today, like the mapping application where you not only can do that, but you have a quick service restaurant that's also one of the apps on that experience where you can then order your burger and fries or your milkshake, whatever your preference is to order ahead and do the full payment checkout so that when you arrive it's all paid for, just take the order and go just one example.
Penny Crosman (02:59):
And in a case like that, what are the advantages of doing that from your car versus your phone?
Rob Abrams (03:06):
It's the right question for sure. One of the things that the car has now that the technology is further along today than it was still coming along is it actually knows how long it's taking because the MAP app says it's going to take 22 minutes between here and there. It knows based on traffic, here's when you're going to arrive approximately. So it can actually put the order in, send it with here's when penny is going to arrive. The restaurant then can get it ready so that it's not sitting cold, but it's also you're not waiting for it for 15 minutes, the phone out. You're sort of timing it of when do I actually click the button for order to hope that you get the equation right.
Penny Crosman (03:52):
So there's the geolocation elements,
Rob Abrams (03:58):
The geolocation, and then you certainly have the eventually and this part of it's there today, not of the, it knows your preferences eventually of the here's where you're going along the way, would you like to stop at that same coffee shop that you've been at over the past couple and reorder your same? So the beginning stages as consumer adoption starts, there's not going to be a lot of net difference between the two. Short of a couple of those tweaks like the location as it builds in and you get more and more user adoption, then the benefits start to become exponential by putting 'em together.
Penny Crosman (04:42):
And what are some other use cases? I've always felt like paying for parking would be a good use case for this technology.
Rob Abrams (04:50):
Paying for parking is definitely one of them today, the map apps will say, okay, here's some parking lots or here's some street parking, et cetera. But through a network of partnerships with various parking providers, some aggregators should be able to just say, go from here to there and reserve the parking, pay for the parking or at least pay for the parking as you drive into the lot or the street parking instead of then having to take your phone out, put in which actual site you're in and then pay it actually did it all in one step. So route me there, I park, click the button, pay authenticate the same way that I would authenticate with a pin or bio authentication in the car and it's taken care of. No second step, then take it out and do it. Certainly everybody's used to the tolling pieces, going through tolls, not paying, not taking out your credit card to go pay for tolls even in some other places. Having it driven because the car then becomes the credit card in that use case. And then you have some other things like car washes where okay, you drive up instead of having to take out the money or the credit card that it opens up the wash bay and it already knows. Those I think are smaller. The parking is probably one of the most predominant use cases we hear enthusiasm over to begin with.
Penny Crosman (06:26):
Is any of this dependent on networking in the area? It's probably a naive question, but for me if I drive in areas that where I don't get great service then it's hard to do anything and then I have to wait until I am in an area where there is good service. How do you get around sort of the variances in network reliability and availability?
Rob Abrams (06:59):
No, it's a great question. I mean today it frankly is subject to a large part of network reliability. So there has to be that communication point either between the vehicle and the pump, the vehicle and the ChargePoint, what have you. There is certainly some thought leadership and some early work with things like conexus, the blockchain, what can be done without connectivity with settlement afterwards, but early days today the technology that actually connects is important, whether that be satellite or that be 5G or whatever the network is in that location.
Penny Crosman (07:47):
And are all the other technology pieces in place or are there things that still need to be developed for this to work as you've described?
Rob Abrams (07:56):
I'd tell you all of it is there barring a couple of getting bigger. So the vehicle is certainly dependent on the vehicle technology for things like strong authentication, so having the fingerprint reader in there, the face recognition is the next and it makes it easier, which also will drive customer adoption. So when you're driving down and you want to order your meal that we talked about before, instead of having to enter in a pin to verify that it's actually you making a purchase or anything else the same way you would do on your phone, the car needs that same facial recognition or fingerprint authentication in order to make it a seamless, especially as you're driving experience that's not there in a large number of vehicles today, certainly an uptick, but that's a longer cycle to be there. The second piece is then it's not a technology piece but it's a, as consumer adoption comes, the more partners that want to play within that incar experience. The restaurants be it anything else that wants to be in that incar dash to go routed to and to pay for that also needs to come further along than where it is today. But the ACE technology of can you drive up to a pump, the pump actually knows that it's your vehicle, turn on the pump, pay for the fueling or charging and have it seamless without you taking out your wallet or your phone. That's all there today.
Penny Crosman (09:50):
Interesting. Maybe we could replace the payment systems on pumps, although I guess that would require everybody to have this, so maybe that's not realistic.
Rob Abrams (10:02):
Correct, yeah, a large number of 'em have the ability today to interact with the car, not all of 'em. Ben, as you say that text technology and over time
Penny Crosman (10:12):
When you talk about your car being a credit card, what comes to my mind immediately is what about theft and hacking and fraud and so forth? Is that something you've thought about? And obviously the biometrics are a deterrent to that, but is that something that you've thought about
Rob Abrams (10:35):
It? It is and it is on par with a, okay, what if somebody stole my phone or something else? It still requires that second level of authentication. So driving up to a pump to go get gas. Okay, sure, somebody could steal your car and go get gas, it's still going to require that authentication. Don't think they're going to do that for online. Going to get a restaurant if they stole your car. Same thing, but it's going to take that authentication second level, I think a lot of it is actually going to be curated to where the vehicle is and provide extra signals that eventually, maybe not in the beginning will actually help reduce the fraud as well. So it knows your vehicle, it knows your driving patterns, it knows where you go, potentially the kinds of purchases. There is some good ability to harness that to reduce, but in the beginning it'll be about the same.
Penny Crosman (11:42):
And what about distracted driving if somebody's ordering dinner for five people while they're driving, did you have any concerns that
Rob Abrams (11:55):
Of course. It was certainly a question that we've asked in a lot of cases of how we build in the technology for the various OEMs and it basically, they're using the same sort of principles that they have today for various apps. You'll see in your in-car experience today get disabled as you are driving, right? So you can't on most go add a new Bluetooth phone while you're driving down the road. It says this feature is not available unless you're in park. So there are some of that same approach that's then being used, but that's why you need that in-car authentication with visual. So today I'd actually argue if you had facial wreck on the car as you're driving down the road using voice to say, order me a hamburger, a strawberry milkshake and fries, instead of having to click that on your phone and then hold the phone up to your face to do facial wreck and use whatever pan methods and then click another button, you're able to do that all with your phone, the facial wreck built into the car and then it ends up actually being a safer way to go about the transaction.
Penny Crosman (13:16):
You don't have to look at a screen and tap something. It could be hands free and
Rob Abrams (13:21):
It's all hands free. The fingerprint reader is either on the steering wheel or something. You're already right there. You're then, not that anybody would of course, but going on your phone, scrolling through the apps, find the app for the restaurant that you're trying to go to or the third party provider that aggregates 'em and then go in, add the things one by one by clicking on them click, try to check out pay, et cetera. That's a lot more distracted than it would be if it's all built into the car ecosystem and doing it through your voice in your face.
Penny Crosman (13:56):
How interested are car manufacturers in this? Are there some that are very interested?
Rob Abrams (14:03):
Several of 'em quite interested in making a lot of progress. When I relocated over to Europe from the US about six, seven months ago, I was amazed at how much more traction probably here and eventually it will come more into the states and it's starting to, they're all looking at how do I commoditize not only the in-car transaction for while I'm driving, but also the in-car experience for things like subscriptions coming to the vehicle. Because in a very tight margin, business subscriptions are certainly one of the next avenues that they're going to. So in order to do that, you also need this same ecosystem that allows for driving up to the pump, et cetera.
Penny Crosman (15:02):
So how far away is all of this from being kind of readily available in the average car?
Rob Abrams (15:11):
I think it's crystal ball aside. I think we're going to see an uptick over the next, call it two-ish years. It is dependent obviously on vehicles and the lifecycle of how long folks are in their cars. So we'll see an uptick. But as cars come into the next generation and people start replacing, we're going to see this more. The vehicle that one's driving that's 15 years old, that works great, isn't going to have the in-car wallet experience today. Hopefully the next generation of that vehicle will.
Penny Crosman (15:57):
Great. Are there any other emerging payment technologies that you're intrigued by these days?
Rob Abrams (16:04):
I mean I think the one that we started to hint around before, I'll be interested on certainly the blockchain connectivity of how, because we use in a couple of dimensions, right? We've used credit card as the example for payments here. It doesn't have to be credit card by any stretch, right? Pay by bank, larger and larger portion of the payment ecosystem over in Europe it would be directed, but in the US straight pushed by the banks and then can you actually then do this with real-time settlement between the merchants, the automotive manufacturers, et cetera. I think that part's coming, but I think the coolest to me is honestly the integration of this same concept with the driverless vehicles and some of the other fleets that are coming and I guess it's twofold. One, when you get into one of the driverless vehicles, I did a couple of 'em a couple of weeks ago out in San Fran and it knows your name, you get in and it routes you.
(17:17):
Why doesn't that same payment profile today that you have in your phone or you can attach to your home car, can I just attach it to the vehicle that I'm renting for that ride? I think that's coming quicker than we think. And so that would give you the same sort of, I'm taking my car as a wallet wherever I go. So instead of having, if I have two cars at home, I can have the exact same experience in both as opposed to let me have two different experiences when I'm on business travel. I can have the exact same experience. I think the intersection of those two pieces of tech is going to come fairly rapidly.
(18:04):
And I think the other one that I see is to the fleet manufacturers and certainly Cassie, a partner that we've got over on the fleet side has been instrumental in the space as well, where you've got real-time data for the vehicles in the fleet, you know how much they're driving, where they're driving, we already know how to optimize routes and things like this, but now we've got the information for the vehicle of how much fuel consumption, what's the charging consumption that's being used for it, add in the machine learning on real-time analytics, fraud prevention reduction of, hey, I'm taking a side trip on vacation on a company vehicle charging my house or paying for the electricity on my house based on my vehicle. Putting all of that technology together for the fleet providers is starting to look very promising and some of the initial results of how much it saves on a cost reduction optimization perspective makes a big difference to those providers. So I think those are a couple of the trends that which are going to be here soon.
Penny Crosman (19:27):
And this might be a dumb question, but does everyone have to be a J.P. Morgan customer in this scenario?
Rob Abrams (19:35):
Well, we would absolutely always love that. No, this works agnostic. So if whoever ever you bank with, if we want to pay by bank and initiate the payment from that bank account or credit union or wherever you are in order to pay for that gas or fueling or tolls or car wash, et cetera, it all works the same regardless of what kind of credit card you like. It works the same in various parts around the world. We now have alternate payment methods based on that particular country like blank, so integrated that it is very much a ecosystem of providers. We're just orchestrating from end to end.
Penny Crosman (20:24):
And does that apply to the fleet companies and the merchants and everybody else?
Rob Abrams (20:30):
For any of the ones for receiving funds like the restaurants on the backside or on the fleet providers, the drivers, et cetera, don't have to equally have accounts, they keep them where they are, the corporate accounts that are transacting with us, the individual automakers or the fleet providers, et cetera, then yes, the funds are originating and coming through a JP Morgan account, which ends up also providing unique benefits because real time settlement, real liquidity, able to do all the financial things the true bank can do along with all these aspects that are on the innovative side of mobility payments.
Penny Crosman (21:26):
Alright, well very interesting project and I hope we can cover this as you move forward with it. Rob Abrams, thank you for joining us today and to all of you, thank you for listening to the American Bank of the podcast. I produced this episode with audio production by Adnan Khan. Special thanks this week to Rob Abrams at JPMorgan Payments. Rate us. Review us and subscribe to our content at www.americanbanker.com/subscribe. For American Banker, I'm Penny Crosman and thanks for listening.