The document discusses big data and its potential applications for payment cards. It summarizes the European Commission's concerns about Europe falling behind the US and China in embracing big data. The Commission is calling for initiatives to develop enabling technologies, share public data, and ensure legal frameworks support innovation. The document defines big data and outlines typical benefits like improved marketing, pricing, and supply chain optimization. It also discusses how payment card schemes could be sources and users of big data to enhance fraud prevention, customer segmentation, merchant support, and new product development.

1. 0
BIG DATA
and payment cards
Emiliano Anzellotti
Madrid, 15° October 2014

2. 1
Agenda
• The European Commission Communication
• Big Data
• The definition,
• The Market sentiment
• Tipical Benefits
• What will mean to endorse the «BD approach»
• Applications for the card business
• What can be done by (the unbundled) schemes?

3. 2
EC concerns on BIG DATA
• “We witness a new industrial revolution driven by
digital data, computation and automation. Human
activities, industrial processes and research all lead
to data collection and processing on an
unprecedented scale, spurring new products and
services as well as new Business processes and
scientific methodologies.”
• “the European digital economy has been slow in
embracing the data revolution compared to the USA
and also lacks comparable industrial capability.
Research and innovation (R&I) funding on data in
the EU is sub-critical and the corresponding activities
are largely uncoordinated.”
• “the complexity of the current legal environment
together with the insufficient access to large datasets
and enabling infrastructure create entry barriers to
SMEs and stifle innovation”

4. 3
EC calls for an action
According to EC «the EU must:
• support "lighthouse" data initiatives capable of improving competitiveness, quality of public services
and citizen's life
• develop its enabling technologies, underlying infrastructures and skills, particularly to the benefit of
SMEs
• extensively share, use and develop its public data resources and research data infrastructures
• focus public R&I on technological, legal and other bottlenecks
• make sure that the relevant legal framework and the policies, such as on interoperability, data
protection, security and IPR are data‐friendly
• rapidly conclude the legislative processes on the reform of the EU data protection framework, network
and information security, and support exchange and cooperation between the relevant enforcement
authorities
• accelerate the digitisation of public administration and services to increase their efficiency
• use public procurement to bring the results of data technologies to the market

5. 4
Agenda
• The European Commission Communication
• Big Data
• The definition,
• The Market sentiment
• Tipical Benefits
• What will mean to endorse the «BD approach»
• Applications for the card business
• What can be done by (the unbundled) schemes?

6. 5
BIG DATA Definition
According to EC:
“Data is "a reinterpretable representation of information in a formalized manner, suitable for
communication, interpretation or processing". Data can either be created/authored by people or
generated by machines/sensors, often as a "by‐product". Examples: geospatial information,
statistics, weather data, research data, etc.
The term "big data" refers to large amounts of different types of data produced with high
velocity from a high number of various types of sources. Handling today's highly variable and
real‐time datasets requires new tools and methods, such as powerful processors, software and
Algorithms”

7. 6
Agenda
• The European Commission Communication
• Big Data
• The definition,
• The Market sentiment
• Tipical Benefits
• What will mean to endorse the «BD approach»
• Applications for the card business
• What can be done by (the unbundled) schemes?

8. 7
The Market sentiment
 “Every 2 days we create as much information as we did from the
beginning of time until 2003“
 “data have swept into every industry and business function and are
now an important factor of production”
 “Over 90% of all the data in the world was created in the past 2 years.”
 “The total amount of data being captured and stored by industry
doubles every 1.2 years“
 “The big data industry is expected to grow from US$10.2 billion in 2013
to about US$54.3 billion by 2017.”
 “Google alone processes on average over 40 thousand search queries
per second, making it over 3.5 billion in a single day.”
 “use of big data will become a key basis of competition and growth for
individual firms”
Sources available on request

9. 8
Agenda
• The European Commission Communication
• Big Data
• The definition,
• The Market sentiment
• Tipical Benefits
• What will mean to endorse the «BD approach»
• Applications for the card business
• What can be done by (the unbundled) schemes?

10. 9
Big data levers grouped by function
Function Big data lever
Marketing • Cross selling
• Location based marketing
• In store behavior analisys
• Customer segmentation
• Sentiment analisys
• Enhaced customer experience
Merchandising • Pricing optimization
• Placement optimization
Operation • Performance trasparency
• Labor optimization
Supply chain • Distribution and logistic optimization
• Supplier optimization
Updated
business model
• Price comparison service
• Web based prices
(source MGI)

11. 10
Agenda
• The European Commission Communication
• Big Data
• The definition,
• The Market sentiment
• Tipical Benefits
• What will mean to endorse the «BD approach»
• Applications for the card business
• What can be done by (the unbundled) schemes?

12. 11
What will mean to endorse the «BD approach»
Big Data does not automatically means Big Value: the whole point of a big data strategy is to develop a system
which moves data along 4 boxes
Data sources Data storage Data analysis Data output
This is where the data is
arrives at your
organization. It includes
everything from
monitoring or measuring
aspects of your
operations. One of the
first steps in setting up a
data strategy is assessing
what you have here, and
measuring it against what
you need to answer the
critical questions you
want help with.
This is where your Big
Data lives, once it is
gathered from your
sources. As the volume of
data generated and stored
by companies has started
to explode, sophisticated
but accessible systems
and tools have been
developed (e.g. Apache
Hadoop DFS or Google
File system)
When you want to use the
data you have stored to
find out something useful,
you will need to process
and analyze it. A common
method is by using some
stat tool to select the
elements of the data that
you want to analyze, and
putting it into a format
from which insights can
be gleaned. Tools will
query the data, and will
use to determine trends,
as well as drawing their
conclusions from manual
analysis
The insights gleaned
through the analysis is
passed on to the
people who can take
action to benefit from
them. Clear and concise
communication
(particularly if your
decision‐makers don’t
have a background in
statistics) is essential,
and this output can
take the form of
reports, charts, figures
and key
recommendations

13. 12
Agenda
• The European Commission Communication
• Big Data
• The definition,
• The Market sentiment
• Tipical Benefits
• What will mean to endorse the «BD approach»
• Applications for the card business
• What can be done by (the unbundled) schemes?

14. 13
Payment Evolution and Big Data
According to Cap Gemini research, data Management will be crucial to increase ROI

15. 14
Applications for the card business
An example: “MasterCard Helps Retailers Perform Better with Big Data” ( cit. Mastercard Manager)
Apart from of course preventing fraudulent behaviour and identifying and preventing fraudulent transaction before they occur, Mastercard
applies big data in another way. It knows what everyone buys and they are using big data techniques to offer reports, insights, customer
information and forecasts to their merchants. The data that MasterCard obtains is not ready to use. With each transaction they receive
data regarding the amount of the transaction, the merchant name, the time, date and the credit card number. They then strip the account
number and make the data anonymous. The data obtained is messy as the name of the merchant on a point‐of‐sale machine is a free‐text
field, resulting in many different names for the same merchants, retail chains or businesses. In the past years MasterCard has worked on
creating the rules, algorithms and engines to clean such data and make it usable. For MasterCard, big data is big business and with all
their data at hand they are helping merchants gain better insights and more revenue while in the mean time grow their own business.
FRAUDS PREVENTION CARDHOLDERS SEGMENTATION
MERCHANT SUPPORT NEW PRODUCTS
SCHEMES ARE POTENTIAL SOURCES AND USERS OF BIG DATA
THERE IS A NEED TO UNDERSTAND IF A SUITABLE APPROACH /STRATEGY
CAN BE FOUND

16. 15
Agenda
• The European Commission Communication
• Big Data
• The definition,
• The Market sentiment
• Tipical Benefits
• What will mean to endorse the «BD approach»
• Applications for the card business
• What can be done by (the unbundled) schemes?

17. 16
What can be done by (the unbundled) schemes?
Card Schemes may be part of the Big Data initiatives, in order to :
‐ Clarify the business needs for the involved players
‐ Discuss and support the initiatives activated by the EC
‐ Agree on criteria for the data analisys
‐ indentify common layers for IT interventions
‐ Suggest focused market initiatives
‐ ….

18. 17
Thanks a lot
Emiliano Anzellotti
e.anzellotti@bancomat.it