GC: Could you describe your role and background for our readers?
Lucia Giancaspro (LG): I have been working as general counsel for the company for four years more or less, but I came from a very different environment. My previous company is actually in the renewable energy sector. What I have always done when changing roles is to work in sectors that were quite important at the time. So I started in the internet industry, then I worked in quite a big telecommunications company (Fastweb), then UniCredit Bank for about two years, and then Falck Renewables. And now I am here, in the digital area.
I was general counsel of the company – meaning responsible for solely legal issues – until the end of last year. But starting from this year, I’m also responsible for all compliance. So I still deal with all the legal activities – litigation, contracts, regulation and so on – but now I am also building a structure of compliance. Payment services are very much a regulated area and therefore compliance activity is key.
I am based here in Italy, but I travel a lot because our headquarters are in London. My team is very multinational, meaning that I have team members here in Italy, but I also have two team members in London, Paris, Madrid, Düsseldorf, Liechtenstein, and also in Singapore.
GC: That must be quite challenging – to manage all of these people?
LG: Definitely. But fortunately, with technology, with digitalisation, with Skype and all these things, it makes things much easier. But of course, you have to travel a lot, because you also have to organise face-to-face meetings – not only to be more in touch with the people, but when there are important meetings, important discussions, Skype is good, but it’s not ideal. I prefer, when it is possible, having face-to-face meetings. But it doesn’t happen that often, apart from with team members in London.
GC: You recently took over the compliance arm on top of your role as GC. Was that role previously occupied by someone else?
LG: No, I started from scratch. Last year, I hired a person to work on compliance issues, but I saw that this was not enough, because compliance was becoming really, really key for the business. So I decided to build a compliance structure with a specific compliance team. So compliance team members are separate from the legal team, but they are sit within my area.
GC: Was it challenging to build that function from scratch?
LG: Yes, but I have to say that the team members that I have, and the new head of the compliance team are very good. I believe in him, and I believe that we can put in place something very interesting, so I am quite optimistic – but it will not be easy. DOCOMO Digital Group has presence in 36 countries, with main offices in Milan, Madrid, Paris, Düsseldorf, London and Liechtenstein in Europe. And then we have offices in South Africa, Moscow, India, Singapore, the US and Australia. We sell products in other countries, but we are dealing with that activity from the places where we have hubs.
GC: In terms of starting the compliance function from scratch, was that difficult to sell to the business – to make the business see that there was a case for it?
LG: Not that much, because the CEO is very sensitive to that. Bear in mind that the CEO is Japanese – the parent company, NTT DOCOMO, is the biggest operator in Japan – and compliance is very important also for them. In Japanese business culture, reputation is really key. It is now starting to become key also in our countries, but this is something that I have learnt mainly from them. So having the support of the CEO and the CFO on that, in the end I didn’t have big problems. They also understand that at this time, when we are launching new payment services, respecting the regulation of different countries is important from a legal point of view of course, but also from a reputation point of view. In the payment services sector, DOCOMO Digital is a kind of start-up, and so you have to build a very strong reputation. Who would ask you to provide payment services if you are not a more-than-reputable company?
GC: What are the key business areas that DOCOMO Digital operates in?
LG: The key business areas are content business, I would say B2O – meaning business to operator – and B2C also. But now we have started to be present in the B2B market, with the payment services.
On the content side, we are very strong in providing digital market services. On the payment side, we provide billing services, giving tech and merchant clients the chance to pay for digital content by means of the mobile telephone bill. We are also starting to launch pure payment services, meaning payment by a credit card, alternative payment methods such as Satispay, and so on.
GC: How easy is it for your business to operate in the Italian regulatory environment?
LG: Not easy. The regulation we fell under until recently was PSD1 – Payment Services Directive 1 – which was applicable to all European countries. That was quite restrictive for payment services. Now, starting from 13th January 2018, Payment Services Directive 2 is enforced in Europe. That gives companies the chance to provide payment services without a licence, within certain thresholds.
DOCOMO Digital Group has a Liechtenstein-based company, DOCOMO Digital Payment Services, which has an e-money licence and a payment licence. With this licence, we are able to provide payment services outside the application of PSD2, meaning for the purchase of non-digital goods. This is something that in Europe, very, very few companies are able to do, because not everyone has a payment licence, even though big operators are now starting to offer also these kinds of services. But in the area of non-digital goods, there are not many companies that have the chance to provide these kinds of services.
GC: What’s the process for getting a licence? Is it quite difficult to obtain?
LG:It can be – it depends on the kind of licence you want to get. There are three kinds of licence – the banking licence, which is very, very difficult to obtain, because you need to be a bank, with the requisite conditions of a bank. The strongest licence is the banking licence.
Then, the step below is the money licence and below that, you have the payment licence. We have a money and a payment licence in one single licence. It’s not that easy to obtain – you have to demonstrate that you have specific characteristics: that you are financially reliable and so on and so forth. But we were able to meet all these requirements and we got it in the end with our company based in Liechtenstein. Of course, you need the final approval of the supervisory financial authority of the country where you are asking for the licence.
It is also very important that the licence we got in Liechtenstein has been passported in all European countries; that permits us to provide payment services all around Europe. For the countries outside Europe where we intend to provide these payment services, we need partnerships with other providers – Visa, Mastercard and so on – and in this regard we are still negotiating.
GC: Looking ahead over the next 12 months, are there any particular challenges you see on the horizon for your team?
LG: Yes: to understand the regulations in countries outside Europe. We know more or less the environment that we have in Japan, because Japan is the seat of our parent company, and we know the situation more or less in Singapore – but we are currently checking the regulation in many other countries. It’s also very important to check the tax system – because the tax system is really key.
GC: Does the legal team have a local presence in every country in which you have an office?
LG: No. We cannot hire people in all countries, so we use external consultants, which is more flexible and you avoid fixed costs. Having a person in all of the different countries we are present in would be unnecessary.
GC: How do you assess which countries to have that local presence versus a country where you are only able to work with external providers?
LG: External advisers don’t know exactly how the company works and they don’t know the specific points of contact in the company. You need more time to explain the business, you need more time to explain how certain dynamics work, and so on. But the big pro in this situation is that you are totally flexible. In terms of costs, in spite of the fact that external counsel are much more expensive than work done internally, having a permanent person is not competitive with an external fee that you can negotiate and pay perhaps a couple of times a week – but then you have paid it and that’s it.
GC: Do you see your legal team changing very much in the next 12 months?
LG: We have already reorganised the legal team in order to render it consistent with the new business organisation. Before December 2017, the business teams were focused locally, and we had a CEO for each country. Now the company is structured into two big blocks – one is the content side, and the other is the payment side. This new organisation is reflected in the legal department. We have to deal with local regulation and local laws – this is something that we cannot change – but I have organised the legal department within the two blocks of the business, meaning I have dedicated some people to the content business and other people – most of the people, I would say – to the payment business, which is the one that the group is investing more in.
GC: How has your service changed?
LG: We are aiming to have more global deals, and this means that we need very good coordination among all the people in the team. On one hand there will be a specific owner of the project, but on the other hand, this owner has to liaise with the different local teams. Theoretically, the local teams shouldn’t exist anymore due to the reorganisation, and that is changing our way of working quite a lot – we were used to having local partners, local telcos and so on. But now we are starting to offer B2B services, we have new relationships with merchants as well as telcos, and so we are stepping into the process from the beginning, whereas until now, we stepped in at the middle, or at the end. Now, being also the compliance office, we have to understand how the project is working from the beginning.
We have to understand how the business is developing, and our role changes in order to fit the business. Our first mission is to support the business in all its activities, render the business more secure, and provide the group services in a secure and compliant way.
GC: Does being able to get involved from those early stages make it easier for you?
LG: This is something that the group still has to work on, because it doesn’t come that naturally. But I have started to work on this process, and I have to say that I receive big support from the CEO, who shares my mind.