Mastercard executive: Economic digitization fuels success

Ajay Banga is executive chairman of Mastercard.
By Michael R. Malone

Ajay Banga is executive chairman of Mastercard.

Mastercard executive: Economic digitization fuels success

By Michael R. Malone
Ajay Banga said that the company’s growth and prosperity has been driven by a social compact that emphasizes “doing well by doing good.”

The head of Mastercard told a virtual audience this week that his company’s success for the past decade is because of “a healthy dose of good luck,” the global shift toward a cashless society, and a workplace culture that promotes financial inclusion as a social compact.

The digitalization of the world economy has been like “wind in our sails,” fueling the company’s successful strategy to diversify its businesses and client base, said Ajay Banga, speaking in a Feb. 16 event hosted by the University of Miami Patti and Allan Herbert Business School.

Banga took over leadership of the company 11 years ago; and in January, he transitioned from president and CEO to executive chairman. 

“The last decade has been a lot about being in the right place at the right time,” he said. “It may look like it was all very logical and sequenced, but we’ve stumbled quite a bit and been fortunate to have had a healthy dose of luck—with digitalization and the move of governments to value the concept of going against cash.”

When he arrived, the firm’s client base was nearly exclusively large banks, he noted. “Today our clients are everybody from governments that issue social security and benefits payments to transit systems to Apple and Google to the local think tank, to the mobile network operator in Africa,” he added.

The virtual Southern Glazier Distinguished Leaders Lecture, moderated by Dean John Quelch and Arun Sharma, professor and chair of the Marketing Department, attracted viewers from the United States, South Africa, United Kingdom, Switzerland, Colombia, the Russian Federation, Canada, Mexico, France, Panama, Italy, Bahamas, Virgin Islands, Colombia, Chile, Jordan, Germany, Thailand, and India.

Banga, who has received India’s highest civilian award and was named “Global Indian of the Year” in 2019 by the Economic Times, noted that the company’s growth and prosperity—market capitalization has risen from $30 billion to $335 billion (February 2021) during his tenure—has been driven by a social compact that emphasizes “doing well by doing good.”

The fact that 2 billion people around the world lack an identity issued by their government and so subsist outside the formal system incentivizes the company’s workforce, he said, noting that the firm has reached its stated goal of 500 million customers by 2020 and continues toward its 2025 goal of servicing 1 billion. Those include 50 million small- and mid-sized enterprises and 25 million female entrepreneurs.

“The things that we take for granted they can’t do—receiving and depositing money, saving money, renting a car—and without an identity their view doesn’t matter, it’s like they don’t count,” said Banga. “With our technology we can make a difference with financial and societal inclusion, and this motivates our people.”

Mastercard has maintained the same marketing firm since the 1990s, according to Banga, that highlighted the campaign, which has evolved from observing to creating “Priceless” experiences.

According to Banga, retail transactions in cash continued to be shockingly high, even in the developed world—still 79 to 81 percent. He added that “the pandemic has accelerated the migration away from cash transactions.” Only Sweden and South Korea principally use electronic transactions and the United States pre-pandemic was still close to half cash.

Nurturing a motivated, satisfied workforce through compensation, benefits, and focus on mission and values is core to Banga’s leadership approach.

“Inclusion starts with your employees and then you can make the story to do it on the outside,” he said. “This is real money and real resources that are being dedicated; it’s not lip service. We’ve been doing that in terms of compensation and benefits and also in the way of respect and promoting diversity.”

In terms of data privacy, Banga said that Mastercard has principles of safety and security.

“First, it’s your data as a consumer and you have the right to benefit from it. Second, you have the right to know what has been collected about you—and not in a long, complicated disclosure. Third, you have the right to be forgotten. And fourth, if we do collect your data, we collect only the minimum of what is needed,” he explained. 

He praised the European Union’s General Data Protection Regulation principles as similar to those his company has adopted and said that he’s concerned that states in the United States are adopting their own individual regulations—and that the federal government should address these consistently instead.

He’s impressed by the efforts toward sustainability that the Herbert Business School has adopted and by the school’s increased interest in environmental, social, and corporate governance.

For candidates who aspire to join the Mastercard workforce, Banga recommended “innate curiosity—be curious about the world around you; a commitment to decency—make the people around you feel that you’re there for them; fairness and transparency—this isn’t about being ‘nice’; and a level of ‘competitive paranoia’—where you’re willing to question everything in the aim of constructive dissent.”

The executive chairman said he’s confident that most countries in the world are heading in the right direction in terms of putting the consumer back in “the driver’s seat” in terms of managing their own data.

“You’ve got to create a level playing field,” he pointed out. “Whether in diversity or open banking or in data—if you create unequal playing fields, you’re cutting off your nose to spite your face,’’ he added.

“And a level playing field is really important in terms of regulation,” he continued. “It starts with putting the consumer at the center and then you provide the guardrails that the government should provide and then allow innovation to flourish within those guidelines. That would be nirvana.”

Banga’s interest in resolving global issues led to the company being among the first to fund the effort, together with the Bill and Melinda Gates Foundation, for a therapeutic accelerator for COVID-19 drugs and vaccines.

“My logic was that society should benefit from the quick discovery of therapeutics and vaccines from those companies that rely on consumers as their clients,” he said. “It’s in our own enlightened self-interest to look up from our narrow focus and care about the world outside.”