In Good Company with Nicolai Tangen - HIGHLIGHTS: Michael Miebach - CEO of Mastercard

Starting point is 00:00:00 Hi everybody, tune in to this short version of the podcast, which we do every Friday. For the long version, tune in on Wednesdays. Hi everyone, I'm Nicolai Tengen, the CEO of the Norwegian Sovereign Wealth Fund. And today I'm thrilled to be joined by Michael Mierbach, the CEO of Mastercard. Now Mastercard is one of the largest technology companies in the global payment space. And last year, I think you processed more than 140 billion transactions totaling more than $9 trillion in payments volume. Wow.

Starting point is 00:00:32 We own 1.3% of the company totaling more than $6 billion. So it's a pleasure to have you here. And I believe this is your first ever broadcast. It is the first ever broadcast and it was 150 billion transactions. Wow, so even more. Even more. So Michael, how do you see the whole payment space developing over the next decade? Right, so the powerful trends at work in payment.

Starting point is 00:00:58 The first one to talk about is, as our lives are digitizing, payments are becoming more digital. There's still a lot of payments that happen in cash. You look at developing economies, take Africa, Asia, and so forth, and you won't believe it. There's also a lot of checks around. When I moved to the United States, you find a lot of checks. That's still also part of the reality. Then there's different kinds of spaces,

Starting point is 00:01:22 as in personal payments and business payments. And personal payments, you know, payments on the phone, biometrics, those things are becoming very, very common. If you go into a store, you just tap your card, for example, you tap your phone, it's also pretty common. That is not the reality in commercial payments. Commercial payments seems a lot more clunky, and it's not as digitized and as intuitive. So with this as a landscape,

Starting point is 00:01:45 progressing from different starting points, digitization, frictionless, all that progresses quite dramatically. Technology is there today to do that, so that in 10 years out from now, biometric authentication, no more passwords, you basically recognize, like your phone recognizes you today when you open it,

Starting point is 00:02:04 and the payment goes through. You know, before I came here, I had a slice of pizza down at the Roma Pizza. Pretty good. Yeah, New York pizza, yep. Now, 10 years time, how will I pay for that? Most likely you will, you have possibly a personal device,

Starting point is 00:02:19 but it's not a payment device. It would just be your phone, or you don't even have a device. You basically just look into some sort of authentication camera or something that the pizza dealer has where it says, okay, it's Nikolai, and then just goes through. You pay, authenticating with your palm,

Starting point is 00:02:36 with your face, with your eye. That is where I think things are going. And what's the role of MasterCard in this world without cards? Right, so what we do is we enable the transactions between different parties. For example, you have a credit card today. The credit card is issued by your bank. Now, the bank. And you travel to New York and you buy a slice of pizza with your Norwegian credit card. Who makes that? All the complexity in the middle work? That is us We connect the bank to another bank here in the United States to the merchant and the circle closes

Starting point is 00:03:10 It's a pretty complex process, which you make very simple and it happens in the background There's only one of the many roles that we have we do many other things. We keep the transactions safe And just and just do just a bit more that's a fraud safe. And just a bit more on that. So fraud, nearly $500 billion a year in global losses. How are you helping to reduce that? So this is a particularly important part of our business. We have invested $8 billion in the last five years into cybersecurity capability. Fraud is the core part of that. If we look at what fraud does to consumers in a rapidly digitizing world, once you're be frauded, you lose trust in digital solutions.

Starting point is 00:03:59 You won't really participate in the same way. If you're a small business, it can be existential to you. So there's a whole range of reasons why this is devastating. It's rising. Now, we have a really preferred position, because every value exchange that takes place in a digital fashion, we have an opportunity to put on a stop to what the fraudsters are doing.

Starting point is 00:04:19 Building the tools, set during the transaction, before, digital identity solutions. Is the person that's even attempting the transaction? Can we know? It is with 99 percent. Surely it is you or me. Are they moving? Are the fraudsters moving faster than you? We invest so much money, $8 billion, to stay that one step ahead. And so far, so good.

Starting point is 00:04:42 How do you define good leadership? The first thing that comes to mind is you have to have a vision where you want to go. Set a clear vision. As a leader, to ensure in a fast-changing world, with a lot of pressure points, technology is changing in a rapid space. We've seen more change than ever before. To have the right kind of team around the table that permanently challenges and hones the vision, really important. I believe you talked to Ajay Banga before, when we did our leadership transition here at Mastercard, we

Starting point is 00:05:17 announced the leadership change in... Just for the listeners, Ajay Banga was your predecessor. Yes. He's now heading up the World Bank. He's now heading the World Bank. We announced the leadership transition on the 25th of February 2020. This was two weeks before the United States went into COVID lockdown. As a result of which, a month later, our revenue fell off a cliff because nobody went to a store any longer to pay. Now, back to the vision.

Starting point is 00:05:46 The vision of the vision and the business model was clear, but it was significantly impaired for a period of time. And we needed a team around the table that was empowered, was willing to speak up, but it was all starting with everybody, including me, accepting we don't have the answers. There is no playbook for a pandemic. I mean, you can't really reach on the shelf and say,

Starting point is 00:06:13 okay, this is how we do this. So creating an atmosphere of psychological safety and ability for everybody to speak up, even if you don't have the answer. In today's business world that you know might be common but I felt this was important to really put that down and with the employees to step forward with humbleness and say to our employees we don't know but we'll figure it out together. You have something which is really unique. You have a foundation, the MasterCard Foundation, which has assets of nearly or roughly $50 billion, so huge, right?

Starting point is 00:06:56 Right. Now, I happen to know the Chief Investment Officer, John Barker, who is excellent. Yes. Right. But could you just tell us what does having such a foundation do to the people at MasterCard? So earlier I talked about doing the right thing and decency. When this company IPO'd in 2006, from previously being an association. It was the decision at the time to take 11% of the stock at the IPO and put it into the foundation. That is the MasterCard foundation today.

Starting point is 00:07:35 At that time it was also important to ensure the independence of that foundation. So it should have not been something that the company can decide at some point, well we don't want to do this any longer. Yeah. It was clear we wanted to do it. I wasn't even there at that time, and it's now there.

Starting point is 00:07:55 They, we have them come to our board meetings once a year, but they run their strategy, and wherever payments and technologies evolved, obviously we talk to each other, they carry the brand, which is important. I was not too long ago at a hotel in Nairobi. And a gentleman helped me find the room. And we're walking down the hallway to the room,

Starting point is 00:08:21 and he says to me, can I hug you? And I'm like, why? But please. So he gave me a hug and says, I just wanted to tell you, the foundation has helped my kids get into college and the first kids in the family that got into the college.

Starting point is 00:08:39 So the foundation, they are focused on Africa and they're doing great work there on youth employment and so forth. What's your advice to young people? I was talking to our summer interns. It was July, I think it just came to an end. We have about 800 summer interns a year around the company all over. And I got that question from them.

Starting point is 00:09:07 So I was like, what's your advice? I said, you know what? If you leave here and you left questions unanswered, what a waste. It's your opportunity. Now you have permission to ask any question. So for those young people, let's say it's people that are starting to take a new role

Starting point is 00:09:31 in post studies and so forth, use the opportunity of an internship to really nerd out, ask what you ever wanted to do, because that's the time where you can do that. And that was the first piece of advice. The second piece of advice that I gave them is people walking around and say, well, follow your passion. Great idea.

Starting point is 00:09:53 But if your passion doesn't really work, if you wanted to be in a corporate environment, for example, then that's great, but it's not always great. So I said, figure out where's the intersection point of what is your passion, what actually matters, and what could you be good at? Bring that together. ["Dreams of a Better World"]

In Good Company with Nicolai Tangen - HIGHLIGHTS: Michael Miebach - CEO of Mastercard

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