HIGHLIGHTS: Michael Miebach - CEO of Mastercard

0:00Hi, 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 nicolaj tangen the ceo of the norwegian someone 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 nine trillion dollars in payments volume wow we own 1.3 % of the company, totaling more than$6 billion. So it's a pleasure to have you here.

0:38And I believe this is your first ever podcast. 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. The first one to talk about is now as our lives are digitizing, is 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.

1:17That's still also part of the reality. Then there's different kinds of spaces, 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. In commercial payments, things are a lot more clunky and it's not as digitized and as intuitive. So with this as a landscape, progressing from different starting points, digitization, frictionless, all that progresses quite dramatically.

1:53Technology 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 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 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 it just goes through.

2:34You pay, authenticating with your palm, 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. A 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.

3:10It's a pretty complex process, which we 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 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. And fraud is the core part of that. If we look at what fraud does to consumers in a rapidly digitizing world, once you're befrauded, you lose trust in digital solutions.

3:59You 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. Building the tools, during the transaction, before digital identity solutions. Is the person that's even attempting the transaction? Can we know? It is with 99 % surety it is you or me. Are the fraudsters moving faster than you? We invest so much money,$8 billion, to stay that one step ahead.

4:38And so far, so good. 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, 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 a table that permanently challenges and hones the vision, really important. When, I believe you talked to RJ Banga before, when we did our leadership transition here at MasterCard, we announced the leadership change in... FYI, just for the listeners, RJ Banga was your predecessor.

5:23Yes. 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. 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, excepting we don't have the answers.

6:09There is no playbook for a pandemic. I mean, you can't really reach in the shelf and say, 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 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 roughly$50 billion, so huge, right?

6:56Right. Now, I happen to know the chief investment officer, John Barker, who is excellent. 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. 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.

7:49It was clear we wanted to do it. I wasn't even there at that time. And it's now there. 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. And 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, 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.

8:39so the foundation does they're focused on africa um and they're doing great work there on youth employment and and so forth what's your advice to young people um i was talking to our summer interns um at you know uh it was july i think that it just came to an end uh we have about 800 uh summer interns a year um around the company all over and i got that question from them so it's 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 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.

9:42And that was the first piece of advice. The second piece of advice that I gave them is there's people walking around and say, well, follow your passion. Great idea. 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