How Mastercard Is Tackling the Banking Tech Revolution

Veteran banker and payments leader Ajay Banga gets annoyed by industry executives who beef about the rapid pace of tech change. He insists no one should complain because all the warnings were there. Understanding tech evolution, and making smart choices about where to hop on, will aid survival. Delaying key tech decisions only ensures irrelevance.

You might think, in the age of digital wallets and the internet of things, that Ajay Banga, President and CEO of Mastercard, and his smartphone would be inseparable. But Banga, while very interested in appropriate use of technology, draws certain lines when it comes to personal tech.

Even though he’s head of one of the dominant players in financial services, Banga doesn’t believe in carrying his phone everywhere.

“If I go out for an evening with friends for dinner, I don’t have my phone with me,” Banga said in an interview with the “Talks with Goldman Sachs” webcast. “I get joy out of the damn thing not being with me. If I could throw it away, I would throw it away.”

When he and his wife, Ritu, vacation, they have an arrangement regarding his phone. He pops it into the hotel room safe, and she locks it. Banga receives it twice a day — 7:30 AM and 4 PM — to check emails. When he finishes, back it goes — click and the lock engages. Mastercard staff has grown used to flurries of emails twice a day when the boss is on holiday.

When it comes to personal technology, Banga believes that personal responsibility goes hand in hand with owning the tech. At the same time, he believes that financial institutions and the tech companies, like Mastercard, that work with them, must strive harder to provide safe channels for ecommerce and data. He believes that data should be considered as owned by the consumer, and treated appropriately.

He has strong views on where and how technology and the financial services business intersect, and definitive views on innovation as well. In a sector where fresh technology keeps rewriting the basics, Banga, whose organization maintains multiple innovation labs, believes in an occasional cold bucket of reality. While on one hand he has said that financial institutions that don’t “embrace technology as a friend will see it disintermediate” their future, on the other he resists infectious enthusiasm about the latest tech processes and gadgets.

Ajay Banga quote cool is not enough

“Cool is not enough,” he said in a welcome address to a Mastercard innovation forum once. “‘Functionally cool’ is what we’re looking for. That’s the future of innovation.”

In an interview before a gathering of the Japan Society, Banga suggested that “if you allow technology to run just for its own sake, my belief is that it produces interesting things, but not necessarily things that are easily commercially applicable or scaleable.”

Banga brings an unusual blend of frank talk, insight, and atypical management attitudes to his job. Ajay — pronounced “Ah-Jay” and short for “Ajaypal” — Banga joined Mastercard in 2009 initially as President and COO after he served as CEO of Citigroup Asia Pacific. He held multiple posts in the U.S. and internationally at Citi beforehand, and started his career at Nestlé, India, and PepsiCo, in sales, marketing, and general management posts.

Technology Should Serve, Not Dictate

Something that bothers Banga about many financial institution leaders’ attitude towards technology is the sense of victimization. A tendency to refer to technology as an overwhelming wave that leaves defenseless managers exposed to risks from massive change.

“You can see technology changing over a period of time. You may not have figured it out. You may not have seized the opportunity. But that’s your fault.”
— Ajay Banga, Mastercard

Banga doesn’t buy it.

“We’re in a business where technology changes all the time,” the CEO insists. “Some people think that technology changes very quickly on you. I actually don’t believe that. I believe that you can see technology changing over a period of time. You may not have figured it out. You may not have seized the opportunity. But that’s your fault, it’s not the fault of technology. It’s coming.”

Take artificial intelligence, he suggests. Its increasing application in financial services has been on the way for years now. When a number of AI trends come together, there are those who will be surprised, even shocked.

“They will say, ‘AI changed everything in one year!’,” says Banga. Such people will be fools, in his word. Clearly it was coming, for years, and anyone could have been reading about it all along the way.

Ultimately, says Banga, “technology is not the issue. It’s your openness to embrace it and you’re ability to comprehend it.” With tech decisions, he advises, a sense of urgency, balanced with careful fact finding, is critical. Listen to qualified staffers first, and then make a quick but educated decision. Risk cannot be avoided, only weighed and taken intelligently.

“Regarding technology, procrastination is not your friend,” says Banga. In fact, he says, in tech, “procrastination kills, in this industry.”

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How to Be Ready for the Wave of Data from IoT

Americans surround themselves with technology, from smartphones to digital assistants to smart speakers to smart TVs to smart watches, all creating, consuming, storing, and using data.

“We need the equivalent of a food nutrition label for the gadgets we buy. But the ‘food nutrition label’ will instead be a ‘cybersecurity level label’.”
— Ajay Banga, Mastercard

Banga thinks that the expression “data is the new oil” is intriguing, but off target. In a fireside chat at the 2019 Fintech Ideas Festival, the Mastercard chief said that “oil is finite, but data is infinite. Data keeps coming to you from everything you are using, from your glasses to your watch to your shoes to your car.”

We are quite nearly literally swimming in it, generating it constantly when one considers that even the humblest cell phone, while on, is constantly connected at some level with its network so that data and voice links can be nearly instantaneous. What bothers Banga is that we all as consumers blithely buy technology with very little understanding of what’s going on in those boxes — and where it can go and who can read it.

For this, he has a solution.

“We need the equivalent of a food nutrition label for the gadgets we buy,” says Banga. “But the ‘food nutrition label’ will instead be a ‘cybersecurity level label’.”

Say a consumer is weighing two large-screen TVs, says Banga. One costs $1,000 and the other costs $1,200. A price shopper would pick the first. But what if the “nutrition” label disclosed that the pricier model provided better data security?

“Today, to understand the difference between the two choices, you have to be a cybersecurity geek to read, comprehend, and figure out if the second set is worth the extra $200,” says Banga. “That’s unfair.”

Banga wouldn’t mind seeing something like this implemented now, but with the internet of things becoming a larger and larger matter, he believes it will be absolutely essential to protect consumers from cyber risks and unwanted data exposure. He believes the internet of things is the next key tech trend and one that financial services must be preparing for right now. He expects to see between 20-40 million “things” hooked into the internet within five years or so, a good deal of them communicating at high speed on 5G networks.

“Everything will be seamlessly done, with your identity passing from one place to another,” Banga predicts. “Payments will be made simply. That kind of world isn’t 20 years away — it’s only five, seven, maybe ten years away. You can take a guess. I don’t know if five is the right number, but it’s not 20.”

Before this era can be entered safely, Banga believes, financial institutions and other players must figure out how to safeguard consumer data however it travels and whatever devices it goes through.

Otherwise, he says, a consumer “putting all of that information together is painting a bullseye on their forehead.”

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Whose Data is it, Anyway?

Banga feels that consumers and the small businesses represent the weakest links in the data protection chain. He points to all the information typically handed over on a form every time someone goes to a medical office.

“You may assume that your dentist is protecting your data,” says Banga, “but that ain’t happening.”

“Anybody who believes that they have figured out the secret sauce for making their cybersecurity systems the safest in the world is either on drugs or foolish.”
— Ajay Banga, Mastercard

Misplaced faith and trust has a lot to do with this, he continues. “People take convenience over security, the cool factor over risk,” says Banga, “and they assume that ‘we’ are keeping them safe and secure. ‘We’ being the device manufacturers, the banks, the companies, the government — somebody else, not ‘me’.”

Consider all the agreements consumers acknowledge without even attempting to read them, online. “What part of your data being used by others was not clear to you?” he says. “When you sign up for an app and you check, ‘I agree,’ and the app accesses your contact, what part of that was not clear to you?”

As Banga sees it, the question of who owns data about consumers should come down squarely closest to home … the consumer.

“I believe that data should belong to the consumer whose data it is,” says Banga. “They should be in charge of it and they should have to right to use it and the right to be able to use it for their safety and their convenience and it should be done with very open standards.” He believes too often today consumers must choose between convenience and security and he thinks it should be possible to have both.

One solution he sees is redesigning systems so that essential data is distributed among multiple custodians, possibly in a public/private sector partnership.

Blockchain technology may be part of this kind of solution down the road, though much needs to be proven about blockchain, Banga believes.

For now, the incentive and ability of criminal elements to infiltrate systems and steal data remain worrisome, and Banga pulls no punches when he warns against complacency.

“Anybody who believes that they have figured out the secret sauce for making their cybersecurity systems the safest in the world is either on drugs or foolish,” he declares. “One of the two and they’re both pretty bad.”

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Innovation Must Make Sense without Numbers

One of the fallacies of modern financial institution management is that numbers always make the case.

“I tend to be very skeptical of people who present data as the only reason for me to do something,” says Banga. He’s seen enough of spreadsheets that can be manipulated to prove pet ideas. He puts more trust in a sound argument.

“Bring your mind to work” — it’s an expression he uses a lot — “and explain to me why what you’re offering to me as an idea is going to be a winning one for consumers,” says Banga. “Do that and I will support it and I don’t need your spreadsheet. Cool will not cut it. I want to know what you are really solving for.”

In fact, he says proving the case in that way gets an idea past ” guys like me” who must weigh innovations’ potential benefits in the context of running the existing operations.

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