Miebach, in this exclusive interview, highlighted the country’s strong startup ecosystem and the potential to further democratise credit access. He emphasised Mastercard’s role in providing payment and data solutions, while also focusing on cybersecurity in an increasingly digitised economy.
Below is the verbatim transcript of the interview.
Q: In all of your visits here over the last 20 years, what do you believe has been the most significant change?
A: When I look at India, first of all, on the broader global ecosystem, I sense a sense of optimism about the India opportunity. So Mastercard isn’t a standout. From that perspective, we are deeply involved in the market, so we might have a deeper view than others. And from that perspective, what I have seen, particularly over the last four or five years, where previously at products in Mastercard and now at the CEO role, is this tremendous growth of the digital economy in India.
So as India leverages technology to pull more people into a more inclusive digital economy, that is a real standout that obviously is a tide that lifts everybody’s boats, including Mastercard’s, and we are happy to be on their journey. So I like that.
Yesterday (Tuesday, October 15), we launched a very big facility in India, one of our seven tech hubs, has been launched in Pune. It is about 6,000 people there, in the state-of-the-art facility and the sentiment of our employees — first of all, there is excitement. They see the commitment to India with this investment, but there is also this excitement and a sense of opportunity. And we will find a solution, we will find an opportunity, the level of ingenuity here is just infectious. So every time I come here, that is one thing to look forward to. There will be one new idea that I will find out about.
We launched this new idea here only at the Global FinTech Festival — a few weeks back here, which was Passkeys, which is biometric authentication for online commerce. Might not sound very exciting to most people listening to this, but I find it, personally very exciting, because it makes something very complex, very easy and very safe. You are online, and it will just work, and you just can rely on that. I thought that is a very exciting idea, and it was first launched in India.
Q: You mentioned the seven global tech hubs you have. I believe this new facility will be your largest for Mastercard worldwide. What factors led you to decide to double down on India as you allocated resources?
A: So, we have been in India for 40 years as a company. We have been bringing our payment solutions here, we set up our initial facility in Pune 10 years ago, so we have 10 years of experience with our ability to attract the best talent in the country, to attract talent that allows us to co-innovate out of India, catering to some of these special situations, where everything in India has to work at scale. This makes it a very unique market. We are a business that is all about scale. We are in 200-plus countries, so learning about scale and having employees that have that mindset sets India apart versus some of our other tech hubs, where we do other things well.
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We have learned over 10 years how these tech hubs can work with each other, and it is a global network of innovating tech hubs ‘follow-the-sun’ model spanning the globe. And we said we are going to double down here because we have the talent, we have the scale aspect, and we have this aspect of coming back to the culture point that I made earlier, the ingenuity is just strong here. So puts us in a position to do that, and we feel very welcome because for 40 years now, it has been a strong partnership with the government here, with the FinTech sector. So for all of those reasons, I can go on, but we made a decision, and it is a commitment to India, but it is also a commitment to innovation, and what we do around the globe.
Q: Can you quantify the commitment in terms of the incremental investments that this will entail in this new facility, this expansion that you have announced, as well as what we could expect over the next five years from Mastercard?
A: Over the last five years, we invested $1 billion here. This project — we opened it yesterday, but it has been a two-and-a-half-year kind of construction project. State-of-the-art employee experience. So we expect the staff number to grow in India, and it has been laid out for that, so many more opportunities that we will be investing in.
Q: Speaking of opportunities, and you talked about collaborating with the thriving FinTech ecosystem in India — take me through what excites you about what is happening there, also what worries you. Because, the pace of change is significant, and the pace of innovation is pretty remarkable as well. So both from an opportunity point of view, but also a threat point of view. How do you look at that?
A: We started off talking about us being bullish – me personally being bullish on the India opportunity. I had a first-hand experience to see that it is not just us. At the leadership summit of the US-India Strategic Partnership Forum – I am on the board there, and I am also on the board of the US-India CEO Forum. So lot of perspective of what others are thinking.
And when it comes to the startup community, India has a super strong startup ecosystem. FinTech in particular is strong. So at the Leadership Summit, we had a few unicorns on stage. They were talking about their growth story from a government support perspective, from a regulatory perspective, and from a funding perspective. So here is the government that is able to mobilize funding.
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So from that perspective, that is a good and important sector for us to engage in. What do we do? We are a FinTech, a very large one and we are engaging with other FinTechs, helping them with our payment solutions.
So give you an example, take the world of credit-based solutions. So in India, there is a tremendous opportunity to further democratize access to credit. There is a lot of businesses that innovate around that. In the end, money has to flow. Payment solutions are needed for that, data is needed for that, to assess credit and make that easier for banks, we provide those solutions.
There is a whole opportunity in the world of commercial payments, there is a lot of FinTechs that focus on helping businesses digitize their processes, enable reconciliation of data, and engage their customers in a better way. Those are all solutions that we have provided for years, on consumer engagement, customer engagement, data management and all of this, everyone in the sector needs one thing in an ever more digitizing world where the digital economy becomes like the economy, cyber security rises to the top and that is a big part of how we engage with the ecosystem as well, that is a strong suit of Mastercard for many years.
Q: I also want to understand from you, how you look at UPI. And I know that when we’ve previously spoken about it, you’ve always said that you don’t consider it as a threat because you believe that it’s actually opening up India’s digital economy. So it’s widening the pie or deepening the market, so to speak. That might be the picture now, but as you look out into the future, how do you brace yourself? How do you create moats around yourself as UPI becomes more and more ubiquitous?
A: I don’t personally like the term moat that much, but it comes to the notion of who makes a decision. The consumer makes a decision, business makes a decision on what kind of payment solutions they will use. And there will be different use cases. I want to get money from A to B in a very quick and fast and cheap and efficient way. That might be one set of solutions. On the other hand, I might want to have a data rich solutions. I might want to have a solution that works across borders, I might want to have a solution that works for me as a business vis-a-vis me as a consumer, all of those are whole different set of use cases. And we want to provide for each and every one of these instances that I just gave, the best solutions and people choose Mastercard. That’s competition, that’s choice, that’s what we do.
And with the digital economy in India opening up, UPI has done a tremendous job. Aadhaar, everybody has an identity. The Passkey solution I mentioned earlier is based on the fact that there is a biometric identity to start with. We’re now using that and we’re putting it across different use cases, including e-commerce.
So what I see in the end is a much larger pie. And within that much larger pie, there will be UPI transactions, there will be card transactions, there will be transactions we can’t even think of today. So we kind of keep innovating and keep competing. So I stick to my point that I said to you last time, that it is an opportunity because the pie keeps growing. The private sector over the years hasn’t solved that. With the rise of UPI and Aadhaar and the India tech stack, the opportunity did get bigger and we feel welcome. We’re part of the India journey. And it’s a strong public private partnership as well. We’re engaged with the government on cybersecurity. So there’s various aspects on how we contribute to this overall opportunity, it’s not just payment solutions.
Q: The US market, and I remember in Davos, you said that the outlook was that there is going to be global expansion in 2024, that was the forecast as far as the Mastercard Economic Institute was concerned. And we’ve seen many developments since then, including the Fed finally moving on cutting rates. What’s your sense on what this could potentially mean now in terms of consumer spending?
A: So what I said in January at the World Economic Forum was that we see a resilient consumer, which is the base of a lot of our business. And that’s held true throughout the year. So in our last earnings call, second quarter earnings call, yet again, we saw a resilient consumer globally in aggregate in the key markets. It’s a discerning consumer. What does that mean? People make decisions, non-discretionary, discretionary spend. They balance, but in aggregate, we see pretty steady spending.
This morning, I woke up to earnings from major US banks. A lot of investors look at the US economy and see that as a bit of a barometer. And we see strong consumer spending continuing, as far as those banks are concerned. So overall, the macro picture on the consumer side is pretty benign. But it’s also true that rates still remain elevated, prices still remain elevated. So we have to see what the various landing paths are in the major economies around the world. So we keep monitoring central bank reactions and moves as they’re trying to get back into the target range for inflation.
But overall, the consumer yet again has adjusted over those last two years or so and made those trade-offs. One thing that was exciting to see this summer is, so this was the summer of travel, the summer of experiences. We have different categories of spend that we can aggregate and where we can see that. Travel, very strong this summer. Europe in particular, very strong. Singapore, very strong. So you look across that, people want to go and do exciting things, do that trip, go and see a show and all of that. And it’s showing in our categories of spend. Two years ago, it was all about goods. Now it’s all about services. The service economy is booming. That is a fundamentally global trend. If we look specifically at India, we see the same strength in consumer spending here.
Q: You were talking about spending, and a data point that I picked up on this morning, and it’s coming from the US Retail Federation talking about close to a trillion dollars this holiday season coming up in winter. That’s the kind of estimate that they’re working with or forecasting, and that’s higher year on year. What are some of the other headlines that you’re picking up from the consumer trends, the consumption trends from across the world? You talked about how services is the big boost, and the experience economy is going through its own sort of surge. What are some of the other crucial trends that you’re picking up that you’re going to be focused on?
A: So the Mastercard Economic Institute projected holiday spending this year, very much in line with the retail report that you just said. So that’s an exciting headline as we look ahead. And it fits with everything that I just said on the consumer sentiment.
We believe the services economy and the spending on experiences will continue, travel will be continuing. I think the other thing to look at, it’s a picture in aggregate. So if you look at different countries around the world, it’s not exactly the same situation because central bank reactions will be different across income bands. Pressures are felt in different ways at lower income bands. So those are just things that one needs to monitor and look for. But the headlines are fundamentally positive around consumer spending. And I think that’s the one key point to keep in mind because if the consumer is doing well, I don’t think we have to worry that much about the economy overall.
Q: Speaking of opportunities and what everyone’s focused on is, how are you AI enabled? How do you fortify yourself in an AI era? Let’s talk about that. From your product days now to the CEO role. I mean, how do you view AI both for Mastercard as well as the kind of disruptions it’s likely to bring in for the ecosystem?
A: Machine learning, it’s been around for a long time. So we’ve been a leader in machine learning, I think for the better part of the last decade. It sits at the core of how we keep 143 billion transactions safe for consumers and businesses out there. How do you even do that? You do it with models and then you predict. What’s exciting about artificial intelligence as you step forward from machine learning is, what it can do in terms of transforming the lives of consumers and businesses.
Think about small business. So as a small business, you have a set of data in your business and generally, it’s very difficult to make sense of that because it’s not structured, there’s not an easy way to help you run your business, and you don’t really have a CFO or a lot of staff because you’re busy running your business. We’re excited about solutions that take such data, structure it, and provide input to a small business owner or a medium-sized business owner and say, here’s how you can optimize your working capital. Here’s a better way to reach your customers because we can use this data to personalize the offers and so forth. We believe in making commerce smarter, leveraging AI, and we have been very busy keeping commerce safe, leveraging machine learning, so it all will converge into one. In the end, it’s a better digital economy and that’s a tremendous opportunity for us.
The compute power that we can put into more people’s hands to use their own data more effectively, I think it’s transformative. Whatever we say today will be probably an underestimation of what will actually happen. So I’m bullish on it, but we also have to consider that this cannot be one of those technologies where we start to have an unlevelled playing field and we don’t take everybody along. So all the work that we’ve done, has been done in India. To create an inclusive digital economy, we have to do the same for AI and not say, here’s the people who have data and who have a large language model access, who have the compute power and other set not. So that’s a watch out for and we believe responsible AI is the way to go and I see the same sentiments here in India.
Q: I think everyone’s figuring out how to put the guardrails in place, who puts the guardrails in place, do you have guardrails in different jurisdictions and what that will mean eventually in terms of the ease of doing business and the ease of compliance as well. Does that worry you?
A: I think we need to strike the right balance when it comes to setting the guardrails on one hand, on the other hand not stifle innovation. Private sector technology companies like Mastercard have a responsibility here? I think it starts off with a very principled approach. We’re long used to this in Mastercard through our data principles. So we would tell you as a consumer, it’s your data, you benefit from it, you control it, and we keep it safe. Pretty simple. But that’s GDPR. That is actually the GDPR legislation in four simple sentences. The same logic we apply to AI with a set of tech principles where we say it has to be inclusive, it has to be unbiased, you got to be transparent in telling people they’re using AI, etc. That’s one building block. I think when it comes to regulation, it’s really important that we don’t regulate the technology, we don’t regulate the innovation process as such, but we get to the use cases and say, when it is in the hand of the consumers, why don’t we take those principles and put them into a regulation? Europe has moved forward with the AI Act. We’ll see where everybody else is going as it’s important that we don’t have fragmentation of regulation, because then it’s going to be very hard, because in the end, data exchange will matter. So there’s got to be a bit of interoperability of regulation that needs to be kept in mind.
Q: India’s point of view is that, given where we find ourselves, not just in the tech space, but population as well, that we ought to have a voice in global regulation. We need to have a seat at the table. We should, in fact, be part of the rulemaking. How would you respond to that?
A: It’s a very true point. And it comes back to the uneven or even playing field. I think India has taken a position at the global stage. I was involved here at the B20, so that was a good example, where exactly those points were on the table. And if you look at some of the recommendations that came out of the B20 in India, it was exactly around those spaces.
I was involved in some of the work around small business, where we said, okay, we’ve got to create a level playing field, and this is what everybody else should be doing. It’s very encouraging to see that the suggestions that came out on exactly the points we discussed now made its way to the B20 in Brazil, which is actually getting together next week. So India has a voice, the Global South has a voice, and I think that’s important in the world of setting global standards and interoperability.
Q: Where does that leave the growth algorithm that you’ve laid out for the company? What does it mean now in terms of future launches? What does it mean in terms of further expansion? And, any new ideas that that you’re working towards taking forward any announcements that we should expect globally or here in India?
A: So our timing is in a way good, but it’s also not that good. Because on the 13th of November, we have our investor day coming up and I don’t want to preview the investor day with you today. But the opportunity that I just talked about- long term, secular opportunity around the digitization of the world, there’s a whole host of things you can do to make those payments smarter, safer. The Passkey launch here with biometrics in India is only one aspect. I will just dwell on the Passkey for a moment because it’s a global opportunity. Underneath the Passkey is a tokenization engine that basically takes your biometric details and puts it into a one-time token that’s passed through the system. And if it’s ever hacked, nobody else can do anything because it’s only for one-time use. Lot of detail, but this is the vision of the RBI. This is what the RBI put out and said, this has to be a safe payment ecosystem. India is the first pretty much completely tokenized market in the world. We have 240 million tokens here in India. Now we see the whole world being tokenized following India’s example. It’s a tremendous growth opportunity for us. I think to date, we have like 4 billion tokens that have already passed through the system and if this expands for the whole world, that’s an opportunity for Mastercard and also a responsibility for Mastercard to make the whole ecosystem safer. So that’s on the consumer side.
We’re excited about commercial. I gave you a little preview of the numbers here in this market, the commercial payment ecosystem. You see in a lot of companies, you have a new generation of CEOs, younger people that are used to a digital personal life and they look at their processes in their company and say, well, that’s got to be digitized. There’s a whole host of companies that have departments that do nothing else but reconciling, has this invoice been paid? Yes or no, this can all be optimized and be much more efficient so that those resources are focused on producing better product instead of reconciling invoices.
So, tremendous opportunity for us. And then a mix between risk and opportunity. Risk for the global digital economy is cybersecurity. So with the world getting more digital and everything I just said, there’s more cyber threats coming along.
We’re a cybersecurity heavyweight. We’re leaning in with the state-of-the-art solutions and that is an opportunity for us. While we don’t want an unsafe world, but we want to lean in and keep it safe. And that is the business that we’re in.
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