MasterCard’s Ajay Banga: Why ‘Yes, If’ Is More Powerful Than Saying No

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Talk to any MasterCard employee today about the key tenets of the company’s mission, and you’re likely to get one answer, according to president and CEO Ajay Banga: Creating a world beyond cash.

At the recent Wharton Leadership Conference, Banga, who joined MasterCard in 2009 after 13 years with Citigroup, talked about leadership, his mentors, life at the helm of MasterCard and the aforementioned goal of bringing about the demise of cash.

Banga said that although people might assume that his company’s main competitors are firms that handle digital transactions (or, as he put it, “the Pay Pals, the Googles, the Amazons, the Visas, the AmEx’s, and the next kid in Silicon Valley or in a garage in Delhi”), such companies’ activities actually make up only 15% of the world’s retail purchases. A whopping 85% of all global purchases (and in the U.S., a still-sizable 50%) are in cash or checks.

“By the time you come to understand this number, you realize that if all you do is focus on the 15%, you’ve just put yourself into a box that’s smaller than what you’re capable of dealing with,” Banga noted. “So one of the biggest things we did was to redefine our competition. Once we got [that] right, then the vision of the company became very clear.”

According to Banga, in addition to being bad for MasterCard, cash is bad for countries and governments. To print, produce, and distribute cash, he said, costs society between one half and 1.5% percent of global GDP. “In fact, the best company’s shares you can buy are not mine. They are Brinks’,” he quipped. “Because anytime you install a new branch, put in a new ATM, or open a new cashier, you need a Brinks truck.” 

Plus, he added, each Brinks truck has to have two employees in it to make sure neither does anything dishonest. Retailers and banks engage in a similar practice: Two people have to count the cash at the beginning and end of each shift. “Labor costs are very high. This is not good economics,” Banga said. 

“Cash is the dirtiest secret of the modern economy. It belongs to a 200-year-old economy. It’s being allowed to play a role because it suits vested interests.”

Moreover, according to Banga, the existence of cash enables illegal activity such as tax evasion, street drug dealing and illegal weapons sales. “Cash is the dirtiest secret of the modern economy. It belongs to a 200-year-old economy. It’s being allowed to play a role because it suits vested interests,” he noted. Changing the way the world pays for goods and services is central to the vision, mission and competitive strategy of MasterCard, Banga said. (Of course, he added, he will “fight the Googles and Amazons for the 15%” already paying digitally as well.)

MasterCard today is “desperate to win everything that comes our way. We were not that way five years ago,” Banga said. Banga characterized the firm’s former attitude with phrases like “‘Yeah, we could have done that deal…. Well, we didn’t really want it. The pricing wasn’t right.’” But, he noted, there is no such thing as a deal you do not want to win: There is only a deal that “the other guy won and you lost. That was my company’s problem,” Banga stated. “Now, people say ‘I can win this.’”

Another major change — which began about eight years ago but has continued under Banga’s watch — is that MasterCard went from being merely an “association owned by banks” to being a profit-making enterprise. He noted that banks now own only 2% of the company. According to Banga, MasterCard is growing its workforce and expects to end the year with 10,000 employees. Revenue is approximately $9 billion, increasing at a rate of between 10% and 15% per year, which Banga noted is eye-opening for “this industry and this environment.” The company’s market capitalization is about $90 billion.

The Power of ‘Yes, If’

Before joining MasterCard, Banga held various senior management positions at Citigroup, eventually becoming CEO of Citigroup Asia Pacific. He spoke fondly of his 13 years with the company, saying that working there would make someone “a far more complete and thoughtful manager than you were before you went there.” He talked about some of the leaders who influenced him, including Sanford I. “Sandy” Weill, CEO and chairman of Citigroup in the late 1990s to early 2000s. Weill, according to Banga, had “a little bit of what I call the Bill Clinton methodology,” in that he appeared to focus completely on whomever he was speaking to.

“[At MasterCard] we are desperate to win everything that comes our way. We were not that way five years ago.” 

“He was amazing,” said Banga. “Sandy could talk to the president of a country … [or someone on the management team] with the same level of compassion and involvement…. When you were talking to him, you felt you were the only important person in his life at that time. He’s not looking over his shoulder to check out the other guys in the room and figure out who else he should schmooze.”

Banga credited one of the most important leadership lessons he has learned not to someone at Citigroup, but to the managing director of Nestle India, where Banga started his career as a young management trainee. The director, he said, would never take “no” as an acceptable answer. One had to rephrase it to “Yes, if…” and describe what kind of support they needed to get the job done. “You can change the entire feel and look of a company by making people realize that they’re not empowered to say no,” Banga noted. “They’re empowered to say “yes, if.” It changes the bureaucracy, the culture, the passion, the purpose — it changes everything.” 

Moves in Microfinance

One of Banga’s roles in his former life at Citigroup was overseeing its forays into microfinance during 2005-2009. Microfinance makes financial services available to unemployed or low-income individuals who otherwise would not be able to save and borrow money, start businesses or buy insurance.

It is an effort that Banga said he still believes passionately in. “We discovered as we went along that what was holding back principally women from advancing along the socioeconomic ladder was the inability to access finance.” All it took to change their lives, he noted, was the money to start a small business such as selling fruit or newspapers, or running a grain machine.

One of the challenges of microfinance, Banga stated, is that most fledgling businesses are fronted by philanthropies or NGOs. Those organizations have limited balance sheets, he said, and continually find themselves on a treadmill of constantly having to raise more money. He became involved in securitizing projects in order to break this cycle. “That was revolutionary at that time, because these were small amounts of money. Nobody had a market for securitizing $50 or $100.” He noted that the first effort that Citigroup securitized was BRAC (formerly Bangladesh Rural Advancement Committee), an NGO that lends to women and disadvantaged communities.

“You can change the entire feel and look of a company by making people realize that they’re not empowered to say no. They’re empowered to say “yes, if.” It changes the bureaucracy, the culture, the passion, the purpose, it changes everything.”

Banga observed that 80% of microfinance today goes to women, and he called that a good thing. “I don’t mean this in any bad way, considering I’m a man [myself] — but if you give the man money, he uses it for … drinking, some [form] of hedonism,” he said. But, if you give the money to a woman, “the first thing it goes into is the kids: their education, hygiene in the house, clean drinking water and better food,” Banga noted. “I cannot understand why the world doesn’t get it: If you get these women to be economically and socially independent, you can transform the future of many people in this world.”

Bringing Your Heart and Mind to Work

Asked how he leads and motivates his workforce, Banga said, “You’ve got to bring your heart and your mind to work.” People who lead with both their minds and their hearts have the tools to be outstanding, he noted.

Leaders, he added, also need to keep in mind that their position is a privilege and not a birthright. “If you have been lucky enough to have one person work for you, you just have to realize how much [the job] means to that person, and then you feel the privilege.”

According to Banga, a key message he conveys to his employees is that one person can make a difference. Employees should ask themselves what they can bring to the table with their time, and how they are going to make a make a difference in the way people around them perceive the company, a given opportunity and themselves.

He added that employees need to be empowered with a sense of true ownership, which goes beyond standard company rewards involving compensation or recognition. “What really helps them realize they can make a difference is [the ability to make] a decision — and that not making a decision is a criminal offense.” He says that making a decision — saying “Yes, if…” — is much better than saying no. “If you can do that [for your employees], then you can, I believe, set free the animal spirits of a company. And — I am telling you right now — we have animal spirits in our company.”

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3 Comments So Far

I wonder if MC pays at the same level to men to women.

I can appreciate the comments and anecdotes regarding his leadership and experience, but his observations regarding gender and money reflect his deep-rooted cultural norms. Suffice it to say, I vehemently disagee.

On the topic of money and spending, while I do carry a MC in my wallet, cash is invaluable in commerce and is a great tool to educate people about the value of money, budgeting, and financial management. That is something plastic cannot do.

The lunacy of advocating the end of cash when it remains the only universal means of exchange anywhere on the planet AND acts a source of interest free credit to sovereign nations from their citizens is almost too much to believe. MasterCard’s desperation does NOT a business case make. Jim Wells