Fantastic! Welcome back, everybody. We are very pleased and honored to have Raj, Raj Seshadri here with us, Chief Commercial Payments Officer at Mastercard, and I had to read that because you recently changed roles.
Yes, very recently, and thank you for having me here.
It's a great pleasure. Yeah. Maybe you can start by giving us some insight into the background and your current role at Mastercard, which has changed recently, as we noted.
Yes, yes. So background. Well, I have a relatively checkered past. I was in academia and physics. I've been in consulting and strategy, and I've also run large businesses and led lots of people. So I've sort of I've been an advisor, I've been a CMO twice, I've been in finance, I've worked with technology, and of course, driven revenue growth and operating leverage. At Mastercard, I came in many years ago to run our U.S. issuers business in North America, and then did that for about four years and then ran our global Data and Services business for about four years, until literally a few days ago. And I'm now responsible for our Commercial and New Payment Flows. We had a relatively recently an organizational realignment where we realigned our internal organizational units to our growth vectors.
The same growth vectors, just, the alignment, I think, will unlock more revenue growth for us. That was relatively recently, just a few days ago.
Yeah.
And I know this conversation is going to be about Data and Services, as opposed to the new role, but, yes. Maybe I'll be back to talk to you about the new role sometime.
I hope so. Why don't you share more about Mastercard services strategy and how Data and Services fits in?
Sure. So, our services journey has been at least a decade old, a little over a decade. It started with consumer cards and some of what we were doing in consumer cards. Things like, you know, benefits and insurances on cards, you know, marketing, consulting. It started there, but today it goes way beyond that. There's a lot that we do in services. Just for context, about 10 or 12 years ago, it was about a sixth of our revenues. It is now well over a third of our revenues. So that just tells you how fast it's growing. It's growing faster than core payments, and it's a material part of the company. And it plays two roles in our strategy. One is differentiation. It differentiates payments.
Like, when you think about services, we use them very often with our customers to grow their payments businesses, and when they grow, we grow. So things like, you know, acquiring customers, creating value propositions, marketing, you know, making sure that the customers do as much as they can, providing offers, loyalty, you know, fraud and risk services to protect the consumer for the customer and protect the customer. So a variety of services that differentiate payments and help grow payments. And then we have a bunch of services, just because we have the same capabilities, are they relevant beyond payments at our payments customers, and they're also relevant to new customer segments and new customer types. And so we're also able to diversify using our services and using services, almost leading with services, entering with services, and then getting to payments. So it plays two roles.
Now, your question on data and services. So when we think about services, it includes things like fraud and cybersecurity, analytics, advisory, marketing. In data and services, specifically, there are essentially five broad product categories. There's... The first one's consulting and innovation. We have, I would say, the preeminent consulting firm focused on payments globally. We also have a number of practice areas in things that we are strong at, in the technology areas like AI or crypto or, you know, loyalty-
Mm.
the things that we are very good at. We also have innovation services. So, you know, many years ago, we were innovative, so our customers came to us saying: "How do we become more innovative with your techniques?" So we provide those to co-create with our customers. The second area is, it's broadly insights and analytics. So providing, you know, benchmarking insights, real-time, you know, data to make decisions, building models and deploying them for our customers, providing software and service solutions like Test & Learn, so that you can optimize decision-making to maximize ROI. So that's the second area. The third area is marketing services, where we look at a consumer's life cycle end to end and help our customers. By the way, when I say customer and consumer, we're B2B, B2C, B2B2C model.
So our customer is that middle B, and their consumers is what we refer to as consumers. So consumer lifecycle marketing, from acquisition to, you know, deepening the relationship to making it sticky, which we do for our customers in partnership with them. The fourth area is loyalty, which, you know, as I was saying before, this business started with things like benefits and insurances on cards, as especially affluent cards. But today in loyalty, we go way beyond that with rewards and offers and, you know, redemption options. Like we have a deal with Expedia, where our consumers of our customers can redeem in the travel space. We have a lot of travel capabilities. So loyalty... and we have a proprietary platform. So loyalty is a large area.
And then, and then the very last one, the fifth one is, two years ago, we acquired Dynamic Yield. Very excited about that. It brings hyper-personalization into Mastercard. And yes, of course, they were doing it with brands previously. We continue to do it with brands, and that's growing really well, but now we're able to do it with banks as well. And so that's what's in data and services. It's a very rich and curated set of services that helps us both, differentiate payments as well as diversify beyond payments or lead with services into new customer types.
I guess building on that, could you provide examples of Mastercard services, of how Mastercard services help to reinforce your other strategic priorities, expanding into payments, embracing new networks?
Yes. So, you know, I should start by saying this is beautiful cycle, right? Where the more we grow in payments, the more it creates transactions and data for our services business. And the more transactions and data there is in services, the more we're able to create services or deepen our services, which enhance payments and grow payments. So payments growth and services growth have this, in a beautiful reinforcing relationship, which is quite unique from everything that I've seen in my, you know, in my lifetime. And so we use services to differentiate payments. So it's things like winning deals. We won UniCredit, or we won Citizens. Citizens went with us because of our open banking, our digital capabilities, our financial inclusion approaches, our fraud, our cyber, right? That's why we won that.
It helps us with the, I think there was a European issuer recently that wanted to enter SME in a big way, and so we helped them end-to-end from their strategy to their go-to-market execution. They're doing very well now in the SME space, and if they do well and their card balances and spend and GDV grows, and their revenues grow, ours does, too. It's very, you know, a symbiotic relationship there. You know, other examples, Financiera El Corte Inglés, we helped them go from closed loop to co-badged open loop. Huge value-add for them as well as for us. We helped Saudi National Bank go into credit by helping them underwrite credit. What they're trying to do is take the debit book and deepen their credit book with those relationships.
There's a lot that we can do using services to drive differentiation and payments quite effectively.
You mentioned that, that services were growing quite fast over time. What is the strategy to kind of drive growth? Is it, you know, how do you, how do you get there?
So as I was saying, this is, you know, beautiful reinforcement between payments growth and services growth. And when you think about the vectors for services growth, it's transactions, it is, you know, our existing capabilities to existing customers, taking it to new customers, developing new capabilities, leveraging our data. These are all the vectors of growth. The way we approach it, maybe I'll take a step back and just talk about how we approach it. We put the customer at the center and think about what opportunity or challenge they're trying to solve. And then we think about our services to figure out whether there is a way we can work with them to get them, you know, achieve what they want to achieve faster, better, more efficiently, more effectively. And sometimes the answer is one service, and sometimes it's a combination of services.
And the analogy I like to use is like Legos. I happen to have two sons, so know Legos pretty well. So, you know, sometimes it's, you know, one piece of a particular shape, color, type that is the right answer. Sometimes it's a group of them that you snap together to create exactly what the customer needs for that particular opportunity. And so that's really how we approach it. And, with the services that I was talking about, we go to market in different ways. In some cases, it's bespoke, where it's a co- in a conversation with the customer that's very targeted. In some cases, the service is right on our transactions, and our customers can consume it. In some cases, there's a software as a service platform where, once they couple into it, they can use it or call it with an API.
So the go-to market, you know, comes in many forms. What is the basis? You know, deep in it is trust and value. So we build the relationship with the customer. It's really important for us to create that trust-based partnership with the customer. That only comes if we can demonstrate to the customer and to ourselves that the services work that we're doing creates value for the customer, that we can articulate very clearly, and it's good for the customer and good for us. The other thing I should say, Ramsey, is what underpins our services and makes them very unique relative to the specific services they compete with, you know, the capabilities they compete with in the market, which is an entirely different set of competitors from the ones in our traditional payments business. What makes it unique is our data.
We see something like 140 billion transactions every year from 3 billion cards in 210 countries. That's a lot of data, and that's just in the card business. We have a lot of proprietary data. And then we have hundreds of third-party sources that we leverage to create, add nuance and color. And we've been doing this for two decades. So we use, you know, advanced analytics, machine learning, AI, to really create data sets that are, high quality and machine readable, and that's really important for analytics. And so, you know, that is really fundamental to our differentiation of our services relative to the services competitors that we are up against for those services.
Mm.
So it is, you know, that's what makes it truly unique.
Mm-hmm. And, I think the Mastercard's growth algorithm has, you know, services is a more important part of it. And part of that algorithm is now penetrating existing customers rather than just thinking of the model as just, you know, cash to card conversion, which is a critical piece of it. But in addition, now you have a penetration story. You know, how do you approach kind of further penetrating your existing customers with services?
Yes, penetrating existing customers, and by existing customers, we mean, you know, of the payments model. So issuers, acquirers, right, in the payments model. There's a ton of opportunity there. You know, we were recently looking at our services penetration across our top 50 customers, and on average, they have about two or three times the services for the rest of the customer base, of the traditional customer base. And, so that points to two types of opportunities. So of course, we can penetrate customers beyond that top 50 in many ways that we're working with the top 50 on, and we're already doing some of this, but there's a lot of runway.
To some degree, they need the capabilities at scale even more because they don't have the same scale the top 50 do. In addition to that, if you say average is two or three, you know, two or three x, and then you start examining those top 50, not every customer in the top 50 is using the same services. So when you look at the diversity of services that are being used, and you look at the needs that are alike, even in the top 50, there's the opportunity, if customer A is using a particular service to do something, and customer B has the same need, there's an opportunity to use, you know, the same service as the second customer. There's opportunity in the top 50 as well.
Mm.
We're doing a lot of this around the globe. So, you know, to give you some examples, Westpac, that we, converted. I mean, the initial services we provided was conversion assurance, when we won the deal with them, in Australia and New Zealand. They now use a variety of our services, from loyalty to marketing, to consulting, to, analytics, a variety of different services, to fraud and cyber. You take Bank of America, that uses a lot of our services; they recently started using, you know, Test & Learn. If you take, Axis Bank in India, they're using our marketing services. Worldpay is using, some of our fraud tools. You know, Citi and, Square are using Consumer Clarity.
So it just tells you the depth of opportunity here, both in doing more with our top 50 customers, and sort of looking at what, what resonates, what creates value, who has what needs, as well as continuing to extend it beyond the top 50-
Mm
where there's a real, even a deeper need. Because the access to the same capabilities, access to scale, is something we can provide uniquely as Mastercard.
And tellingly, I think you asked me to clarify whether we're gonna talk about existing customers in terms of categories of customers versus new customers.
Mm.
So maybe talk about how your customer base has evolved over time. You know, share maybe more about how you're going after new customer segments.
Yeah, and by the way, by new customers, I mean things like, you know, merchants beyond just the payments business-
Right
So retail and commerce players or CPGs or governments, increasingly governments, too, et cetera. And, you know, there are capabilities that we have that resonate with them, so things like Test & Learn or loyalty or, or things like Dynamic Yield for personalization or some of our cyber and fraud solutions, our analytics. These are all things that resonate with them, and we can help them, you know, grow their top line, grow their bottom line, engage more deeply with their consumers, innovate more, you know, keep their ecosystems more safe and secure. So there's a lot that we can do with them, and we are doing with them. So for example, we can do things like, you know, reduce cart abandonment in the shopping experience, increase the frequency of visits from a customer to a retailer, increase the basket size.
You know, understand what offers will trigger what kind of purchases so that they can, you know, make drive more revenue more profitably. So there's a lot we can do with these customer segments. Provide macroeconomic insights. We have a depth of insights from a macroeconomic institute, a Mastercard institute, which is amazing, and provide some of those insights. And so, so we're working with a lot of them. To give you some examples, you know, Saks Fifth Avenue does personalization with us, or, Dunkin' is using us for analytics. ALDI is using us for Test & Learn. So a lot of these folks are using a lot of our capabilities to drive their core businesses, and we're able to help them create real, tangible value.
Is the sales and distribution approach relatively similar? I mean, I know you have folks who face off against merchants, but is it an easy kind of a segue to say, "Hey, we're already important to your business from the network side, maybe there's some more, you know, more we can do for you?
Absolutely is. In fact, more we can do from the network side. Sometimes, like I said, we also lead with services. So the example I'll give you is Gap.
Mm.
Gap was a Test & Learn client for many, many, many years, very deep relationship. And as a result of it, when the co-brand opportunity came up, the co-brand for a decade has been with our competitor. And when a co-brand opportunity came up, it opened the door for us to go and win it, convert it, and bring it to the Mastercard brand on the payments side. So yes, we have the distribution capability to support many of these customers, new and existing, both in payments and in services, but in a way that's very linked to each other.
Is, is the sort of rhythm of when you sell in new, new services, is it linked to, contract renegotiations? Or is there sort of an ongoing, potential opportunity, maybe especially with the non-FI clients, like the merchants, to say, "Hey, here's something else that we can help you with"? Or is it more tied to, you mentioned co-brand, more tied to kind of contract renewal cycle?
It's both, it's both. Like I was saying, you know, there's obviously enhancing deals or bringing value to deals and differentiation, and that's around winning deals, either de novo or, you know, flipping them or contract renewals.
Mm.
We also, you know, in our consulting business, marketing business, we have bespoke sales, which could be done in the context of payments, also done independent of payments. We sell our software-as-a-service platform. I just mentioned Test & Learn at Gap. That's an independent sale of that platform to the client in order for them to use it to drive value, and that's true in loyalty. It's true in Dynamic Yield, for example, with brands and increasingly with banks that are using it on their websites. So we have a variety of different ways in which we sell. And of course, there's also our transaction-driven services, where we embed the service in the transaction, and then the customer can consume it, which is tied to payments. So a variety of these distribution models.
Like I said, they're linked together. The key thing is to make sure that these, you know, different touchpoints are linked very closely and reinforce each other.
As part of your, your services and solutions growth algorithm, you mentioned adding new services and solutions. If you could share more about the progress you're making here, that'd be great, and maybe also touch on, on AI, incorporating AI, including generative AI, in, into these services and solutions.
Yes. Let me start with AI.
It's a big question.
It's a big question.
Feel free to crack it.
Yes.
That's all right.
Let me start. It's a big question, and by the way, a big question with a ton of opportunity. As Mastercard, we've been, you know, in the AI space for over two decades. We use AI in all its different forms, you know, including generative AI. So when we say AI, it includes generative AI. In this recent reorg that I was talking about, we actually have created a new role across Mastercard for data and AI, that one of my colleagues has taken on, Greg Ulrich. It's important because there's so much going on across Mastercard, and it's all very exciting and dynamic. This is where some of the exciting and dynamic, both to enhance existing capabilities as well as develop new capabilities.
So let me give you a few examples, and, and these are all combinations of AI and generative AI. So, we recently launched in Dynamic Yield, a product called Shopping Muse. Love this product! So it, in Dynamic Yield, as you know, brings personalization. So what you're used to in your Shopify, in your Spotify or Netflix, is now available in your favorite retailer, right, or brand. And so it really personalizes to you as a consumer, relative to somebody else who might be using the same account in your family. So the generative AI Shopping Muse capability, I can go into a retailer and say, "Hey," I can look around. Maybe I'm going to a wedding in Miami in a month.
I can look around and say, "I need a new outfit." Maybe, you know, sort of navigating the site, I might find something. But I can also use Shopping Muse and say, "Hey, I'm going to a wedding in Miami in a month. I need a dress." And so it, it curates the dresses, and it, it also has a visual AI. What I mean by that is, sometimes with a retailer, an item is not tagged right. It could be a red dress that is not tagged "red" or "dress." And visually, I would say, "You know what? It's not tagged right, but it's a red dress," and tee it up to me. So it also, you know, it really curates it in a nice way. Another example is Smart Subscriptions. So we all, you know, I was just mentioning a bunch of streaming services.
We all have many subscriptions now. What Smart Subscriptions does is for a consumer, you know, create a single view of all the subscriptions you have, that your issuer can provide to you through the banking app. You can look at it and, you know, see what you have and what you want. But at the same time, we can also target offers to you. We can also target experiences, curated experiences to you, based on that information. So that uses a lot of AI. Those are product examples. Now, coming back to your question, in addition to sort of using AI and GenAI, or con- I should say, continuing to use it in all of our product capabilities and our services, whether they're payments products or services products, we're also using it internally. We're using it in our HR function.
We've always used it for a long time to make sure our resume screening doesn't have gender biases. We use it for matching, you know, jobs to people with skills. We have a platform called Unlocked that, you know, that automates some of the matching, and gives, provides employees more choices and also gives the hiring manager or the person trying to find talent internally, more choices. We use it for forecasting, you know, GDV, revenue, et cetera, in finance more accurately. And by the way, I should say, the product customer side of it and the internal applications also have linkages. So because we use AI so well in forecasting with our finance function, we're now using it with customers.
We, you know, have done work, for example, one customer comes to mind where we worked with them, and we created their forecast accuracy, improved it by tenfold. Now, I'm sure for all of you, that's wonderful because that means we can get you more accurate numbers. But, it's actually even more important to the company, because you can then run the company much more efficiently. Because if you can forecast better, you can plan better in terms of, you know, all your expense bases, et cetera. So, we're using, you know, AI and generative AI in many different ways. I should say that as we do it, one really important thing to keep in mind, which, you know, I think, we're very principled about, is the risks associated with it.
So, you know, we really believe in ethical and responsible AI. And just like in privacy, just like in security, just like in crypto, we're very principle-based. We start with principles and then think about how to apply them. And so while we want our employees to innovate and to leverage all these technologies as much as they can, both for internal purposes as well as externally in our product services and working with customers, we also want them to do it within guardrails and do it in a responsible way. So we spend a lot of time making sure that that risk management side of it is also, it actually needs to be ahead of the innovation. So, yes, that's a long answer to your question.
It's a long question. And then, you know, broadly speaking, what are the biggest opportunities for data and—for the data and services organization? That's another, another big, high elevation question, but what are you most excited about for, maybe not you, but for the, the next person to fill your seat?
Yeah, so the person filling my seat is Craig. He's, you know-
Craig
responsible for services. And, and I'm now responsible for commercial and new payments flows as of a few days ago. The one thing I'll say is, listen, there's a ton of opportunity in both. One thing I'll say about the Mastercard management team is, I think there are few companies where we can change seats like this and do it seamlessly, and there's a depth of, you know, management talent and leadership talent that is quite remarkable. It's a great team. So, yes, so I'm very excited for Craig because I see a path ahead in services that, you know, it's an established vector of growth. Like I said, it's gone from something like a sixth of our revenues in 2012 to over a third today, and there's tons of more runway for growth.
I'm very excited for Craig, and there's opportunity both in differentiating payments as well as in diversifying, like I was saying before. These businesses, you know, are very interrelated, so I will still be working very closely with him, he'll be working closely with me. We'll be working with our core payments leader. These businesses are very interrelated, but the runway for growth in services is... In some ways, it's established. It's an established growth vector. In some ways, there's a lot more distance to go, so there's a lot more growth left over the next decade.
And then, I actually wanted to go back to your generative AI comments. You know, a lot of investors are trying to think through the impact of generative AI on payments. And it's interesting the way you kind of described some synergies between what you're doing internally and what the sort of customer-facing piece is. But how—this is another massive question, but how do you see generative AI, you know, impacting, you know, the consumer payment experience? And I know it's early days, so very hypothetically, what could happen? You know, mass customization or much more accurate, you know, targeting or how should we expect to experience generative AI as consumers?
You know, I, and I say generative AI, and I want to come back and say all of AI, because generative AI is just one type of AI, and we mix it in with other types of AI. You know, yes, there are applications that are uniquely gen AI, but there are many applications, like I was giving you the Shopping Muse example, where there's different types of AI that come together in the solution. And I'd say whether in payments or services, it, it enhances the experience of the user, and it enhances the experience of the people providing the service as well. And so what do I mean by that? So internally, for example, when you're doing marketing, you can use generative AI to create, you know, the first version of the visual. It saves the creative person time.
For a consultant, it can create the first version of the document so that they can pick that up and iterate it. You know, it makes things like Epic and whether it's in payments or in services, it makes, you know, providing customer service that much easier and better, both for the person accessing the service as well as for the person providing the service.
Mm-hmm.
I think it'll make us more effective and efficient across the board, whether it's in payments or services, whether you're talking about Mastercard or talking about our customers. This stuff will, you know, enhance how we all do business, and it'll make it easier for consumers.
Mm-hmm. Maybe we can pivot over to your new role and, maybe first, tell us what the sort of mandate is in terms of what, you know, items inside the organization you'll have under your purview. And then, just talk about what you most look forward to there and the opportunity on that side.
Yes, I'm very excited about the opportunity. I guess the best way to describe my new role is it's everything in payments beyond consumer card, right, consumer payments.
Mm-hmm.
And so it's, you know, it's a commercial B2B accounts receivable management, AP/AR. It is disbursements, remittances, bill pay. You know, there's a whole collection of payments, businesses that have, you know, some of them are quite established and have a good growth rate. But what's common across the board is when you think about the addressable markets, the penetration levels are still very low. So there's a long runway for growth. It's a little like, you know, our services business 10 years ago, where it was a sixth of the company. These businesses today are much smaller with a high growth rate, and it's, we're here to unlock the growth and to make it yet another vector of growth for Mastercard over the next, you know, decade.
I think the two or three big areas are, one is commercial, and commercial is both commercial card. I think in 2023, we disclosed commercial card, that's credit and debit, was, you know, I believe it is 13% of our revenues, growing at 13%. When you think about that, there's a ton of opportunity in card, whether it's fleet, T&E, you know, SME cards, procurement, tons of opportunity. We're growing really well, but there's more growth to unlock. And then when you add to that B2B accounts payable and receivable and virtual cards, it is tremendous in terms of what one can unlock and what use cases today can get to be much more efficient, effective. There's sort of a secular shift there that, you know, we will be part of, and we'll be driving pretty hard.
So commercial card is quite exciting. Commercial payments is very exciting, inclusive of card. The second area I would highlight is remittances and disbursements.
Mm-hmm.
So, you know, today we can reach something like 95% of banked consumers globally in 180 countries and in 150 currencies. That's pretty big. And when you think about some of the use cases you can turn on there, which we're already working on, it's things like disbursements to gig workers. It's things like cross-border remittances, you know, from one country to the other, that a consumer can make. It's disbursements from governments. It's you know, loading wallets. It's things like you know, cashing out winnings. There's so many of these use cases we can go after.
Mm-hmm.
I think in Q1, we told you that our transactions grew by 40%. These are early days for these businesses. There's a ton of growth to unlock and a long runway ahead, and I look forward to talking to you about it, maybe in the future.
Fantastic. Fantastic.
GDV, sir. GDV.
Um-
Thank you, Devin.
Well, thank you so much. I think we're just about out of time, but a terrific conversation. Sounds like you have an exciting road ahead here, so thanks for being here, Raj. Appreciate it.
Thank you for having me.
My pleasure.
Enjoyed it. Thank you.