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  • Transcriber: Ivana Korom Reviewer: Joanna Pietrulewicz

  • Whitney Pennington Rodgers: Ajay Banga, thank you so much for being with us today.

  • I feel like this conversation is especially meaningful

  • as we're wading through this pandemic, it's late 2020,

  • and we've seen the way that inequalities have presented themselves

  • throughout this year, through this crisis.

  • And since you've been at the helm of Mastercard,

  • you have championed this idea of financial inclusion.

  • And so, could you start by telling us a little bit

  • about financial inclusion,

  • what is it

  • and why do you think this is something that can change people's lives?

  • Ajay Banga: Yes, look, I think that the COVID-19 crisis

  • has actually made things worse in some ways

  • and some of the advances that were being made

  • over the prior decade

  • on fighting poverty and fighting exclusion

  • have probably got set back a little bit,

  • just by the nature of the manner

  • in which the virus has impacted minorities and disadvantaged people

  • more than they have others,

  • including, by the way, minority-owned businesses,

  • a number of whom have had disproportionate impact

  • through the crisis.

  • But I guess if you pull back from the crisis,

  • because financial inclusion or exclusion

  • is an underlying social problem that dates back to well before this.

  • The real issue, here's the theory of the case.

  • Of seven billion people in the world,

  • close to two billion are either underbanked or unbanked in some way.

  • And what I mean by underbanked or unbanked --

  • unbanked is obvious,

  • they don't have a relationship with a banking institution of any type.

  • Of any type.

  • Now, underbanked is, even if they do,

  • they're not getting to participate in the financial mainstream

  • and do things that you and I take for granted,

  • which means being able to access credit

  • when you need it, at a reasonable price,

  • being able to access insurance

  • of the type that's relevant to you,

  • being able to do things of that nature,

  • save for a rainy day in the right way.

  • All that done in a form that's good for you as the consumer.

  • That's underbanked.

  • And so, a couple of billion people around the world,

  • this is World Bank statistics,

  • are basically unbanked or underbanked,

  • and most of those people

  • do not have a formal identity

  • that they had received or got from their government

  • and therefore, there's nothing they can take and hold out

  • to show when they go to hire a car

  • or live in a hotel

  • or take a flight, which they don't do,

  • to show that they exist in the system.

  • Their opinions don't count,

  • they don't get counted in censuses very often,

  • they don't get counted for their opinion of what government should be doing,

  • they get left out, they're locked out.

  • And the last part of that puzzle

  • is that this is too big an issue,

  • over the years,

  • for just a government to solve,

  • or for just one bank to solve in a country.

  • It does require, kind of, a bunch of shoulders at the wheel

  • to come together,

  • it requires partnerships across the public and the private sector,

  • but even within the private sector,

  • to get to make a real movement on this issue.

  • WPR: So if I'm understanding correctly,

  • it sounds like it's just an opportunity for people no matter where you are,

  • what your socioeconomic status is,

  • that you have access to financial services,

  • that you are part of the system and you have a place,

  • a financial identity.

  • AB: You have identity, you have a voice,

  • you have access to financial services.

  • So financial inclusion has got so many facets,

  • but the basic facet is be counted, be included,

  • be somebody, have the dignity of your identity,

  • and of being included.

  • That's really what financial inclusion is.

  • WPR: It seems like such a simple idea,

  • that can potentially have a big impact,

  • and I know that this is something that you've implemented

  • in your work at Mastercard,

  • but also we see this in many other organizations,

  • so talk a little bit about what does financial inclusion look like in practice

  • for a range of different organizations

  • and a range of different spaces.

  • AB: First of all,

  • you're absolutely correct, there are lots of people participating

  • in trying to change this.

  • And honestly, without that, we wouldn't get anywhere.

  • We're doing our bit,

  • but what we're doing is really in partnership with others,

  • because we're not a direct-to-consumer company.

  • There's nothing I can do to improve your life directly

  • in terms of being included

  • because I don't open bank accounts,

  • I don't give credit,

  • I don't underwrite insurance

  • and I don't have a way to provide you ways to save money

  • in a mutual fund or anything.

  • For me to do anything,

  • I need to have banks,

  • I need to have fintechs,

  • I need to have mobile phone companies,

  • I need to have governments,

  • I probably need to have merchants

  • and that ecosystem of the coalition of the willing

  • is kind of what you will see represented

  • when different companies talk about their role

  • in financial inclusion.

  • Let me give you a couple of tangible examples.

  • So if you're a farmer

  • and you've got to go to sell your produce when it's harvested,

  • you've got to go two days' way to the nearest village market,

  • well then, everybody knows that on the way back you're carrying cash

  • from the produce you sold.

  • That normally leads to bad outcomes.

  • Also, you've got to go buy fertilizer.

  • Or you've got to go back and forth to do all this

  • and you're really unproductive,

  • or you send your spouse to do it.

  • All that changes if I can connect you

  • with a phone

  • into farmers, fertilizers and cooperatives,

  • give you cropping information,

  • rainfall information,

  • enable you to sell your produce in a better marketplace, online,

  • receive the money into an account online,

  • that is a complete game changer.

  • Something again that farmer's cooperatives,

  • local governments,

  • banks and companies like ours can help facilitate,

  • in Africa, we're doing it in India,

  • we're doing it in a bunch of countries around the world.

  • Again, the idea here is to take you out of the cash economy

  • and give you access to an electronic economy.

  • Imagine that same farmer,

  • they now receive money for their produce,

  • a bank can look at how they spend money out of their account,

  • and could, using the spending and receiving of money,

  • underwrite you much better for a crop loan

  • than they could if they didn't know anything about you.

  • So the same example, another one,

  • is for small and microbusinesses.

  • Take a woman in Kenya or in India or in Mexico in a village

  • who opens a small shop outside her home

  • when her husband and children are away.

  • And it runs for a few hours in a day,

  • and she stocks a little baby food, and soap and toilet paper

  • and whatever else people buy there.

  • Well when the company van comes,

  • the Nestle van, the Unilever van, the local Bimbo Bread van,

  • comes to sell produce to her

  • on a Monday or a Tuesday or a Wednesday at a certain time,

  • she buys what she can in cash.

  • Typically, she's in the cash economy, nobody's given her credit,

  • she runs out of cash for that produce that she's buying

  • before the week is over.

  • She's out of stock. She loses sales.

  • Imagine if she could then be underwritten,

  • digitizing that supply chain,

  • what she bought, what she sold,

  • underwrite her in a bank

  • with actual transaction history,

  • you could lend her the 500 dollars

  • to enable her to be smarter about what she buys,

  • educate her on how to use her credit,

  • that's financial inclusion.

  • WPR: And so one thing that's really struck me

  • as you're talking through what financial inclusion looks like

  • and how it works,

  • is the dependency on technology,

  • on smartphones, on internet access,

  • and we know that this is something

  • that a lot of people struggle to have access to this

  • in developing nations, even in developed countries.

  • Talk a little bit about how this might in some ways increase the digital divide,

  • and sort of, how you respond to people who might criticize

  • this idea in that way.

  • AB: There are two topics you just came across,

  • the digital divide, which I think is a real issue.

  • But just to be clear, all the examples I gave you,

  • they work on smartphones and they work on old flip phones as well.

  • That QR code, if you have a camera on your smartphone,

  • you can take it,

  • but there's a numerical number there,

  • you could enter that number into your finger phone

  • and get it across as well.

  • Examples like that in Egypt,

  • where we've opened mobile wallets on phones,

  • they don't have to be on a smartphone,

  • it could be on an old phone.

  • So to be clear, these financial inclusion examples

  • do not depend on smartphones,

  • they do not depend on just internet access in your house,

  • you do need a phone, a cell phone,

  • in a number of the examples I gave you.

  • But in the case of the micro and small credit enterprises,

  • you don't even need a phone.

  • That actually is just the transaction history

  • of the produce you bought and what you sold getting digitized

  • and a bank being able to underwrite.

  • There are other problems of infrastructure in those

  • that we can talk about.

  • But to be specific about the digital divide,

  • I think that's another real big issue

  • and again, COVID-19 has actually, unfortunately,

  • exposed what was already sort of an issue in society.

  • So whether it's rural parts of America,

  • let alone an African or Indian or Indonesian or Guatemalan example,

  • in America, in rural parts of America,

  • broadband access is a problem.

  • Disadvantaged children in New York City,

  • who may not have access to the same bandwidth capacity

  • or computers that they need to be able to participate in education,

  • that's a problem.

  • And so, that's a separate issue, Whitney,

  • from the issue of some of the examples I gave you,

  • which I think can actually be operated equally well

  • with old-fashioned phones.

  • WPR: It seems like a precursor to this

  • is in talking about these partnerships with governments, perhaps,

  • is making sure people do have even access to a flip phone

  • or some sort of way that they can communicate

  • so they can participate in these initiatives.

  • AB: So I think a phone is transformational

  • and the fact is that there are many people in the world with a phone,

  • but there's still a billion people

  • who do not have the right kind of phone or internet access.

  • That's a different topic.

  • So that said, you've got to find ways to reach them too.

  • You can't only do it by phone.

  • So the example of those micro SMEs I was talking about,

  • they've got nothing to do with a phone.

  • Or for example, in South Africa,

  • with the social security administration

  • where the government gives them a certain amount of money every year

  • for their being not employed,

  • you can actually reach them through a biometric card,

  • which is what we've done,

  • with the government, the government collects your identity,

  • your biometrics on a card,

  • and we can load the card remotely