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