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Executive Speechwriting
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Susan Goldman

2817 N. Burling
Chicago, IL 60657

Johannesburg, South Africa
July 22, 1997
Following is the text of the CEO of MasterCard International’s first address to his regional members:

Good morning. It’s great to be back in South Africa, and great to see so many good friends again.

I had the good fortune to visit this part of the world several times over the past three years, in my role as president of the Middle East Africa Region. And as a matter of fact, the last time I was here, Angelo and I danced with Zulu warriors ... and there better not be a picture of that behind me right now!

Obviously, my role has changed considerably in the past 100 days, as I have taken on new responsibilities as CEO of MasterCard International. For one thing, there hasn’t been nearly enough dancing going on! But as I look back at the three years I spent working in this region ... and the two decades in retail banking before that ... I am struck by how much the rapid and sweeping change we have seen over the past 20 years is really only the beginning ... a precursor to what’s ahead.

The world gets smaller every day, as we see staggering increases in global telecommunications and international travel that bring people closer together. We also see an increasingly sophisticated consumer ... and a massive migration of millions of people into the ranks of the middle class all around the world.

These people, with higher education and more disposable income ... are providing the backdrop for increasing economic growth. This growth, in turn, will feed unprecedented levels of pent-up demand for better living and working conditions ... and more goods and services.

This represents a tremendous opportunity ... an opportunity to grow further, and to establish ... and re-establish ... the unique bond that this association has with you ... and that you have with those you serve ... your customers.

The extraordinary shift to free markets ... all around the world ... will result in a borderless, world economy. Only those organizations with the vision, and the technological, financial and human resources to lead, will be able to take advantage of this coming opportunity.

At MasterCard, we are extremely well positioned to take full advantage of these trends on your behalf.

MasterCard has the vision ... and the resources, to not only take the lead, but to set the standard, starting right here ... right now.

Just look what we are today. Globally, we are continuing to see double digit growth ... 15 to 20% per year. There’s no reason it can’t ... and won’t ... continue.

By whatever measure you choose ... dollar volume ... number of transactions ... merchant locations ... or cards in circulation, we’re very successful. Our volumes are two and a half times what they were five years ago ... and we’re more than three times the size of American Express today.

Our future looks even brighter. As strong as we are ... as well as we’ve done ... there is still enormous potential. Whether in Europe, Asia, the U.S., or here in South Africa, the overwhelming majority of the payments business today is still cash and checks. But the potential opportunity for card-based payments is tremendous.

We are making sweeping headway ... in supermarkets, doctors’ offices, government agencies, and over the Internet ... but you can see that there are still many merchant categories where we’ve only begun to scratch the surface. Just think where we will be when we convert even more cash and check transactions to electronic payments on cards.


Today, brands are more important than ever, and they will only be more so in the future. As travel restrictions disappear and prices fall, and deregulation continues ... more and more people will make international trips. Already the world’s largest industry, international tourism is up more than 49% in the past five years. In fact, the Middle East has the fastest-growing tourism rate in the world.

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ally, they like to use brands they know ... brands they trust ... and brands they respect. South Africans like to use brands they’re familiar with here in South Africa. The same is true for Germans, Americans, Japanese, and so on. This all bodes well for our business, given our promise of secure access, any time, anywhere, and the fact that we have one of the best-known brands in the world.

In short, people are traveling more than ever before. And when they travel, they are looking for the MasterCard brand.


But what role, specifically, does the payments industry play in an increasingly competitive ... and increasingly global ... marketplace?

In the future, you will be able to move money to anyone, in many forms, from anywhere, more conveniently and with greater security. In the future, everyone will accept some form of virtual, or electronic, money.

Whether it’s big-ticket items like appliances, health care, tuition and mortgage payments ... or pocket change for fast food, taxi rides and newspapers, people will be paying with some form of virtual money.

Even in business, virtual money is beginning to replace slow, bureaucratic and antiquated paper-intensive payment methods ... driving a 400 billion dollar market opportunity worldwide.


Actually, virtual money is not really such a futuristic concept. When you think about it, we haven’t physically moved money for years. We are now digitizing the dollar, the rand, the pound, and the yen ... and moving them electronically ... just as we digitize sound and pictures.

At the end of the day, we are in the business of moving information.

Information. It all comes back to information ... and how we use it ... to satisfy both your needs ... and your customers’ needs.

Let’s just stop for a minute ... this is staggering: It took 2,000 years for all the information in the world to double. It took 50 years after that, for it to double again. And by the year 2000, it is projected to double again ... every year.

How can we take the fullest possible advantage of it, to help us serve our customers better?

How can we use this information ... and technology ... to get closer to our customers ... to establish, and continuously re-establish, that special bond? The answer is to turn information into knowledge.


To me, the magic of high tech is that it can help us be more human ... and provide a higher level of personal service.

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I believe that we are most successful when our business is a marriage of both technology and marketing. Technology allows us to personalize our marketing efforts ... to recognize our customers by name ... and accommodate their preferences.

Technology allows us to know more about our customers to make them feel special ... because they are special.

The more we know about our customers, the better we can build and develop new products to not only meet their needs ... but to exceed their expectations. And the more we know about our customers, the better we can compete.


You will hear a lot today about our expertise in technology ... but we must approach technology in terms of what it can do for you ... and what it can do for your cardholders and customers. If you don’t use technology ... wisely and strategically ... to your advantage ... you risk losing customers to your competitors who do see the benefit, and do take advantage of this opportunity.

As powerful as technology is ... it is not, in and of itself, a means of driving business. Technology only becomes valuable if we apply it in a way the customer values. It only becomes valuable if we are able to offer customers flexibility. And it only becomes valuable if we can assure customers of secure access ... any time, anywhere.


With this explosion in information comes an equal explosion in the use of computer power to digest and manage the vast quantities of data. And with the growth in computer use come new challenges for our business ... and new opportunities.

When I look ahead just 10 years, when my sons will be in their early twenties, electronic commerce may well be the single biggest distribution channel for the retail trade. It will give them an unprecedented variety of choices ... meaning that they no longer will go shopping because they have to ... but because they want to ... just as there are people who still go to the movies in an age of videotape.

But they won’t need to go to a store to make purchases. They’ll be able to shop on an airplane ... a boat ... a train ... or from where-ever their travels take them.

That’s because MasterCard has led the way in the establishment of open standards for secure electronic transactions. The SET standard, as we call it, will make commerce on the net even more secure, which will turn the Internet into a viable commercial environment ... giving you a new revenue source ... and a new distribution channel ... over the long-term.


Soon, nearly everything will be done on a laptop, or some even smaller piece of technical wizardry we can only imagine today. Just as hand-held calculators worked their way through the -rule generation ... that would be me! ... so will computers work their way through our children’s generation.

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Now I know that this level of progress will not happen everywhere at the same time. In some parts of the world, the infrastructures must first be created. But, at whatever pace the change comes, it will come.

You may ask yourself whether anyone will have to go to a bank anymore. If no one has to go to a retail store, what does that mean for acceptance? Scary questions ... and ones we must be prepared for ... to ensure that we will evolve to be not only what people need ... but what they want.


In the past 23 years, I have lived in 5 countries, on 3 continents, in large cities and small towns, all over the globe. What did that experience teach me?

First and foremost, I learned that jet lag is part of the job!

But seriously, that experience has given me unique insights ... as well as an understanding of the issues ... the challenges ... and the opportunities, inherent in the global financial services industry today. It also taught me that the way to build a global business is to be successful in many local markets. Not force success from the top down, but create leverage, and transfer success, from the local markets.

I’ve found there is tremendous benefit from looking at what’s the same across the regions ... not at what’s different ... and relying on the folks who are knowledgeable about the local marketplace to tailor things to meet their unique needs.

We’ve been hearing the phrase, think global, act local for years now. But I suggest a better slogan might be build locally ... support globally.

I have long believed that the best decisions are made close to the customer ... and that the closer to the customer we are, the more successful we will be. That means, I want to be close to you, as my customer ... and understand your needs and concerns ... and you want to be close to your customers ... as close as you can possibly be.


It is often true that the first thing that a new CEO does is get rid of everything that has to do with the previous regime. There’s the idea that if something was part of the past, it can’t be any good. That won’t be the case with me.

As one of the chief architects of the MasterCard strategy, I am committing to you today a renewed energy toward focusing on our strategy ... and executing it flawlessly ... Here in the Middle East Africa region, and in every corner of the globe.

That is not to say there won’t be any changes ... we must constantly evolve to meet the changing needs of the marketplace. Our strategy is in place. Our challenge now is to focus on the strategy ... execute the strategy ... and deliver.

I would like to see us be less reactive as a company than we have been in the past. I don’t want to wait to put resources in a given area until we have enough business to warrant them. Instead, we should put resources in a market as a leading indicator of what we expect ... and seek ... to achieve.

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We need to state clearly where we want to be ... and what we need to do to get there. And let us not fall into the trap of letting others define success for us. We will define success ... and we will measure our success by three dimensions:

First, how you, our members, respond to us. In other words, what you deliver in terms of market share.

Second, how you give us feedback on the programs, products and processes we provide.

The third and final success factor is how we manage ourselves as a business ... a business run as tightly and efficiently as any of our members ... a business with improved productivity ... a business with a pricing structure that reflects volumes ... and a business that produces earnings to sustain the association.


The question remains: how do we gain the greatest competitive advantage in this region ... an advantage that sets us apart ... and an advantage that clearly distinguishes MasterCard? We do it by focusing clearly on the markets ... the programs ... the initiatives ... and the members, that will be critical to our success.

If we focus ... and provide the right level of service ... and do it consistently ... we will kick the cover off the ball. No one ... no one ... will be able to touch us.


For direction, I look to our strategy ... and how it complements yours.

At MasterCard, our strategy is all about delivering. The four strategic drivers are:

- Deliver acceptance excellence

- Deliver best-in-class service quality

- Deliver profitable new ways to pay

- Deliver on member customization


We hold the broadest view of acceptance, which delivers us that competitive advantage. It’s our payment guarantee. For the cardholder, this means that the card will be honored by their merchant. For the acquirer and merchant, acceptance means that the payment will be honored by the issuer. And for the issuer, acceptance means that the transaction is valid and properly presented.

Ultimately, we will broaden and deepen acceptance even further to respond to demands for any time, anywhere access ... consistently ensuring the highest quality experience for all parties.

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Our competitors are in a whole different ball game. They are simply not in our league.


Best of class ... quality of service ... operations ... and technology ... these are a cost of doing business. We must deliver in these areas ... and we will deliver in these areas. Period.

But it is in the final two areas ... new ways to pay and member customization ... that we can truly distinguish ourselves from the competition ... all of our competition.

When we talk about new ways to pay, we have to consider not only our research and developments efforts, but also the potential to take advantage of the trends that will shape our business. When we talk about member customization, we know our members benefit from our local knowledge and expertise in the marketplace, combined with our global resources.

But when we closely align ourselves with your business ... staying close to our customer ... when we focus our resources on revenue-generating markets ... and when we truly understand the business drivers and performance indicators that are important to your business ... only then can we develop relevant, effective concepts into mutually beneficial, profit-making business opportunities.

That is the power of our strategy.


To make this work for both of us, we must stay ahead of change. And since change is a given, the only question is simply a matter of who will survive, and how much damage there will be along the way.

Whenever you have major change, two things usually happen. The first is that an incumbent hits the wall, stumbles, and can’t go further. The second is that a competitor gets in position, takes advantage of the incumbent’s stumble, and pole vaults onto the next plateau.

That is what happened 15 years ago with Apple and Microsoft. Apple was the leading contender ... breaking new ground ... leading the computer industry. Then Microsoft came along and said software was the way to go, while Apple stuck resolutely to a hardware solution ... with a proprietary operating system.

We all know what happened. Microsoft catapulted over Apple, with its open operating system ... available to anyone who wanted to write applications for it ... with a fee going to Microsoft for the privilege, of course.

Apple’s biggest mistake was that it didn’t learn from the experience of Gillette. Gillette knew ... and knows to this day ... that marketing success comes from virtually giving away its razors ... but selling the blades. That’s what Microsoft did with its operating system, and this is precisely what MasterCard will do with the MULTOS operating system we acquired with Mondex International.

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No discussion of new ways to pay would be complete without at least a mention of Mondex.

Henry Mundt will go into our chip strategy and the rationale for the Mondex purchase in great detail later today, but for now let me just state, firmly and unequivocally, that what we are doing is absolutely the right thing to do.

The louder our competition yells and screams about it ... the more convinced I am that we are doing the right thing ... and we have to do even more of the same. You should feel very comfortable that no one else has articulated a chip strategy that will define the next generation of the payments industry. That’s the MasterCard advantage.

No one else has set the standard with an operating system that is flexible enough to support both multiple applications ... and simple functionality ... and deliver it over the course of the next year. That’s the MasterCard Advantage.

No one else has made such a strong commitment to its local members ... customizing products and services to meet your individual needs. That’s the MasterCard Advantage.

No one is better prepared to face the challenges ahead, and lead our industry into the new millennium. That’s the MasterCard Advantage.

And no one ... no one ... has the vision ... the determination ... the expertise ... and the resolve .... to address ... leverage ... and own the future of money.

And that, ladies and gentlemen, is the ultimate MasterCard Advantage.

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