Following is the text of the CEO of MasterCard Internationals
first address to his regional members:
ROBERT W. SELANDER
CEO, MASTERCARD INTERNATIONAL
MIDDLE EAST/AFRICA REGIONAL MEETING
Johannesburg, South Africa
July 22, 1997
Good morning. Its 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 hasnt 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 whats
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. Theres no reason it cant
... and wont ... continue.
By whatever measure you choose ... dollar volume ... number of transactions
... merchant locations ... or cards in circulation, were very
successful. Our volumes are two and a half times what they were five
years ago ... and were more than three times the size of American
Our future looks even brighter. As strong as we are ... as well as
weve 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 weve 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 worlds 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 theyre
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 its 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 havent 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.
Lets 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 dont
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 wont need to go to a store to make purchases. Theyll
be able to shop on an airplane ... a boat ... a train ... or from where-ever
their travels take them.
Thats 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
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 childrens
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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
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.
Ive found there is tremendous benefit from looking at whats
the same across the regions ... not at whats different ... and
relying on the folks who are knowledgeable about the local marketplace
to tailor things to meet their unique needs.
Weve been hearing the phrase, think global, act local for years
now. But I suggest a better slogan might be build locally ... support
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. Theres
the idea that if something was part of the past, it cant be any
good. That wont 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 wont 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 dont 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
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
- 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. Its 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
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 cant go further.
The second is that a competitor gets in position, takes advantage of
the incumbents 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
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.
Apples biggest mistake was that it didnt 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. Thats 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. Thats 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. Thats the
No one else has made such a strong commitment to its local members
... customizing products and services to meet your individual needs.
Thats the MasterCard Advantage.
No one is better prepared to face the challenges ahead, and lead our
industry into the new millennium. Thats 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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