Mastercard Incorporated (MA) Earnings Call Transcript & Summary

Good afternoon. I'm Stephen Morris, the banking editor of the Financial Times, and I'd like to welcome you this afternoon to the latest event on our Global Boardroom series. We will be debating banking post COVID. Will the future be built on trust and technology? So I'll give a brief introduction to the topic first and then flip over to our 4 great panelists. So executives across banking industry worldwide have noticed a dramatic leap forward in digitization of finance since last March when the pandemic broke out globally, forcing many of us to work from our homes and access all manager of financial services, including almost all of our personal finances, completely online or via our phones. Now anecdotally, adoption was particularly pronounced against all the millennials, those who may have been resisting this process earlier on, including my parents, up until this point. So even more so before, technology is seen as the major engine for future growth in the banking sector. And I think the experience of the last year has really underlined that. You will have seen the comments of the new UBS CEO, Ralph Hamers, last week, talking about wanting to turn UBS into the Spotify or Netflix of wealth management and global finance. And while this raised a few cynical eyebrows, it shows you how seriously this type of thinking is being taken in global boardrooms, even in traditional institutions like UBS. So digitization also presents a big opportunity to advance global financial inclusion to those who are under-banked or unfairly excluded. But on the other hand, the industry still faces issues with trust, which is our subject today, trust around digitization and the loss of personal connection, now whether that be data privacy, security or the widespread adoption of AI. So my panelists were introduced before, and they span the financial sector, from traditional global banking giants and payment powerhouses, to vogue fintechs, challenging the established order in Europe and the West Coast of the U.S. And I've spoken to them all before, despite their healthy professional rivalry, they all seem very collegiate and all promised to get on well today. So let me remind the audience that you can ask questions at any time via the Q&A box on the right-hand side of your screen, and I'll do my best to ask them throughout the session and leave a little bit of time to bring them in at the end. You can also share your thoughts on social media by using the hashtag ftglobalboardroom, all one word.

So now I'd like to kick off with a very broad question to my panelists. As the business of banking moves online and becomes mobile, contactless, cashless, data mined and machine led, does this signal the end of the traditional banking model built on trust and loyalty? So Cathy, over to you first, considering one of your mantras is banking is built on trust. I'm going to start with you. Is this still as true in the modern digital world? And how have the changes during the last year of COVID affected this?

Actually, back to your earlier point, I think we'll all get along well today. As long as we don't reserve vogue or separate vogue from the notion of large-scale financial institutions. So I like to think that can be an end. Trust and technology go hand in hand, and they have to be delivered together. It's not an or. Our marketplace has changed dramatically, as you've said. And I don't view it anymore as pushing digital adoption. I view it as accelerating digital demand. We've seen double-digit growth in our utilization of every single digital channel that we have across every single client base. Our thinking, though, is this. Technology is the journey. It's the delivery vehicle. It is not the destination. Customers and clients are the destination. And trust and high-value capabilities are what we deliver through the technology. So if I was saying it simply in a large audience, I wouldn't say, high tech, high touch, but the tech definitely enables the advancement of the trust and loyalty relationship and the deepening of the discussion and the conversation. It doesn't take away from it at all.

Now next, I'm going to bring in Ajay of Mastercard. Now Mastercard is always experimenting with new authentication methods. Most of us, probably all of us here will be clients. So from your perspective, how does this sort of technology and trust nexus progress from here? I mean do you actually see it increasing trust by helping us authenticate ourselves better than even in the past?

So Stephen, I think what we saw in the last 12 months was a multifold acceleration of digitization, and it's happened in every single space, from banking to retail. Everything is going to digitize. And I think you said that earlier that many people who are reluctant to get into doing, let's say, digital groceries, everybody, really in the last 12 months had no choice, had to accept it, embrace it. And it's worked absolutely well. It's actually remarkable that the world moved on very, very successfully. Yes. There are a lot of issues in terms of people not being well, and that's very, very sad. But in terms of economies moving, it all moved, and that happened because digitization and the technologies behind digitization were able to create trust. So as the world moves on, I think as we go to normalization and the world comes back to normal, many of these habits which people have now tried are going to stay on. And in that world, in the future world where everything move toward digital, trust is going to be the most important thing. And I would say it's really not about technology. It's about really creating technology that solves real-world problems for people. And by doing authentication or by doing digital identity, we are able to solve many issues, which arise in the digital world because you're not present physically, which means trust in technology has to be of a different level because you can't see the person with whom you are transacting. So being able to identify someone through their devices, through authentication, through digital identity, through biometrics, through KYC becomes extremely important. And we've been investing in a very big way in these technologies, and these technologies have actually really helped in the last 12 months, helped the world carry on paying normally and do all these transactions. So I think as we look forward into the future, the importance of these technologies is even more important.

And the people that I mentioned before, you have been more resistant to it. When you do surveys and you ask for asset use, are they learning to trust this technology? Are they now accepting the fingerprint or face recognition can be just as good as a signature?

Yes. And most of the studies that we are doing, consumers are actually embracing these technologies, and we are finding this globally. We were actually finding that globally, even before the pandemic. Now it's accelerated because I think all segments have just experimented, tried. Like if you can't get out of your house, you want to buy something, you want to make any payments, you got to try these technologies. And if the experience is good and you can trust them, you don't have disputes, then you rely and you do that again and again. And if you notice, these technologies have been embraced across. Like medical technologies are getting delivered on this. Your government services are getting delivered on digital technologies. So it's created trust in technology, which is actually very, very good because it will help the world become more and more productive as we look at the future.

Yes. Now I want to bring in one of the aforementioned vogue companies. Max of N26, you've been growing very rapidly in recent years after young people's demand for branchless, intuitive phone-based, app-only services. But with no face-to-face contact with your customers and no branches or any frontline staff and comparatively little track record compared to older institutions, how do you approach building trust?

Yes. First of all, like full agreement with the other panelists that trust and technology aren't at odds with each other. Like for us, it's also something that's naturally fundamental in banking, and it doesn't change whether you provide a service via brick and mortar or via a smartphone like -- and my company, N26, is doing it. How do we trust in a digital environment? Like, first of all, like there are some aspects of it that have not changed like compared to the past. It's about predictability. It's about like keeping the promises you make to the customer, which is the same like in traditional space as well as it's like in an online space. Like service orientation, reliability, like all those aspects that have not changed. But if you think about like in terms of building like a trusted brand, which, again, in banking is very important, traditionally, banks would have invested millions and millions in euros in like brand campaigns. I think, today, it's actually in a way, it's easier to build a trusted brand. For our customers, it is much more important that they are exposed to the product by their friends. People are talking about it like it's rival element, and they check it out. They go to the app store. They find a straight 5-star rating. And then obviously, they get to the process to become customers and then have a great user experience, which is important for them, much more important in terms of building like a trusted brand. Perhaps one thing to add also like really related to the question, I looked at the study recently, I think, was the Edelman Trust Barometer and learned from there that in the last 10 years, if you look at what's the trusted industry by customers, actually technology was quite like on the top, and the financial services were at the bottom. So clearly, technology can be an important way to build trust rather than something that works against it.

Yes. Thank you. Now Colin, you'll have quite an interesting perspective because you started your career in more traditional banking industry in the U.S., but you now run a Silicon Valley start-up, first a fintech company, together with a U.S. national banking charter, and actually try and take on the more traditional banks in their core business. So over the past year during coronavirus, how -- have you experienced the changing customers and their expectations from their banks, specifically with regards to digitization and trust?

I think COVID has been a massive accelerant in terms of adoption of digital technologies across many industries but certainly in banking. And the only thing that I would maybe add to comments that some of the other panelists have made is that for -- this vast group of consumers in the U.S. who have been underserved by the traditional banks, simply because the economics haven't worked for them, they are moving very quickly. So I believe we're reaching a tipping point, and we would estimate that there's about 30% per annum growth over the next few years of consumers that are just seeking out better solutions because, as we've talked about, trust is the largest currency we trade in. It's the primary currency. And consumers want to trust that their money is going to be safe. It's going to be taken care of. They want to trust that they can access their funds and their financial well-being and various aspects of their financial life anytime they want. And so mobile technology is certainly helping with that. Trust is about not being nickeled and dimed along the way and being charged lots of fees every time they fall below a certain threshold or they fall short in their checking account. Trust is about working really hard to make it easy for customers to save and to invest and to borrow and to build their credit. And trust is really, in many ways, about ensuring that the financial institution has the customer's back. And I think that with the emergence of new challenger brands and banking institutions that can provide the full suite of capabilities for consumers but in a trusted digital platform that sort of checks all those boxes, we're seeing, like I said, kind of a tipping point happening and massive growth towards digital banking.

Yes, yes. Now the flip side of that issue of trust is of course security of online and digital data. And this is increasingly becoming a big concern as people have pointed out just how much of our lives we're putting out there online, potentially permanently. One example in banking will be collecting and sharing data to market more personally relevant ads or financial products. How do you do this as 4 very different financial institutions without compromising on privacy protection and the feeling among customers that they can actually trust you with their personal data? Now Max, I mean, N26 and other rivals like Revolut and Monzo will have these stated ambitions to become financial supermarkets and to provide ultra-tailored, personalized advice at different points in someone's life or even where they are during the day. So how are you approaching balancing privacy and providing new financial services to your customers?

Yes, absolutely. First of all, like data, like technology can and should be used for good. So it means like using data for me means like creating an experience that is personalized in the right way. If you think about some of the great digital companies, like Netflix and Spotify, the content is actually extremely personalized, like based on the usage data of the customers. And like for N26, I see it the same way. Like everyone should see their own version of N26, where relevant content is displayed and irrelevant content is not shown. Of course, there needs to be a clear differentiation between product recommendations within the banking experience and ads from external partners. So that's something we should mix like in the same discussion, also something like also we like at N26 and probably like most of the other like institutions represented here, would actually never do it.

Yes. Okay. Now Cathy, you might have a slightly different customer base to Max. How are you kind of approaching this potentially touchy issue, protection and trust with customers' data?

Well, we are 100% built on a relationship concept. We are not a product per or the next actual sale-motivated entity. We're about needs and solutions. And using the technology to deliver solutions better, faster, more cost effectively is a really important part of getting the model right. We don't sell data, and we don't share it in a way that causes products to be marketed by others to our customer base because we believe they have to believe that we trust and treat their data exactly as they would do that themselves. Now, no kidding, all of us have given away way more data than had we known how it might have been used, we ever would have given away. And how many times are you in a meeting or in a room full of people and someone says, "Wait, was someone talking about that pair of shoes? And how did that show up on my phone?" And so there is a continuum here from responsible use of data where that data makes the experience better, as Max said, and where it makes it safer and what I think of personally is the creepy factor. And our customers will change over time as they understand and they'll -- as they understand how their data is being used, and I believe they will differentiate providers based on their confidence that their data protection is as much as they would choose for themselves.

Yes. And we're seeing that in technology companies. Like Apple are running this whole campaign now, which is causing a bit of controversy along that regard. They're seeing it almost is a competitive advantage for them, the way that they're going to use your personal data. Ajay, I just want to bring you in on the same issue as well. I mean Mastercard sees trillions of transactions, probably more every month, maybe every year. Maybe I've got my numbers a bit confused there. But you've got an extraordinary amount of customer information at your fingertips. I mean how are you kind of approaching using this and reassuring your customers that it won't end up in the wrong hands or with the wrong actors?

So Stephen, you raised a very, very important question, and I think it's, again, very clearly linked to trust that you create. Because if you don't handle consumers' data, consumers' information properly, you're not going to be able to build the trust. And in today's world, there is so much rich innovation and technologies available, and they're changing constantly, that this is a -- it's a very important part of developing any new solution or product that we do in the company to ensure that we've created in such a way that it creates tremendous confidence in our customers and consumers. Now I think it's in everybody's interest that as the organizations, when we create anything, we do that well because it's not one organization that creates trust. It's -- everyone who helps build this entire trust in the whole ecosystem with consumers. But I'll give you an example. We have identity solutions, and that helps consumers to prove their identity seamlessly and securely in physical worlds and digital worlds, can help consumers open a bank account, do digital transactions. And when we develop these solutions, the framework with which they are developed is very transparently shared. So when we introduced the model of digital identity, we established a very clear consumer-centric framework of principles or bill of rights. And then we created the entire product solution based on that design, very, very transparently. And the model is based on a decentralized approach, which -- with users in control of their data and identity. I'm just giving you an example to bring into light on how organizations can be very transparent and share it with everyone that this is how we are creating. And if everybody starts doing that, then actually, you create the trust in the ecosystem, and then consumers trust technologies.

Yes. And people are embracing this digital identity you're offering?

They are. We just started it very, very recently. We have been investing significantly in it. In fact, we announced the acquisition a few days back in this Phase 2. It's an area -- again, it's a big consumer issue. Because as consumer, we are constantly all proving our identity, whether to open a bank account or to access any government services. When we all know it, we all go through it. And we believe that this service will actually solve a major consumer pain point.

Yes. And Colin, just finally, on the same issue. I mean, within Varo, do you use data to provide more personalized real-time recommendations? And what kind of reception does that get from your customers? Is it something that they want? Or is it something that Cathy said that they can find a bit creepy sometimes?

So -- well, first of all, I want to build off a point that Cathy said in that we take our role and responsibility in safeguarding our customers' data very seriously. We've invested heavily on data security and data governance, analytics. Thinking about how we use our data, we do not share data with third parties for marketing purposes. Like any offers and experiences in our app, we carefully curate ourselves. But our customers do trust us with a lot of information from a variety of sources. It could be the digital identity as they're onboarding. It could be as they decide to make us their primary bank account and information about how they're using products. It's when they make decisions that -- around how they want to access credit or build credit or start savings and going on a savings journey. And it's very much about deepening our understanding of the journey and how we can use that data to most responsibly help find solutions to the problems that they're facing and sort of advance them into the next stage of their financial lives. And so that data is a tremendous asset, but it's also a huge responsibility that we have to focus on delivering against our mission of creating greater financial inclusion and opportunity in the banking system. And so it's something that we use our data very carefully, and we think about how to provide personalized insights, how to be able to provide the right product to customers when they need it. And it's something that we just all have to be very cognizant of because the -- it's table stakes, but it's also something that there's a lot of bad actors out there that want access to it. So it requires an intense amount of attention and diligence to taking that responsibility seriously.

Yes, indeed. Well, I'm going to ask a question from the audience now, mainly because I've got 4 on basically the same topic. Somebody -- one of our virtual audience asked today, do you see blockchain applications as a way of establishing trust in a digital environment? I think we'll go to Ajay first on this one.

So I think as the world evolves, as technology evolves, I think blockchain has been tried very, very successfully for many things. And it's worked very, very well. We, as a company, have a lot of intellectual property in the space. We are investing very heavily in the space. I think over time, we will discover what all industry applications, does it actually successfully handle. Because technology is good. We all know it. But I think should it be replacing everything? Should it be replacing a few things? And those use cases are all evolving as we can see the -- some of these use cases have worked very well in the digital currency space. We've seen that work very, very well in the identity space. And I think as more investments go into blockchain technology, I think we will find more use cases in the technology. So I think it's a very, very promising space.

And Cathy, what do you think?

Well, I may have a slightly contrarian view to that. We do have a lot of intellectual property in the space, something like 60-plus patents in the use of blockchain or distributed leisure technology. In financial services, I think it's important to point out that we've been using digital transference of money and digital transference of documents and documentation with third-party verification for years and years. Think about the mortgage title insurance process. We transfer the money, and there's a centrally trusted repository for the documents that come with that kind of capability. So it's not new to us. And I -- the reason I'm a slight bit of contrarian is while I embrace and love and see lots of application in lots of spaces for blockchain technology, just not sure it's in financial services. We have scoured the planet, scoured internally frontline units, product head, talked to almost every third-party vendor that we could talk to just say, "Show us a use case. Show us one use case that potentially could change something we do and deliver something better than what we can deliver at scale." And because of the long-standing electronification of the movement of money and movement of documentation in banking, I think it's a great technology. But for financial services, we'll be ready, but we haven't seen a use case really materialize at scale.

Yes. That's interesting because I've always been on the lookout to write about the first time it replaces a major banking system, and we see it used for a lot of cross-border transactions, commodity trades, but the amounts are always very small, more so test cases than billions or trillions over longer periods. Max, I just want to ask you the same question. I mean have you ever considered using blockchain as part of your company? Do you think some kind of centralized laser as a way of establishing trust in an always completely digital environment?

Actually and interestingly, like a similar answer to Cathy, we have actually looked at it. And one more time, like when it comes to trust, it's about predictability, service orientation, also -- and also security, and we are happy for any technology solution that enhances that. But so far, we are not applying blockchain technology in any of these.

Okay. Colin?

So I'm going to be the contrarian here, I guess, and the other extreme and say that I started Varo because I wanted to shed that banker skin and think of the world through a consumer technology lens. And so I would say we are exploring some really interesting ideas around how to use distributed ledger technology to embrace our community and to sort of build different ways for our customers to interact. So it's -- I don't want to say too much, because it's very early days. But we see an opportunity to think much more like a consumer technology company in terms of how we really lean into some of these new technologies and how consumers are thinking about them and how they want to manage their finances and also the interactions that they have with other members of the community. So anyway, I'll leave it at that and say stay tuned.

If you can't provide us any more information.

Just a teaser.

I don't want to give away a competitive advantage.

That's right.

Okay. So the next other question in mind that I want to move on to is looking at sort of 2 strands. Obviously, there's a continual of financial services at the moment. Over the last year, things have become increasingly competitive and disintermediated in banking. So the question is sort of in 2 parts. What tactics and strategies should older, more established financial institutions adopt to stay as relevant and agile as they can to keep pace with the new entrants coming in, not just in sort of mainstream financial services, but also sort of the payment side of things as well? Even wealth management, we're seeing disruptors come in there and challenge the old, established Swiss banks and Morgan Stanleys. And just as a corollary, I'm always told bigger is better in banking, and that's still kind of true these days, but maybe the panel doesn't agree that that's the case. So Max, I think we'll go to you first on this one. I mean what are you seeing? Do you think bigger is still better in banking? And do you think your large arrivals are as agile as you are?

Actually, I think the rise of digital challengers, like in banking but also in other areas fintech, actually shows us that bigger isn't necessarily better. I believe like better is actually better. N26, this is not size. This is about like speed, customer centricity and flexibility as you look at it. Otherwise, the fact we are still like compared to traditional banks, a small company. We have 1,500 people on the team. We are present in 25 markets. The fact that we're actually part of this discussion today is much more established and definitely much, much bigger players is actually a proof that you don't need to be like bigger to be relevant. I think in like 100% digital space, this actually allows us to scale like quicker and more efficiently. And I speak for N26, I think that's important. It is not about having a big branch network. It's not about CEO salaries. It's not about having like great offices in the heart of financial districts. For us, it's more about really changing the nationalistic like structure of banking, so we can bring our banking experience across borders.

Yes. And do you think, just with your experiences, so far, of running the company, I mean, obviously, I mean, let's talk about the U.K., where I'm most familiar with. We have 2 large banking start-ups here, Monzo, Revolut, others in the business banking space like Starling. Whilst they're doing very well and they are growing quite rapidly, they still haven't made that big a dent in what we would call sort of the big 4 or 5 consumer, mortgage, small business banks in the U.K. to the extent that a lot of them are asking for the government to have a look at this and allow them to be more competitive. Ultimately, do you think that you're able to compete with these larger players with millions or tens of millions of customers that have this established profitability and these huge tech budgets to steal your best ideas.

It's an interesting point because you see this massive shift in user behavior, obviously like a shift from off-line, people used to go to the bank branch; to online, people starting to do banking on a browser; to mobile, people started to mobile banking. But this transition is way slower than in pretty much any other industry. Us -- from booking all the travels in the travel agency to us booking all our travels online, this was like a development of 5 years. From us buying our CDs in a record store to us actually downloading everything online was a transition like 5 years. And in banking, you have this massive transition, but it is a much slower one. But I very much believe that in the next years, you literally have billions of customers on the market that are still banking -- it's true for the majority of people worldwide are still banking with the high street banks. But a growing number of customers, in most of these cases, doesn't have access to a great digital user experience, and they're paying fees for branch network a growing number of customers is not using anymore. So I definitely think there's a bright future to challenge us everywhere on the planet.

Yes, yes. Ajay, as one of most senior people at one of to these global titans, I mean, in a sense, I guess, Mastercard has always been a fintech company in a way. But you have so much innovation and so much huge valuations of new payments and players in the payments industry, a lot of whom use your rails, but some are trying to challenge that as well. I mean how -- are you worried with all these new pipelines and ways of transferring money being created? How do you keep your established advantage?

So I think, first of all, the whole financial services space is changing in a very, very big way because of the overall digital adoption. And it's not only banks. It's -- if you look at even the central banks of the various countries, they're looking at launching central bank digital currencies. So the way the world is today and the way the world of future will look will be very, very different. And I think it's not even a question of banks, whether a bank is small, whether a bank is large, I think any bank in today's world cannot ignore of what -- they could be big. They could be small, but they all cannot ignore this disruption and have to embrace these new technologies, whether it's artificial intelligence, biometrics or digital identity. We spoke about blockchain and all of these other new technologies which are coming in. And as far as we are concerned, frankly, for us, the way we always believe as an organization, we are an enabler for all these organizations. We are the rails. And for us, the digitization of the world is actually a very -- very good for us. And I think in the entire piece, as the world evolves on digitization, I think the important piece I would say is what is very important is to keep the consumer focus. Because really, all these big, small banks or all of these new investment applications, they are really doing well because they have a consumer focus. Yes, they are using technology, but the fact is they have used technology to make it so easy for consumers to open a bank account, we heard from my fellow panelists just now, or to open investment accounts or to do anything else. And that's what has to be the key focus, and that's been our focus at Mastercard, too, that we want to make sure that our focus on consumers makes sure that we provide one of the best consumer experiences. And that's what we are very, very focused on.

Yes. Now Cathy, I want to ask you, I mean, is bigger still better? And how do you explain the slower transition of consumers in financial services away from older models to all digital newer ones?

A couple of thoughts. First of all, I agree with everything that's been said about the importance of staying focused on clients and customers. And that is possible, not based on size of institution, but on the quality and capabilities that those institutions can project into the marketplace. No individual customer or client actually cares if they are $29 million,or whether they're $2 million. It is what is their own experience that makes the difference. Now if you think about what clients and customers want, they want great capabilities at speed delivered into the marketplace. They want them to work flawlessly and be resilient even in times of crisis, and they want ironclad security and protection. There's probably 10 other things, but just pick those 3. Those all take investment. And one place where bigger is very helpful is on the quality of investment and the ability to have large-scale talent and large-scale innovation thrown at those things that customers and clients want. We've been running a new development, not running the bank as it is, not our operations, capabilities, but new development budget of roughly $3 billion a year for the last 10 years. That's $30 billion into capabilities, resiliency, flawless execution and security. And I think it's why our customer satisfaction is at an all-time high, why our customer retention is literally at an all-time high. And there's room for every size company in the marketplace, there's no question about it. There are roles for all of us to fill, but there are places where scale is important, and we believe we've got a winning combination for that.

Yes, yes. Now, Colin, I just want to move on to the next topic and bring you in on that. And that's about something that all 4 of the panelists have mentioned today already that we haven't specifically addressed, and that's kind of the promise of AI. Obviously, the combination of AI, technology, digitization and finance can be a force for good for financial inclusion, but also people are very worried about the unintended consequences of this. Machines ultimately learn from behavior of people, and there are concerns that something like racial or gender bias could actually be counterproductively made worse in terms of inclusion in financial service because of this. So I just want to get a sense of how all 4 of your institutions are approaching this potentially thorny but also quite promising technological development. And Colin, you've mentioned inclusion a few times as one of your main objectives. So if we'll start with you, please.

Sure. So -- and I also kind of going back to wrapping the broader theme of how technologies are enabling greater financial inclusion. It's -- there's the confluence of mobile and AI, machine learning, cloud-based technologies that allow speed and agility and rapid iteration. It allows us to have a hyperefficient cost structure so that we can actually pass much more product value back to our consumers because we can operate at a unit cost that you just can't see it in the legacy banks. And there's no -- it's just a different business model. I mean I chose to pursue the path I pursue because I felt like a new build was a lot easier than a renovation, trying to fix all the things that Cathy is having to deal with. I'd let her do that. I left that behind because it was so...

And I love it. I love it, by the way. I love doing it.

That's good. I'm glad to hear it because it's like -- but so for me, it's about starting from scratch with clean data. We, as I mentioned earlier, have invested in data governance and really thinking about our data security, but also on the AI, machine learning side, is we're building algorithms, thinking about model governance, thinking about model validation, thinking about explainability, which are all really important. I mean we're an OCC-regulated bank. So as we are developing tools to help our customers improve their financial lives and be able to offer solutions that many consumers have been sort of systemically left out of the system because for various reasons, because of racial and gender bias. And now we can eliminate a lot of that bias, but we have to be sure that we don't sort of replicate it in a digital context. And so making sure that our models are, in fact, working as designed is very important. So we have put the investment into making sure we have those controls and guardrails in place as we're innovating with new technologies and new AI capabilities.

Yes. And now, Ajay, it's strike to me that you're probably utilizing AI perhaps the most of anybody on the panel, partly to detect kind of fraud, other types of prying as well, but presumably, also, just kind of fine-tune your user experience. I mean what's your kind of view on the kind of benefits of this versus the potential negative unintended consequences? And how are you approaching it as a multinational?

Yes. So Stephen, innovation has to be good for people. Otherwise, introducing new technology is of no use. And AI is a phenomenal technology which can change the way human beings live, and it's making a big difference in many industries, not only in financial services. And the way we address it is to look at the fundamental design stage of the systems and solutions as we build them. And as I said earlier, trust cannot be an afterthought. So when we build anything using AI, we make sure that it's built in such a way that it's transparent. It's secure, and privacy and confidentiality is maintained. Many studies have actually proven that consumers trust companies whose AI is understood to be ethical. Study after study in the AI space is proving that. And we can see a lot of governments are becoming very active in the space. We've just seen regulation coming out of the EU. We are seeing this as a very, very active topic, and it's very, very important that AI actually remains fair. So we create progress in society, rather than creating biases in society. And if you just look at from a value perspective, like you said earlier, we are heavy users of AI. It's embedded in our network. Billions of transactions that pass through our -- to our network are all screened using sophisticated AI. Just in last year, we stopped $20 million in fraud using AI technologies. And in the last 3 years, we've stopped more than $20 billion of attacks on cyber infrastructure. So AI technologies have been very, very useful. And I think as organizations invest more in these technologies as the world invests more in these technologies and as governments look at more regulation in the space, I think it's up to all of us here to make sure that we use AI in such a way that we progress society and create a fairer society.

Yes. And I just want to quickly bring in Max and Cathy on the same issue as well, perhaps Cathy first. Have you -- I know that Bank of America is increasing its use machine learning a lot. At the moment, how are you looking to balance its potential and pitfalls?

Well, first of all, again, in financial services, we've been using data and applying algorithms for a long time. It is fair and true to say now we can store and move a lot more data, and we can compute at a much higher capacity. And so we have a lot more capabilities to use data to create insights, which is what it's all about. Our belief has been, it's important to build the safety, engineering, the safety architecture in advance of utilization of AI. And we use it very aggressively. We think that -- or very extensively. We think that it's a huge part the future of the growth of the firm, but we choose to use the term responsible AI and have built the responsibility part in advance of at-scale deployment. So we run governance and testing disciplines that have second and third-line oversight. We were one of the first financial institutions to actually have an AI policy which differentiates between what AI can do and what it should do. And I think all of those things are very important, but it's that responsibility infrastructure, and I don't mean technical infrastructure, that responsibility mentality that says just because it's called AI doesn't mean it's necessarily good. And until proven good and proven bias-free, we're unwilling to deploy it.

Yes. Okay. And Max, do you have any thoughts on this issue?

Yes, absolutely. First of all, inclusion is, for us, extremely important. I think it's one of the things we really stand for at N26. And if you think about the business we are doing, like when it comes to financial inclusion to how like you enhance financial literacy of the customer, how you like -- the impact you can have on the people's life, I think it's something that really, really we are passionate about. I think it's also clear that we cannot hope the technology alone can solve like all the historical and societal issues that we're having. I think we need to recognize that technology presents an opportunity and where we need to do a little more. Like when it comes to AI specifically, like whether it's in the data set, choosing from machine learning models or in the interface abdication of AI, that can definitely -- buyers can definitely like creep in. I think AI will then inherit and likely amplify devices like in the context it was created. I think we really need to think about like how we can combine technology and machine learning on the one hand side with human intelligence and validation. What is also, for example, we're using at N26, machine learning and AI our customer service and very much rely on this kind of mix, have the technology on the one hand side and artificial intelligence but also like constantly check it and verify it with human beings on the other side.

Yes, yes. Well, unfortunately, I think we've pretty much reached the end of our time now. We managed to get through most of what I wanted to discuss and quite a few questions from the audience as well. So all that remains for me to do is thank all 4 of our speakers. I'd remind the viewers that this will be -- the session will be on demand on the FT Global Boardroom website, and you can share it online if you found it interesting with your peers. And with that, I'm going to hand back to the moderators in the FT studio. Thank you.