Digital Transactions Authoritative, insightful and timely information for payments professionals
Ajay Banga, chief executive of Mastercard Inc. for the past decade and the strategist who converted what had been mostly a consumer card network into a player in non-card and real-time payments, said Tuesday he will step down Jan. 1 as CEO. He will then assume the role of executive chairman of the board, according to an early-morning announcement from the company. Richard Haythornthwaite, the current chairman, will retire.
Succeeding Banga as CEO will be chief product officer Michael Miebach, who has been with Mastercard for the past 10 years. In the meantime, Miebach will assume the president title from Banga on March 1. Miebach was president of the Middle East and Africa region for Mastercard for five years, and before joining the company he had filled executive roles at Barclays Bank and Citibank. For the time being, he will continue leading the product department.
Separately, Mastercard on Monday said it expected effects from the global coronavirus outbreak to trim 2 to 3 percentage points from the first-quarter year-over-year revenue growth it projected Jan. 29, leading to a revised growth rate of 9 to 10 percentage points on a currency-neutral basis.
In a conference call Tuesday morning to discuss the leadership transition, Miebach and Banga both stressed Mastercard’s so-called multi-rail payments strategy will continue to unfold under the new leadership. Through product introductions and acquisitions, the company in recent years has entered or reinforced positions in such markets as government, account-to-account, and business-to-business payments, and has rolled out technology for real-time transfers in bill payments and payouts. To help guard against increased fraud risk, it has also added heft in security technology. Most recently, Mastercard scored a breakthrough via a joint venture to process payments in the massive mainland China market.
“Success is a team sport,” Miebach told equity analysts on the call, adding, “I have a view of where things should be going.” But the multi-rail strategy developed under Banga will only gain momentum, he said. “Our approach has been to participate in as many payment flows as we can,” he told the analysts. “We’ll be participating in more flows. Multi-rail, that was not the most obvious thing for a card company to do. I wholeheartedly endorse the strategy.”
Calling it “the right time” for a transition in top leadership, Banga, who assumed the CEO mantle in the summer of 2010, praised Miebach’s skills as a strategist and manager. “He understands what it means to add things that add value,” Banga said, adding his agenda from now until January is “to make this transition as seamless as possible. Michael knows the company and the industry well. He has a fresh pair of eyes, and will serve the company well.”
Though he’ll be stepping down at the start of the new year, Banga outlined some top priorities for the new management, including building on positions in real-time transfers and making further advances in security technology and non-card payments. “Now, our revenue profile is much more diversified,” he said. “There are more legs to the stool. That keeps the company on a healthy growth trajectory.”
Banga’s direction of the company has paid off for investors. Mastercard released numbers Tuesday indicating the company’s stock price has grown from $20.26 on Aug. 31, 2009, in the depths of the so-called Great Recession, to a $324.67 close on Monday.
Beyond reinforcing Mastercard’s diversification strategy, however, Miebach made no promises. “I didn’t come with crystal ball,” he said. “We’ll see where things are going.”
