The following is a conversation between Shamina Singh, President of the MasterCard Center for Inclusive Growth, and Denver Frederick, Host of The Business of Giving on AM 970 The Answer in New York City.
Denver: Try to imagine your life if you are completely locked out of the financial system. No banking or checking account, no credit or debit card, no record of transactions or credit score, no access to loans or other financial instruments. And many of the records that help prove that you… are you…well, they would have never existed. There are 2 billion such people in that very predicament around the world. The MasterCard Center for Inclusive Growth didn’t think that was right, while also seeing them as potential customers. They decided to do something about it. And here to tell us what that was and is, is their President, Shamina Singh. Good evening, Shamina, and welcome to The Business of Giving.
Shamina Singh: Thank you. I’m so glad to be here.
Denver: What is the MasterCard Center for Inclusive Growth? And what’s your main focus?
Shamina: The MasterCard Center for Inclusive Growth is a relatively new organization that was built to use the assets of MasterCard – technology, money, people, network, expertise – to really look at a very important problem of our time– and that’s income inequality– through the lens of financial inclusion.
Denver: What you’re doing here really plays into your theory of change, which is connecting people to networks. Explain that to us.
Shamina: It’s really interesting. It’s very simple if you start to think about it, but it’s not something I thought about every day. But the truth is that there are these informal and formal networks that drive the modern economy. They’re either social networks like Facebook, like SnapChat, things like that. There are physical networks like water, electricity, Internet. And then there are these virtual networks like your banking account if you’re transacting online. You’re buying and selling online – commerce. Letters of recommendation and referral. These things that connect you up into possibility, and to what we call productivity, that allow you to maximize your own talents and resources. So if you think about these networks, there are a lot of barriers to these networks. There are a lot of enablers to these networks, and there are a lot of barriers.
So, what the Center is really trying to do is look at these networks in a very scientific way, but also a very real, methodical way to say, “How do we figure out how to break down the barriers to the various networks that stop people from reaching their economic potential?” Or more focused, “How do we help business and entrepreneurs, in particular, reach their full potential as business owners?”
Denver: Interesting. Before we get too deep into the work of the Center, MasterCard is a bit of an enigma to many people. Some people think it’s a credit card company; other people think it’s a bank. Perhaps it’s neither. What is MasterCard?
Shamina: I think it’s a great question to level set for everybody. It’s interesting because I’m somebody who comes out of the public sector. So I spent my whole life working for labor unions, for grassroots activist organizations, for the government. So if you would have told me…I don’t even know 10 or 15 years ago… that I’d be working for a company that basically connects buyers and sellers through technology. I wouldn’t have predicted it in a hundred years.
But again, if you think about the power of that technology, and that’s really what MasterCard is. It’s the rails that connect buyers and sellers who can’t see each other. So for example, if you shop online at any platform company… or Etsy… or whatever, and you swipe that card or you tap that phone or whatever, that information, usually, if you’re using a MasterCard, goes on that network, and they will transfer the information that says, “You’re Denver, I’m Shamina, you have money in your account, you want to get money from his account to purchase a product, let’s go ahead, make this transaction happen.” And it happens in less than a blink of an eye. So, that’s some serious technology, and it’s in 212 places around the world, connecting billions of people with millions of banks and opportunities to buy and sell.
Denver: Speaking of billions of people, as we said, there are 2 billion people who are currently locked out of any form of financial system. What are some of the barriers they face that prevent them from being included?
Shamina: I’ll give you a really personal example. And just to put perspective on 2 billion, by the way, so think about 7 billion people in the world, 2 billion completely cut off, but probably 4 billion who are off and on, inside the formal and the informal economy. That’s important because for me personally, I’m a first generation – my parents are from India. And when my mother was born, she was born without formal identification. So it’s a little known fact that not every country in the world provides a piece of paper that says, “I’m Shamina Singh, this is where I’m born, this is who I say I am.”
When you don’t have that recognition from a government or from some sort of third party entity, it’s really hard to do things like go to college, go to school, get a bank account, get connected up into a network that gives you access beyond your own geographical space. So that’s what financial exclusion is really about. It’s about the inability and the problems that come when you’re confined geographically to where you live, and you can’t really transact beyond yourself or beyond the person next to you because all you have is a currency – a piece of paper, cash, whatever. So if you’re not included in a financial economy, you’re really living in a world that is very confined.
So that’s what financial exclusion is really about. It’s about the inability and the problems that come when you’re confined geographically to where you live, and you can’t really transact beyond yourself or beyond the person next to you because all you have is a currency – a piece of paper, cash, whatever. So if you’re not included in a financial economy, you’re really living in a world that is very confined.
Denver: Yes. I think in the case of your mom, they use a rope to keep track of her age.
Shamina: Yes. You’ve done your research. Oh, my gosh. Yes. So at that time, for girls in the village, they would tie a knot …around the time you’re born and every year… to try to keep track. But if you think about it– Think about my mother. Just staying with that example for a second.. and this idea for networks.
She was born in a village in India. Didn’t have a birth certificate. Grew up in the village and grew up in Delhi. Married my father. They had an arranged marriage… and which was also very productive because I have four sisters, so that was a good thing. But moving from the village to the city, moving from the city, my father moved to the United States to complete his education. He moved from an area of, at the time, lower productivity, to an area of higher productivity to reach more maximum levels. He brought my mother over with the children and brought us to a place that allowed us to reach even more of our potential.
So it’s really a human example of how networks drive the modern economy. And the closer you are to networks that allow you to achieve your potential or your gifts or your talents, the more successful you’ll be.
The closer you are to networks that allow you to achieve your potential or your gifts or your talents, the more successful you’ll be.
Denver: Well, a good example of that. Does technology play a role in financial inclusion… getting more people included? And if so, how?
Shamina: Technology is a massive enabler of financial inclusion. I mean, I’ll tell you, and you know this probably from all of your shows and everything you do that this is an enormous time of change. But it’s an enormous time for opportunity. So there is this enormous convergence of technology with things like data, with things like artificial intelligence, but also this enormous need, this enormous amount of human suffering that’s still happening around the world. We have all the tools at our disposal to solve these problems, or at least address the challenges. So what makes me very interested in this work, and to get back to your question about technology, is that we have an enormous enabler of human potential called technology that exists today, that’s constantly changing.
Technology is a massive enabler of financial inclusion…We have an enormous enabler of human potential called technology that exists today, that’s constantly changing.
Denver: Let’s say I’m illiterate. How can technology help me become part of the financial system?
Shamina: If you can’t read, and frankly, this is something we’ve come across in a lot of our work, you have voice recognition sometimes. In some of our projects, especially with government social subsidy programs, a lot of times, we will allow the registration for the program to include a voice recognition… so that if you want to draw down your benefit, or if you want to make a banking transaction, you can simply dial the number on your phone and say, “Hi, I’m Shamina Singh,” voice ID, and then the money comes straight into your account, and then you can start to transact using either your phone or a card or whatever it is that’s easy for you.
Denver: Very cool. A topic that I know interests you deeply is the cost of cash, which is a bit of an oxymoron. Took me awhile to get my arms around that. What is the cost of cash?
Shamina: I know. Did you ever think that there are costs to cash? Here’s what’s interesting about cash. Cash has no friends. Unless there’s some reason why you want to transact in a way that is without identification or without trace. So in that community, cash has a lot of friends.
Denver: In the sketchy community.
Shamina: Well, potentially. The cost of cash, if you think about it—And we’ve actually done studies to show that from a country perspective, it can cost a country anywhere from 0.05% of their GDP all the way to 2% of GDP, depending on how much time, energy, effort, is spent driving cash somewhere, having people guard the cash, transacting in cash in a way that means, depending on where you are, you have to have an enormous amount of security around that cash. Then you have to bundle up the cash at the end of the day, put it in a bag, or do whatever you’re going to do, and then hope that nobody sees you going to your bank to make that late-night deposit into the late-night deposit box. That’s just one example.
…we wanted to really focus on financial inclusion because at the end of the day, not only do we want to make sure people are connected up into the formal economy, but we want to make sure that MasterCard as a business entity isn’t so focused on the top 1% of the world and then they leave everybody else behind.
Denver: Sure. Standing online. All those things. A lot of time involved.
Shamina: A lot of time involved. If you think about maybe for countries who may get their benefits or may get their paychecks and things like that in more physical form, people spend days waiting in line to get their check or their voucher. And especially with this refugee crisis, you can only imagine how much time people are spending… and how dangerous it is to get your refugee aid or your humanitarian aid in the form of money. Maybe you’re living in a camp and so you’re surrounded by people who are in a very tough predicament. So there are enormous physical costs to cash and economic costs of cash, and what we found is that 85% of transactions in the world today are still done in cash. Only 15% are actually digital. So if you think of a company like MasterCard, that’s an enormous amount of actual running room in terms of the business proposition, which is also the other reason why we wanted to really focus on financial inclusion because at the end of the day, not only do we want to make sure people are connected up into the formal economy, but we want to make sure that MasterCard as a business entity isn’t so focused on the top 1% of the world and then they leave everybody else behind.
Denver: So your competition really is not Visa, it’s cash.
Shamina: Well, I don’t know about that. But if you think about the enormous business opportunity, it’s a world where you really want people to go digital.
Denver: Well, at MasterCard Center, you set a goal to get 500 million more people included in the financial system by 2020. That is one ambitious goal. What exactly will you do to see that will happen?