How Mastercard is Using AI Strategically: A Case Study
While the financial technology field is constantly evolving, Mastercard stands out as a pioneer in leveraging artificial intelligence (AI) to drive innovation and operational efficiency. In this case study, we delve into how Mastercard strategically applies AI, scales its applications, and maintains robust governance processes to ensure the responsible and effective use of this transformative technology.
Mastercard's strategic use of AI
Mastercard has long recognized the transformative potential of AI. Ed McLaughlin, president and CTO at Mastercard, said, “AI has been an integral capability for Mastercard for years, and its importance and impact is only growing.” The company is seamlessly integrating AI into its core operations to enhance both the security and personalization of its services.
One of the main ways Mastercard is using AI is through its decision management platform, which acts as the AI brain running within its network. This allows the company to make complex transaction decisions in real time, greatly enhancing fraud detection and prevention. McLaughlin highlighted that “in the last 12 months, we've stopped over $20 billion in fraud.”
Choosing the Right AI Application
Mastercard's strategic application of AI is not accidental, but the result of a thorough decision-making process. The company employs a two-stage review mechanism to evaluate AI opportunities: an AI review board followed by a detailed technical review.
The AI Review Board is made up of experts from a variety of disciplines, including law, privacy, product, and business. The board evaluates potential AI projects for intent, data provenance, and ethical impact. McLaughlin explains, “We start with legal, privacy, product, and business intent. It's really important to understand what we're trying to do here, should we be doing it, and can we be doing it.”
Once a project passes the initial screening process, it undergoes a rigorous technical evaluation, which includes assessing the scalability, ROI, and operational efficiency of the proposed AI application. “If it doesn’t scale, it’s useless,” McLaughlin emphasized, underscoring the importance of scalability in any AI initiative.
Scaling AI across your organization
Mastercard's approach to AI augmentation involves silent mode validation, where new AI techniques are tested in parallel with existing systems. This allows the company to measure the impact and effectiveness of AI without disrupting current operations. “We can run this in production alongside our existing systems and determine whether the difference is worth the additional cost,” says McLaughlin.
To ensure that its AI initiatives can be effectively scaled, Mastercard is investing heavily in training and upskilling its employees. The company has established specialized workbenches for different roles, including software engineering, data science and sales, to provide customized AI tools and training. “We're thinking about what's the right level of investment in data science, engineering workbenches, generative, etc., and how do we tailor that to our environment,” McLaughlin says.
Governance and ethical considerations
Governance plays a key role in Mastercard's AI strategy. The company has put in place a comprehensive AI governance framework to oversee the ethical and responsible use of AI. The framework includes continuous monitoring, compensatory controls, and feedback loops to ensure ongoing model effectiveness and mitigate unintended outcomes.
Reflecting its commitment to ethical AI practices, Mastercard is also a founding member of the Harvard University Council on Responsible Use of AI. McLaughlin emphasized, “We have issued a Data Bill of Rights for consumers: Your data is your data. You have the right to know what data we have from you and how we are using it.”
The company's governance process ensures that all AI applications comply with its core principles and regulatory requirements, including regularly reviewing and updating AI models to address conceptual changes and other challenges that may arise over time.
Looking to the Future: The Future of AI at Mastercard
Mastercard continues to explore new AI technologies and their potential applications. McLaughlin spoke about the impact that generative AI and quantum computing will have on the company's future strategy: “We are looking at quantum computing from a security perspective and as a way to solve complex combinatorial problems that cannot be solved with classical computing.”
Mastercard's forward-thinking approach enables the company to remain at the forefront of technological innovation while maintaining customer trust and confidence. The company's strategic use of AI not only enhances its current operations, but also positions it to tackle future challenges and opportunities in the financial technology space.
Mastercard's strategic application of AI serves as a powerful example for other organizations looking to harness the potential of this technology. Through a clearly defined governance framework, rigorous review process, and commitment to ethical practices, Mastercard ensures that its AI initiatives deliver significant value while upholding the highest standards of responsibility and integrity. As AI continues to evolve, Mastercard's proactive and strategic approach will undoubtedly keep the company at the forefront of innovation in the financial industry.
