Animated Infographics: The Epic Quest by Visa and Mastercard To Become Future Ready

Feb 26, 2021 - 4 minutes read time

Animated Infographics: The Epic Quest by Visa and Mastercard To Become Future Ready

Fintech is all the rage. And the big accelerant for this has been the pandemic. When people shop at home, mobile payments take off. When people stop visiting banks, they manage their finances online. 

We at IMD business school have been tracking how ready financial companies are for a changing future. You can check here for our latest 2021 ranking. Payment companies, like PayPal and Square, are doing very well. So are credit card networks, like Mastercard and Visa. They’ve all been outperforming retail banks and insurers. 

But not American Express. Amex may have the best airport lounges and personal concierge services. But that $550 annual fee for a platinum card is a non-starter when we can’t even dine out in a local restaurant. 

The trouble is that COVID-19 doesn’t only create a temporary setback for companies. It exposes their long-term readiness. But great companies don’t create dramatic results in one fell swoop. Rather, they do so through cumulative efforts over time that build up an inexorable momentum. You can’t simply point at one defining action, one killer innovation, or one solitary lucky break. 

So my research team decided to run an epic analysis. We’ve created an animated infographic, or a short film, that shows how Visa, Mastercard, and American Express have evolved over the last 10 years. They started off at a similar size. Visa was worth about 40 billion in 2010, while Mastercard was worth 30 billion. American Express was the biggest at close to 50 billion in 2010. Today, Visa has grown to over 450 billion and Mastercard 350 billion. Amex has fallen to a distant third at under 120 billion. What happened? 

Here is what my team did. We’ve downloaded every report published in the last 10 years by the standard-bearers of business news—the Wall Street Journal, CNBC, and the Financial Times—along with corporate press releases from this period. Data from the last 10 years was all fed to an algorithm. We want to look at how digitally obsessed these companies were and to what extent the business community had come to understand how digitally savvy each of these players was. Such “textual analysis” may not be the perfect measure of their digital relevance. But it should give us a good gauge.

This was where things stood back in 2010.
image 1
Notice that there’s a second dimension on the x-axis. We want to see how focused and committed these companies are. Are they being open-minded and exploratory on the right? Or are they focusing on exploiting a few chosen areas on the left?

You can play the short film below. We’ve combined this exploit–explore spectrum with digital relevance on a two-by-two. The size of the bubble represents the valuation of the company. 

I find the movie to be almost hypnotic, especially when playing on a loop. A few key themes jumped out. 

During the earlier years, Visa and Mastercard maintained a good balance. They both explored new areas and exploited existing opportunities. Meanwhile, American Express focused largely on exploitation in the short term. 

As they explored new technologies, Visa and Mastercard became increasingly digitally capable. They went beyond merely being aware of the new areas. But they invested further in data analytics, cybersecurity, and artificial intelligence. 

American Express eventually took notice and started to explore. As I wrote here, Amex became bold in its social media marketing. It partnered with BuzzFeed to create the “Epic Everyday” campaign in the summer of 2016. That campaign, which featured Tina Fey, used Facebook to engage the younger generation. Then the company experimented with a Facebook messenger bot. It also let people pay their friends through Facebook. 

The problem was that this digital evolution was confined to the marketing side. Just like a better coupon campaign wouldn’t have saved Blockbuster, none of Amex’s new marketing efforts changed the fundamentals of its business model. 
image 3
Interestingly, during the same period, Visa and Mastercard became very focused. They had built up enough digital capabilities to exploit new opportunities. Mastercard, for instance, made the commitment to grow into cybersecurity and data analytics. No more experimentation. Instead, the company has clarified its vision to make any payment seamless and secure. That includes payments through credit, debit, and prepaid cards or any other system that might evolve, including blockchain. 

The end result is that Amex got trapped in its legacy business model. It tries to get customers to spend more and stay loyal. In stark contrast, Mastercard and Visa are forging digital partnerships everywhere. One remains a credit card company. The other two have become IT companies that just happen to be in the payment business. 


Stay healthy,

Howard Yu signature

P.S., A picture is worth a thousand words. A short film can illustrate corporate histories even better. Are there other sectors you would like us to cover using a similar approach of analysis? Let us know. Our research team is hard at work.

This article is co-authored with Angelo Boutalikakis, a research associate at the LEAP Readiness Project.



Paul Hunter Mar 03, 2021 at 11:52pm

Insightful analysis beautifully illustrated and explained

Willy A. Sussland Feb 26, 2021 at 5:28pm

Interesting, thanks. It makes me wonder, what is the Board of Directors not doing of what it should be doing when the company they also work for misses the boat year after year ? Should there be some guideline that Directors have to sign up on?

So, American Express missed the boat, and same can be said for IBM during the 8 years of Gini Rometty as CEO, and unfortunately for so many other companies. I have asked an exepert whether the principles of governance include something on the responsibilities of the Board of Directors and on the suitable performance measures.

Nikhil Isaac Feb 26, 2021 at 1:50pm

Companies like Amex (positioned as premier or cooler than Mastercard & Visa) - possibly are going through just the motions of marketing engagement. However, Visa & Mastercard may be aware of the real risks of being commoditized or wiped out by an international digital payment gateway, and therefore soul-search harder for their "What Next". Thinking your #1 in any segment is the real killer.

Saidah Feb 26, 2021 at 1:32pm

Great movie! It shares so much info in a short period of time.

I look forward to seeing how these companies will continue to evolve in a more decentralized climate and in the crypto space.
We're still in the early days but Bitcoin offers individual sovereignty and encourages p2p transactions. I wonder if there will be a greater need to push narratives around security in order to encourage customers to transact using a third party.

Willy Sussland Feb 26, 2021 at 1:09pm

Interesting, thanks. It makes me wonder, what is the Board of Directors not doing of what it should be doing when the company they also work for misses the boat year after year ? Should there be some guideline that Directors have to sign up on ?

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