American Express or Amex, founded in 1850, is an American multi-national services corporation. Itís key products include charge cards, travelerís cheque, credit cards, corporate banking, gift cards, plenti rewards program while also offering services like finance, insurance and travel. It has the highest rank in the world in terms of financial services and last year in 2018, it was considered as 14th most admired company worldwide by Fortune.
Forbes also noted last year that Amex would most likely overtake MasterCard to become the second largest US card processing company obtaining 21.9% of the market share which equals that of MasterCard and a 10.3% increase in purchase compared to 2017 while MasterCard had only an 8.8% increase.
ďAs the payments industry continues to evolve with more types of transactions being processed electronicallyÖĒ , it spurred Amex to invest more in networks so that the credit card company would be able to adapt in the evolving world of digitalized payments. Embracing technology advancements will catalyze growth for this financial service honcho, as unanimously pointed out by Amexís SWOT analysis.
In this digitalized world, KMPG report in the Pulse of Fintech (financial technology) states that fintech investments are highly focused on innovations that can help promote SME(small to medium sized businesses).
Many belonging to the SME sector lack the security needed to provide a collateral in bank lending or get low returns which are insufficient to attract investors and venture capitalists. Moreover, the OECD scoreboard shows how the financial crisis that occurred in 2008, strongly affected SME business finance. Things took a positive turn around 2013 owing to the global economic recovery.
Attention was shifted to B2B payments, small business loans, invoice financing and online e-commerce and procure. KMPG also noted that AI or artificial intelligence has ďbecome a major driver for innovation in the Americas, particularly in the US and Canada where investors have recognized the massive opportunities presented by AI to automate processes, such as regulatory compliance and reporting.Ē
Along with AI, fintech also uses blockchain for cost reduction and streamlining processes for businesses. Blockchain technology uses technology to raise more money via ICO or initial coin offerings by creating cyrptocurrencies or blockchain tokens and selling them to the public. Sales form these token sales raised above $1.6 billion for startups just within the first two months of 2018.
Besides blockchain and AI, factoring or invoice financing is another form of financial instrument that offers a cash flow for the SMEs which is required to maintain a substantial cash balance. Reduction in size of cash balance makes more room for investing in the growth of the firm.
For the enhancement of the companyís power, potential and itís core capabilities, Amex also looks forward to venture into investing in innovative startups or companies that use new technology and data sources so as to upgrade itís rudimentary fundamentals. Amex explores both national and international opportunities using management to reap maximum returns through their partnerships and strategies.
Among their partnerships, Amex is known for the American Global Business Travel or GBT’s joint venture formed between Amex and an association of Certares investors which includes Macquarie Capital, Qatar investment Authority, BlackRock and Certares. Headquartered in New Jersey, American Express Global Business Travel is a multinational company dealing with travel management and booking solutions for meetings. SWOT & PESTE.com also highlights the importance of key strategic acquisitions of AMEX as an opportunity which can be converted into strength.
American Global Business Travel acquisitions also include Hug Robinson Group (HRG). Headquartered in UK, the HRG leads in B2B services globally. It is a company that specializes in payments, expenses and travel management by helping companies, financial institutions and even the government.
Amex also bought Pocket concierge, a Japanese restaurant platform in 2013. Itís services include the booking of high end quality restaurants such as Michelin starred restaurants and itís available in three languages- Japanese, Chinese and English to all their card holders by integrating their business with the card membership services.
Technology investments such as the American Express card technology investments through acquisitions and investments in areas such as block chain technology, have all contributed to the development of Amex in the age of technology and has worked as a major growth driver. This open mind towards adopting technological advancements rather than being defeated by them and becoming obsolete, will be a critical factor in the payments space in the coming years.
Mar 24, 2020