AmEx Talks Mobile Engagement Strategy

Fully acknowledging the challenges ahead, in large part because of the severed co-branded card partnerships with both JetBlue and Costco in the past few months, American Express CEO Kenneth Chenault said yesterday (March 25) at the company’s investor day that better days are ahead.

“Clearly we face some challenges over the next two years,” Chenault, said, according to Bloomberg’s report. “But I’m confident in our ability to deliver against the objectives we’ve set.”

In 2014, AmEx missed its revenue increase goal of 8 percent, only hitting half of that, but the confident CEO said he expects the company’s long-term goal of ESP growth to hit the projected 12-15 percent in 2015. To help drive AmEx’s growth, the company highlighted a number of digital and mobile initiatives that it’s undergoing in order to help keep its customers connected while on-the-go. This includes putting more emphasis on its Pay with Points program that can be used with partners such as Uber, McDonald’s and  VeriFone’s in-taxi devices.

While Chenault spoke in general terms about how the company is going to boost revenues, he didn’t provide many specifics.

“Our intent is to provide these customers with high-value proprietary products that meet their spending needs,” he said, according to The Wall Street Journal‘s report. That report included details about how AmEx plans to fight the recent merchant antitrust case, in which a federal judge ruled that American Express can’t prevent merchants from suggesting that customers use a less-expensive payment card.

“Fighting this suit was the right call in 2010, and continuing to fight is the right call now,” Chenault said.

But AmEx may have an uphill battle when it comes to securing what used to be its core customer base, one analyst said.

“The competitive environment for AmEx is very challenging,” said Jason Arnold, a Wall Street analyst for RBS Securities. “Major competitors have all directed their efforts to take chunks away from their business. They’ve got serious problems.”

Moving toward AmEx’s digital side, the company said integrating American Express across all devices and mobile pay apps — including Apple Pay (as highlighted in its own presentation slide), is also another way AmEx plans to stay relevant in the digital age. Speaking in general terms, the company said it plans to “fuel growth in online and mobile through enhanced security and service,” which includes providing customers with instant mobile fraud alerts sent directly to the customer’s phone.

According to AmEx, its payments platform processed over $1 trillion in volume in 2014, and through “connection with some of the world’s largest digital brands,” it plans to capitalize on that metric to generate future growth. This also includes executing its “multi-pronged approach to increase our relevance and engagement with digitally savvy customers.”

Although Apple Pay was noted as one of its payments platforms, when it came to highlighting the platform opportunities through partnerships, the companies specifically highlighted were: Uber, Samsung, Twitter, McDonald’s, TripAdvisor and Facebook. American Express also touted its small business side as being an “engine of growth” for the company,” saying that its “merchant footprint continues to grow at an accelerated pace [and] small business will continue to be a focal point of future investment and growth.”

“We have accelerated merchant signings in the U.S. with OptBlue. We are seeking to leverage similar constructs outside the U.S.,” the company wrote in its presentation. “We have made progress in signing key merchants globally. We believe merchant financing represents a good opportunity, but it is early days in the expansion of this business.”

Besides its digital efforts, AmEx also discussed its new loyalty program, Plenti, which was announced on March 18. The program is structured similarly to drug-store reward programs insofar as customers can earn points by shopping at one of the seven participating retailers. Merchants teaming up with AmEx include AT&T Inc., Rite Aid Corp., Macy’s, Hulu and Exxon. AmEx, through the cards it issues and its processing network, will operate the program, collecting fees from the partner companies. With the rewards space getting more competitive, AmEx is looking to expand beyond its once-wealthy core of customers.

“We want to be a much more welcoming brand,” said Abeer Bhatia, chief executive of AmEx’s U.S. loyalty division. “This helps us to do that.”

Looking toward AmEx’s financial outlook for 2015 and beyond, the company reported that it expects to have a flat-to-down EPS growth in 2015. That is expected to pick back up and return to a positive EPS growth in 2016 and by 2017, AmEx expects its EPS growth target to return to the 12-15 percent mark.