In Praise of American Express

Yippie! The Bluebird of Happiness comes to retail banking.

I have had an Amex card for many years, in fact, several cards, and my rather trendy Amex Blue credit card still gets admiring looks and questions from cashiers ten years or so after I first go it. Does anyone else have one in the UK, or is it unique to me, as most folk have never seen one? If I am honest, it was ego that made me want an Amex charge card in my youth, but today I have one because Amex have simply the best customer service in the sector: they actually treat me with respect and the UK company oozes organisation and control, which is not what I have experienced from its competitors. Oh, and the 1% cash back on purchases, although bettered by others, seems a good deal too.

To me, living in the UK, just an outpost of its US centric global empire, Amex has changed considerably in the last twenty years or so and as far as I can see it is real and not just apparent change.  Amex was founded in 1850 as an express mail business; it got into financial services as early as 1882, but it only launched its first charge card in 1958: incredibly, that makes me older than the green icon it has become!  In 1966, while I was collecting England Winners postage stamps, someone in Amex discovered market segmentation and the Gold Card appeared, and then in 1987 its first credit card product, Optima, came along which has now been superseded by my Blue Card. Amex is one of the 30 components of the Dow Jones Index; it also accounts for some 24% of all US credit card transactions, which is the highest of any card issuer.  Amex is a class act and it is famed as both one of the 22 most valuable brands in the world and one of the 20 most admired companies too.

The introduction of credit cards in the 1980’s, and then the changes to its retailer contracts that made its cards much more widely acceptable, has very significantly changed its scope and scale. You could say that from being a one trick card payment pony it discovered marketing strategy, along with the rest of us, and diversified into related segments whilst retaining a certain Amex service quality that went with its old charge card heritage. Whilst at home it may well be seen as something of an institution, it has successfully positioned the brand around traditional service quality that can then be applied to other market segments.

To an observer like me Amex appears to have managed its evolution very well indeed and now it seems to be taking another significant step in its slow and deliberate strategy.  Amex and Walmart have announced that they are jointly issuing a low-cost debit card that seems to be directly challenging the traditional banking model. This new service is called Bluebird and it is targeting a new segment for Amex but one which Walmart focuses on, the “wide swath of customers who are unbanked, under banked, or unhappily banked” as the FT quotes an Amex executive as saying.

With this initiative, and with Amazon and Google also making moves to lend to their respective customers, we have a fascinating challenge developing from the massed balance sheets of the major retailers, to the outdated, tired, and rather shabby retail banking model that is now well and truly due for an overhaul. Rather then governments encouraging this to happen, they have been standing in the way, but now it looks like things could begin to change at last: the banks may no longer be in control of the end game.

Well done American Express.

Mark

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