American Express is employing multiple tactics to increase the scale and reach of its products, much of it centered on fintech.
That has included building new platforms that make it easier for fintechs to connect with
The time is ripe to entice new partners, especially for co-branding relationships, as analysts say American Express has successfully heightened its appeal to younger generations. Historically, the stereotype for Amex cards is that they are not widely accepted and they cater to the ultrawealthy, but that has not been true for several years, said Michael Miller, equity analyst at Morningstar.
"That shifted first in reality but now more in perception, which likely enables more of these partnerships to work," said Miller. "The big success story for Amex is the shift in their target demographic, away from the affluent travel-focused cardholder to a more aspirational lifestyle card. It's relatively rare for a banking institution to change their target user so drastically in such a short period of time." He estimates the bulk of American Express's transition from its affluent travel focus to aspirational lifestyle took place between 2019 and 2022.
Though it's not a traditional bank, American Express's fintech strategy demonstrates how small moves and collaboration across teams, such as the venture capital arm's work with units that could potentially partner with the fintechs they source, add up to bigger changes.
"There's no singular place you can go or company you can acquire that will give you a huge inroad," said Stephen Biggar, director of financial services research at Argus Research. "The strategy is to come up with smaller but meaningful partnerships and deals that will grow over time."
One way Amex is strengthening its fintech partnerships, in a bid to increase the reach of its cards, is through the Agile Partnership Platform.
The APP,
Badi compares APP to a power strip that fintechs can plug into to access American Express's broader electrical grid. American Express uses cloud-based issuer processors including i2c and CoreCard to let fintechs plug into its network, and has signed on several sponsor banks to support partners with compliance and card issuance, including Celtic Bank, Evolve Bank & Trust and First Electronic Bank.
American Express counts more than 10 partners so far.
"We are picky about who we partner with," said Badi. "We put a lot of energy into brand compatibility."
The partners include Square, which used APP to launch its
"Neither of these will be massive programs, but they put more cards in peoples' wallets to spend at merchants," said Badi.
He describes the pipeline of interested partners as "super healthy. It went from people reaching out hesitantly, 'Hey Amex, do you do this' to us getting the word out that Amex is open for business."
The company says young consumers, steady credit quality and a robust travel recovery will offset a weaker economy for small businesses.
In July Amex launched its Sync platform, a way for fintechs and B2B software companies to access different capabilities. Currently the platform lets other companies embed virtual cards from Amex into their websites, software or select mobile wallets using application programming interfaces. Participants include Centime, a platform for accounts receivable, accounts payable, cash flow and banking solutions, and digital B2B payments firm Melio.
"Over the last five to 10 years we doubled down in our strategy of embedded payments," said Trina Dutta, general manager of B2B payments automation and APIs in global commercial services at American Express. "We believe the embedded payments model is here to stay."
Having a structured commercial partnership program and developer portal "has made it much easier to create a pipeline of future partnerships faster than we've been able to do before. Previously we had an effective but more time-intensive approach to partnerships," said Dutta. The APIs and the onboarding experience Amex designed "makes it much easier for those smaller and midsize fintechs to partner with a large company like Amex," said Dutta.
The investing arm of American Express has been heavily emphasizing fintech.
"Fintech is a major focus on the venture side," said Matt Sueoka, global head of Amex Ventures.
American Express Ventures targets early stage startups, typically writing its first check at seed, series A or series B stages. There is no requirement to have a partnership lined up at American Express at the time of investment, but about two-thirds of investments have landed a commercial relationship with the company. Sueoka's team might also refer startups with promising products to other parts of Amex even if they are not suitable investments.
One example of the former is Cardless, in which Amex invested in 2022. The Ventures team referred it to Badi.
"We thought it was the perfect partner — a fintech that could enable other brands to launch services on our network and grow the diversity of products we make available," said Sueoka.
American Express has been more selective in its acquisitions, which Biggar thinks is a wise strategy in general.
"Buying is not always as bolt-on as you think. You acquire different people with different cultures and sometimes the people who are running it don't stick around, so it can be a clash. If you develop internally, there is much less risk," he said.
"We're not a particularly acquisitive company, which is by design. We spend a lot of time ensuring that potential acquisitions are a true fit, not only in their products, but in their culture, executive team and vision," said Sueoka.
One major example is
"Traditional banks take a long time to get things done and tend to be fairly slow at innovation, which is why a lot of fintechs and some publicly traded digital banks like SoFi have been taking share," said Vincent Caintic, research analyst in specialty finance at Stephens. "There was a lot of inertia with consumers but it seems like that inertia is being stirred a bit, [such as] when the bank failures happened in March. That's where Amex's willingness to invest and try different things stands out.
