Tech Spending at Amex Continues to Climb

  • JJ Hornblass
  • July 21, 2016
  • 1

© Can Stock Photo Inc. / pockygalleryWhile the headline out of American Express‘s earnings yesterday was the $1 billion of gain from the sale of its Costco Wholesale Corp. credit portfolio, the underlying story — at least from an innovation perspective — was the continued increase in technology spending at the payments giant.

Amex records its technology payments within its “Occupancy and Equipment Expense” on its profit-and-loss statement, and that line increased 6% last quarter — that’s both on a monthly and annual basis. Amex said the increase was “primarily driven by spending on technology development, partially offset by lower rent expenses.”

Specifically, Amex spent $438 million last quarter, up from $415 million during the same quarter in 2015. Year to date, Amex has spent $903 million on “Occupancy and Equipment Expense,” compared to $806 million during the same period last year.

During yesterday’s earnings call, Jeffrey C. Campbell, American Express’s chief financial officer and executive vice president, said the “technology investments … are about building capabilities in infrastructure.” He did not elaborate.

He did add, however, that technology spending should “roughly dial down” next year:

Part of the elevated spending or elevated investment spending that we’ve been talking about is a lot of technological or technology development work that we think is going be really valuable long-term. That’s the kind of stuff where we can actually dial it up even as we go through the back half of 2016 and very roughly dial it down in 2017.

American Express has a market capitalization of about $60.2 billion.

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JJ started the first iteration of Bank Innovation back in 2007, and has been working on it ever since. He also serves as President & Chief Executive Officer of Royal Media, Bank Innovation’s parent. He founded Royal in 1995 and oversees all aspects of the New York-based diversified media company. Prior to forming Royal, JJ was on the editorial staff of American Banker, the daily newspaper, and worked as an editor of a business magazine in Hong Kong. As a reporter and editor, he has won journalism awards from the National Press Foundation, Newsletter & Electronic Publishers Foundation, and the Reader’s Digest Foundation. He has a BS in Economics from Yeshiva University and a Master’s from the Columbia University Graduate School of Journalism. He was also a Fellow at the University of Wisconsin-Madison Graduate School of Banking. He lives in New York City with his wife, two daughters, and son. He counts among his accomplishments one New York City Marathon, two New York City Triathlons and the 2010 Father’s Day 5K, the first race he ever ran with his daughters. He can be reached at hornblass@gmail.com or 212-564-8972.

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