How American Express Beat JPMorgan Chase for Marriott’s Business

Posting $10 billion in revenue for Q2’18, up 9% from the same quarter last year, American Express‘s post-market earnings call reveals a battle for a strategic partnership, which Amex won against JPMorgan Chase.

A question was fielded from Donald Fandetti, managing director, Wells Fargo on competitive intensity:

Could you talk a little bit about the commercial segment? The build business is obviously performing well, you got the Amazon-cobrand (with which Amex has a member rewards program), talk about the competitive intensities on commercial, maybe contrasted with the consumer, do you think there are more upsides to the growth rates that you’re seeing today?

This prompted recently appointed CEO Stephen Squeri to share a competition between Amex and JPMorgan Chase for a deal with Marriot, from which the co-branded Starwood Preferred Guest credit card was born:

When you look at the SME segment in the United States, it’s competitive regionally. Different banks do different things because customers mean different things to them. We compete regionally. You [Wells Fargo] compete with Capital One’s, we’ll compete with Wells [Fargo], we’ll compete with Citi, and JP Morgan and so forth but what I would say is that it’s probably not as intense as the competition we traditionally see in US consumer business.

We’re truly leveraging scale here. We’re leveraging the assets that we have from a large and middle market, and global corporate perspective. We’re leveraging that global footprint. That’s really helping us out. We’ll continue to do that. You look at Amazon you look at Marriot; I’ll just pick those two out in particular because they truly had a choice. Marriot could have gone either with us or with Chase, and could have split it. What they liked was our assets, our ability to reach small businesses, and so we won that part of the portfolio, and Amazon obviously looked at it the same way. We’re excited not only about the growth opportunities but the partnerships we’ve engaged with. We’re going to continue to aggressively compete in these segments.

Squeri emphasized that the brand is engaging in blockchain testing, artificial intelligence (AI) and machine learning (ML).

This decidedly digital strategy was seen in action with the acquisition of tech companies last quarter. Mezi, a VR, AI-assisted travel companion acquired for an undisclosed amount in January, and UK fintech Cake, a payments processor, acquired for $13.3 million in March.

Jeff Campbell, executive vice president and CFO, also noted that half of the card acquisitions are from millennials and that 60% of Amex’s growth is from existing customers, this perhaps prompted the company’s $4.5 billion spend on customer engagement this quarter, up half a billion, or 14% YoY.

Is the payment-processing giant concerned about fintechs? Not so much.

“We’re different than the pure fintechs, which really have neither the relationships, the brand, or the scale to do some of the things that we’ve been doing,” said Squeri.

1 - Reader Likes This Post