|James M. Cracchiolo, Group President-GFS,
Amex: Bringing a new focus to old relationships
Express (AMEX) is no stranger to change. Founded in 1850 as a freight
forwarding company, Amex has morphed many times over-as an issuer
of travellers cheques, charge cards and, more recently, financial
services. In 2001, the New York-based company consolidated its various
products and services into Global Financial Services. As Group President
(GFS), James Cracchiolo is
the man entrusted with the task of growing GFS worldwide. In India
recently, the 44-year-old Cracchiolo spoke to BT's on GFs and India. Excerpts from an exclusive interview:
American Express is known for travel and
cards business. What made you set up Global Financial Services (GFS)
group? Where does GFS figure in American Express Company?
Our domestic and international business in cards
has been growing. We are also the largest travel provider. We want
to ensure that we continue to build upon Amex as a brand around
the world based on established relationships. In the US, we have
Amex Financial Advisors, which provides planning and advisory services
to consumers and has a large asset management company, a large insurance
company and securities brokerage firm. More than providing transaction
services, it looks at providing advice against their life goals-planning
for retirement, children's education, insuring that the investment
portfolio is appropriate and helps to manage their liquidity. We
feel that based on the rapidly changing landscape of financial services
industry and what the consumers are looking for- with greater access
to information, increased demand for choice in financial services
and payment products-there is a great opportunity for Amex to be
very focused on building this out further.
Our strategy for GFS, which combines the Amex
Financial Advisors, Amex Bank, international consumer and small
business payments (card business), global brokerage and membership
banking, revolves around making Amex as well known in financial
services as it is in the card and travel business around the world.
To be a leading global provider of financial services to customers
by helping them manage their financial future through a relationship
based on quality, service and trust.
Is Amex beginning to look beyond high net worth individuals?
Previously, we only went after the very upper
market. But more recently, we have been focused on expanding to
more of middle market consumer, more of mass affluent and pre-affluent,
where we think people need more of the type of services that Amex
can provide. We are much more focused today on moving beyond travel
and entertainment spending to local spends and needs. Then we package
within that a comprehensive membership reward programmes and guarantees
as far as our service levels are concerned. It's a combination that
gives us the ability to grow much more comprehensively in the local
markets that we do business in.
How has your business model evolved?
If you consider the last seven-to-eight years,
we have put more products in the marketplace than in our 40-year
history. Last year, we rolled out over 100 new products, an average
of two per week, including Gold in New Zealand and Indonesia, and
money plus personal account in India. We have been looking at the
new segments and developing products that satisfy individual needs
as a consumer. As an example, in 16 countries we have introduced
the Blue Card. A Blue Card in many of these markets is a revolving
credit card. That card product also has unique benefits and rewards
programme. In the US, we offer benefits for internet shopping. Then
we have the Green card, Gold card and Platinum card. While the Platinum
card is the premier card in any part of the world, we came out with
a new Centurion Card first in the UK, now in Germany, Hong Kong
and Japan. This top card would serve the needs of people who travel
a lot or spend a lot. It has concierge services. Let's say you want
to arrange a party for children, we can help you set that up. If
you were travelling and you want to set up a whole itinerary from
hotels where you want to stay to what events you would like to go
to and so on. We help you orchestrate that. We are a sort of personal
assistant. Depending on your needs, you would choose the card most
appropriate for you. Even if we have global set of products, we
gear them to local markets.
How did you go about growing the business
using the global advantage?
If I go back to our vision for Global Financial
Services, to be the leading global provider of financial services,
what we have tried to do is take a global perspective and share
the expertise and intellectual capital within the group and across
the company. In each market, we don't have to re-invent. Regional
management teams benefit from the world-class products, learning
and tools to support their local customers' needs. By applying the
specific in-market expertise, the local management can ensure that
all products, services and related activities are delivered in a
way that is locally relevant and appropriate. If I don't understand
your needs here (locally), you are not going to be comfortable taking
my products. We have put in place a consistent strategy-the building
block strategy -that represents the critical drivers of success
across our businesses.
How exactly does this building blocks strategy
All strategic initiatives fall under one of
the building blocks. The first is growing the client base or new
customer relationships. Second, deepening the existing customer
relationships. It's not good enough to give the customer one product.
We use cross-selling to see if there are additional products and
services that we can offer such as insurance, personal loans to
Amex card members. Third is enhancing capabilities and processes.
We invest a lot in technology and infrastructure for running our
businesses. Then we ask people to constantly think about improving
the processes that we put in place. We look at how we can be more
efficient and effective and apply methodologies such as Six Sigma
so that we continuously look at flaws in the process and try to
re-engineer them out. What that does is not only improve our cost,
but makes processes more efficient, so that we can handle a transaction
more timely, we can handle it in the assured cycle time, and provide
better service. Last of the building blocks is enhancing organisational
effectiveness. What that means is we recruit the best of talent
and make sure that we continue to develop their skills. So, as an
example, in GFS we bring all the business lines together so that
we can offer our customers a tightly focused set of products and
services and deepen the relationships with them.
To what extent have you been successful
in cross-selling products?
In the US, our typical client has six-to-seven
Amex products-a card, mutual funds for investment, insurance, long-term
disability insurance, securities and brokerage trading. Our feeling
is that over time, outside the US with changes in regulations in
countries where the governments are thinking of privatising pension
systems and where the average consumer needs to be informed about
how he would invest for retirement, Amex has an opportunity.
What scope do you see for growing GFS in
India, especially in terms of getting new products?
We are focused on 25 key markets around the
world, including India. Across Asia, there is a large opportunity.
In these countries, the GDP is growing significantly, with greater
access to information, consumers have increased their demand for
choice in financial services and payments products and are looking
for advice and planning. In international markets, we have a significant
opportunity to capture more of consumer spend needs as well as in
unsecured lending. India is a strategic country and a focal growth
point for Amex. GFS takes the one-consumer approach in offering
the full range of card and financial services.
In India, if you have an Amex card, we would
like you to borrow from us, we would like you to have a money plus
personal account with us, a savings type investment product with
a check-in account. We are providing insurance as a part of our
relationship and over time, as rules and regulations change, you
may want to invest in say Europe or purchase a mutual fund that
tracks stock exchanges in Europe. We provide those products in Europe
and other countries round the world for private banking customers.
We can bring those products to India. Over time, we will go beyond
your payment needs to satisfying a bigger part of your financial
We also look at India as a global provider
for Amex. We are today working here in India, developing some of
our innovative global sites for servicing international activities
around the world. As we look at the world as a global marketplace,
it doesn't matter whether you are doing business in the US or Europe.
If we can provide servicing from India because of India's telecom
infrastructure, that's appropriate for us.
With GFS you seem to have targeted the retail
segment. What about institutional business?
The institutional business has always been important
all through. We are the largest global provider of corporate payments
today, the largest business travel provider and we are aggressively
developing the payments area to actually handle all the corporations'
purchasing management activities. This is a core part of what we
are. In the US, we manage pension funds for companies, handle 401k
plans and we have been working for financial employee education
programmes whereby we educate employees to make individual investment
How satisfied are you with the GFS evolution
in the last two-and-a-half years? What is the future roadmap?
If you look at Amex, we have been successful
because we have constantly re-invented ourselves. Over the years,
we have innovated in each of the products. The next stage is to
be well known in financial services by building on the attributes
of our brand. If we think about Amex 25 years from now, our strategy
is to be a global provider of payments and financial services and
be a strong leader. Twenty-five years from now financial services
will become a much bigger part of Amex.
What's the one thing that has made Amex
a successful corporation?
Customer focus is in the DNA of our company.
If you think one thing that has made Amex successful is focus on
the customer as an individual or customer as an institution. In
good times or bad, Amex has been there to support those relationships
and services. To do that successfully, we have had to have a clear
focus on employees, who are the lifeblood of the company. We make
sure that we improve their satisfaction so that we have employees
that really want to grow. As I move on to China, Australia, New
Zealand, our people have the same values, same philosophy and same
focus. That's what makes us, we think, a leading company around