American Express Company (AXP) Presents at SVB MoffettNathanson’s Inaugural Technology, Media and Telecom Brokers Conference (Transcript)
Welcome everyone. Thanks for joining us for our 2 O’clock session, and the final session of our payments track for today. I am very delighted to be joined by Doug Buckminster who is the Vice Chairman of American Express. Thanks for being here.
Q – Lisa Ellis
So as Vice Chairman – and before I start, of course this is a session where audience questions are welcome. I have the iPad up here with me, the QR codes on the screen, so you can follow the usual drill and send them up to me if you have specific hot topics for Doug, always glad to get those.
So, one of your roles as Vice Chairman of American Express is that your very heavily involved in setting the strategic direction for the company. Can you give us an overview of what Amex’s top three or four strategic priorities are right now?
Yeah. Well, first of all thanks for inviting me. It’s great to be here with all of you. First of all, we’re fortunate. I mean, we’re in a great industry. The payments industry is a growing, high-margin business, and we happen to be in all of the markets where that business makes a difference on a global basis.
One of the things I say to my team frequently is the biggest danger for a company like us is to get bored with our core business. Our core business is a fascinating, high-return business and it’s not lost on competitors, right. It is why it is also the focus of a tremendous amount of competition from traditional and non-traditional players as well.
And so we focus a ton of energy making sure that we’re strengthening our core offerings, right.
We’re on a cycle of adding new value to our products on a very regular basis and doing large-scale refreshes of our product on like a three-year cycle, where we add not only new and differentiated value, but we price for that value as well. And so, that chews up a lot of our resources, a lot of our energy, and it’s also what’s responsible for driving a lot of our outsize share-taking growth over the last couple of years.
Other things we’re focused on, look, you know I think getting to parity coverage here in the U.S. was a game-changer for us, and for those of you that spend time outside the U.S., you know we still have an opportunity to improve acceptance outside the United States. We’re very focused on that as well.
We’re focused on leveraging our portfolio of world-class partners, whether that’s partners in the payment space, whether that’s partners in travel and entertainment like Delta, Hilton, Marriott, British Airways, innovating new products with them, bringing new services to market with them, whether that’s lounge offerings or whether that’s installment payment capabilities.
So yeah, I would say those are some of the things that keep us busy. I also think you know we – I know we’ll talk a little bit about international, but we restructured our international business in the middle of last year and its early days, but we’re seeing some really strong growth results from our international business as well.
Good. All right, well let’s go to consumer spending, always the topic on everyone’s mind with our payments companies, particularly the networks. So over the past three to four quarters, Amex and both, Steve and Jeff, the CEO and CFO, have been consistently highlighting the resilience you’ve been seeing in consumer spending. For example, you had just in this most recent quarter 16% growth in billed business, 30% growth in T&E spending. So how would you characterize the health of the consumer right now and what are some of the trends you’re seeing there?
Well, all of those numbers are of course accurate, and we did see modest sequential growth in the first quarter from the fourth quarter of last year in U.S. consumer. But you have to remember, there have been pandemic distortions throughout. Q4 still had some of the Omicron tailwind in it and it was – it ran into Q1 as well.
I think it’s also important to remember that our customers are not necessarily the typical consumers. I mean, we have relationships with, let’s say roughly 10% of U.S. adults, and they account for about a third of credit card spending, credit card borrowing. So these are higher income, higher credit quality customers who spend more of their billings on discretionary expenditures than the average credit card customer out there.
So I think we have seen resilience even through this normalization process. We have seen real strength in T&E inside the U.S. and out. There’s a lot of focus on, is that strength being driven by inflation and increase in ticket prices and hotel room prices. And look, that’s helping it for sure. But the majority of the growth is driven by the number of transactions, not the dollars per transaction.
And I would highlight that outside the U.S., which has been a little slower to recover from the pandemic, we are seeing some really strong growth. Headed into the pandemic, our international businesses were our fastest growing businesses and they are again right now. Some of it driven by delayed recovery, some of it driven by delayed recovery, some of it driven by some real strength and return of cross-border travel and such.
And so, with this elevated T&E, let me just drill into that, because it’s such an important part of American Express’s business. How sustainable do you see elevated growth in T&E, meaning where you see enormous amounts of data? How far are we on that recovery path in T&E?
Well, I mean we’re certainly fully recovered, right. Like if you were to look at our T&E spend versus pre-pandemic, at an overall level or per account level, you would say that we’ve fully recovered to pre-pandemic levels.
How enduring current growth rates are? Like demand is, demand is very strong, right. When you talk to our air partners like Ed Bastian from Delta, you talk to Chris Nassetta from Hilton, the demand is extraordinarily strong. How long will it sustain? Some of that’s about the macro economy. Some of that is about how much of this is revenge spending, catching up from, the couple years where you couldn’t visit your parents who live in another country or another state, or you couldn’t get out and see your customers as frequently. And how much of it is a more sustainable shift in priority?
I will say that when we, one of the statistics we look at is, we run a very large consumer travel agency as well in support of our card business. And we look at the bookings and how much of the bookings are kind of like next 30 days and how much of those bookings are two, three, six months out. And partially due to some of the supply constraints you see in airlines such, that has been increasingly attenuating, right. More and more of the bookings are for trips two, three, four months out. So there’s no sign right now of abatement in consumer appetite for travel.
All right, good. Well speaking of T&E, you guys acquired – American Express acquired Resy, the Resy App, which I’m sure everyone in this room has used. I think I used it yesterday. Can you talk about that acquisition? How does it fit into the strategy and what have maybe some have been – been some of the unexpected benefits or synergies you’ve seen from that acquisition?
Yeah. We did that acquisition in ‘19 and I have to say, in like March of 2020 that looked like a really bad acquisition, right, with restaurants closed down all across the country, but we hung with it. I mean the reason we made that investment is through observing what was important to our customers, right and it is our number one T&E transaction type. It is the number one request into our concierge desk and our travel desk. It’s not for airline tickets or flower delivery. It’s, can you get me into this restaurant?
And so our hypothesis was that we could both create a service for existing customers, which we recently have branded global dining access, where certain tables’ at the most desirable restaurants would be available only to American Express card members. And because this is an open platform, there are 40 million users on Resy today. There were 7 million or 8 million I believe when we bought it in 2019.
Those non-Amex users would come into the ecosystem. They would see the benefits of American Express card membership through some of this distinctive table access and it would encourage them to apply for the American Express card. And so we actually embedded a bunch of acquisition technology within the Resy ecosystem and it has become a meaningful source of card acquisition in one of our target demographics, right, high income, high T&E consumers. And most of that acquisition is concentrated in our Platinum and gold product line that have access to this global dining program.
All right, good. Let’s talk a bit about the U.S. consumer banking business of American Express. One of your roles again as Vice Chairman, is that you oversee a number of Amex’s big strategic growth areas. And one of these more recently, we’ll talk about several of them, but let’s start with the expansion into consumer banking, which many folks here I’m guessing, aren’t even fully aware of how successful you’ve been in things like your accumulating deposits, your high-yield savings account products, etc. Can you talk a bit about that strategy and the success you’ve had and how it affects your overall business model?
Yeah. Well, as I said in my opening comments, we are heavily focused on our core payment product set right, in making sure that it has full payments functionality, whether that’s wallet-based payments, peer-to-peer, online and physical POS payment capabilities, that it has a distinctive set of borrowing capabilities, our card-based installment lending, as well as revolving lending capability.
But we’re also looking to build a supporting ecosystem of services like dining around that core, and one of those areas that we’ve focused on is consumer banking, and some of it was driven again by observing our customers when we launched our high-yield savings product in the back of the global financial crisis. And we marketed it out through search-based marketing.
One of the things we saw was a very large portion of the people taking our high-yield savings product were our existing card customers, even though it was marketed far more broadly than that. And so it felt like we had permission to explore more broadly serving our customers’ needs, and we have a couple of advantages in the current account space.
We’re not addicted to three basis point deposits to fund our business, right. So we felt like we could put a meaningful APY on that product, and our debit offering is not regulated by Durbin, and so we felt like we could put some meaningful rewards on a debit product that hung off of that checking product, and we felt we could have a very compelling product, both for funds at rest, as well as funds in motion, focused entirely on existing customers.
We are not out in the prospect space acquiring current accounts. We felt like we could have a very secure, low-friction checking product for our existing customers, and we built around that existing customer set.
I will say, it is a complicated product to bring to market, as some very large, would be entrants have found out over the years, and so we’re pacing ourselves, right. There are a couple things on our roadmap I want us to have, including peer-to-peer and some improved bill pay functionality before we really push hard on that marketing, but we like the early results a lot.
Well, you mentioned debit in there. Most people don’t think of American Express as doing debit, so talk about your expansion into debit. Where are you in that process? What’s the status? What do you see as the opportunity there? What’s the strategic rationale behind the expansion?
It’s totally linked to the expansion of checking, so debit will grow as our checking footprint grows, and what we thought was you know, especially for younger consumers, the way they want to be able to manage their expenditures between what they put on credit card products and what they feel more comfortable in terms of small transaction types or even structurally surcharge transaction types like gasoline that they prefer debit on, we wanted them to have an option from us, and so that’s what took us down that path, and that’s what led us to think about, is this a defensive offering or are we really trying to better serve our customers, and that’s what led us to an offering where you get half a reward point for every $1 of spend on debit, which is very uncommon in the marketplace, right.
Other than a few small neobanks or fintechs, it’s very unusual to see a triple basis point APY and a meaningful debit rewards proposition from a trusted provider, and that’s where we felt our opportunity to compete and serve our customers was.
And what network investments were required to offer debit? Was that easy to kind of flip on, given your credit rails or was there a bunch of additional…?
There was a fair amount of additional work to do, but we were in the middle of modernizing our network and making a substantial three-year investment to kind of uplift the underlying technology. We also knew that we needed debit capabilities for our joint venture initiative in China, and so it kind of was the right time to bite that off.
All right. Well, we just came out of another session with Boston Consulting Group, talking to some of their experts about the recent turmoil among small and mid-sized banks and the impact that’s had or may have on the broader payments and fintech ecosystem. How has that turmoil affected American Express?
I would say the impacts have been quite modest to date and maybe slightly positive. I mean, we certainly saw net inflows to our HYSA product on the back of SVB and it’s not surprising in some ways. I think our brand is a deeply trusted brand. It says security, it says service, it says trust. We’ve been around for 173 years and we see the value in that name and brand, even in the way we price our deposit products, right.
We don’t aim to be industry leading with respect to our high yield savings. We can attract the funding we need at a modest discount because of the quality of our name. So I’d say we’ve seen some modest positive impact. There are going to be other follow-on impacts quite potentially in terms of regulation or some charges from the FDIC and such on a go-forward basis, but I would expect them to be relatively modest.
How about in the small business, commercial lending piece of your business? I think you guys yourselves describe it this way as you’re often the sort of secondary lender or an alternative lender to small businesses. Are you seeing an upswing in that business?
We’ve had really nice growth in our lending businesses over the last couple of years. Some of that is just like everybody knows, that when the pandemic hit and liquidity flowed into the system, there was a very large pay down in credit card balances across the industry. And so we along with everybody else fell by 15% to 20% over the course of a couple quarters. And so some of the growth we’re seeing over the last couple of years is sort of a recovery in those balances.
I would say we’re also more focused typically on kind of faster turn receivables, right. Like those card based loans. And I think it’s one of the geniuses of our small business product set is you see other issuers out there now talking about no preset spending limit. We have been operating a no preset spending limit for five decades, right. And we have figured out how to do that in a way that gives the spending and borrowing capacity to small businesses they need. And not only not do it at the expense of good credit quality, but see best-in-the-category credit quality as a result of it.
The small business organization is also working on some additional working capital products, like a line of credit type product. It seems to be getting some nice early traction. But on consumer and on small business, we’re very focused on loan growth from existing customers. Pre-pandemic, 70% of our loan growth in the consumer business came from existing customers and we’ve been tracking at about that level as we come out of the pandemic as well.
We know those customers better. We can market to them more efficiently and we can underwrite them more precisely.
Let’s go to some of your recent metrics. Amex, one of the things, as folks that read my research are aware, I’ve been very focused on the record net card growth we’ve been seeing out of Amex recently. 7% to 8% net new members or net new card members’ quarter-after-quarter-after-quarter, while at the same time you’ve had steady mid-teens or higher fee growth, which is a combination of mix and a number of other factors.
But that’s a really remarkable combination that you’re seeing, both record card growth and record card fee growth at the same time. So what has changed or what have you done at Amex differently over these last few years that’s enabled this type of growth?
You know, it’s interesting. If you went back 10 years and you asked senior folks at Amex what the growth rate was on cards in force or accounts in force, they could tell you like to three decimal places, because it was like the metric we focused on. Like I bet like a large part of management couldn’t even tell you what the number is, because we don’t we don’t focus on growing cards. All of our acquisition investments are focused on efficiently acquiring revenue and discounted equity cash flows. So all of our math is around how can I most effectively put $5.5 billion of marketing to work in a way that’s going to drive revenue growth and long-term enterprise value.
But what’s driven those two things to come together is what we talked about at the beginning, which is investment in product, right. If I went back to 2016, 2017 when Chase launched Chase Sapphire Reserve, we had very modest growth in our Platinum Card portfolio. We revitalized it, we raised the fee to $5.50. We saw a doubling of acquisition volume.
Now in 2020, middle of 2021, just we aren’t even really fully out of the pandemic, we refreshed it again. We raised the price from $5.50 to $6.95 and acquisition volumes doubled again, right. And it’s this ability to identify customer needs, source that value from partners who are willing to pay for part of it, because they want exposure to this scale high margin customer base and then demonstrate the confidence to price for that value, and that’s what has driven the extraordinary.
We talk about Platinum all the time. We could have the same conversation about the $250 Gold Card that’s driving really strong demand based on its dining rich value proposition.
Well, that was a good entry point I think for one of the questions that came in from the audience. Can you discuss how you think about the strategic value of your co-branded travel cards and how you prioritize marketing dollars for proprietary travel cards versus co-brand travel cards and that overall strategy?
Yeah, we are blessed to have the co-brand partners we have – and that have had for a long time. I mean – and I think the quality of the partnership is extraordinary. You don’t extend a co-brand partner for Delta to a contract term of 10 years like we did a few years ago, without there being a lot of trust and a lot of sense that there is more value to unlock between those two companies.
And there’s a lot that we do together, right. We do the things you expect around pay with points or we put installment borrowing in their purchase path. We co-invest in lounge activities. The most senior folks, the most valued people in the Delta loyalty program can come into our Centurion Airport lounges. Our Platinum and above customers can go into Delta’s lounge footprint. No other issuer in the U.S. has that arrangement, right. You don’t have Chase Sapphire Reserve folks going into the Southwest or United lounges unless they have a Southwest or United ticket, like that’s how it works, right, and so they are incredibly important to us.
I do think like everything else balance is important, right. Like having a business that was two-thirds co-brand, these big chunky things that you need to renegotiate every five or six years, like that’d be a scary place to be, right, but we’re not there. We see very strong growth in those proprietary products that I’ve described and we’ve had record acquisition with both Hilton and Delta in recent quarters.
And I think there is a ton more that we can do together to create value and customer experiences. We tend – I said it about Resy, I’ve said it about other things. We tend to follow our customers. We tend to look for brands that are important to our customers and figure out how we can create value with them. And that could be a Delta, it could be a Hilton, it could be an Amazon on the small business side, could be Apple, could be any number of partners that we’re looking to co-create with, to better serve our joint customers.
Also, one final thing I’ll say on that is, one of the great things about co-brand products is the distribution tends to happen in partner channels, right. So it unlocks a whole bunch of distribution reach that would be difficult to do without a really powerful partner. Like a lot of our Delta acquisition as you can imagine happens in Delta channels.
Q – Lisa Ellis
Well, let’s go to a hot topic in payments land, which is Apple’s aspirations in financial services. Now American Express was one of the founding card networks that was a partner in Apple Pay back in 2014, and you’ve had a long-term relationship and partnership with Apple. But on the other hand, they more recently write are starting to get into things like the Buy Now Pay Later offering, a high yield savings account, etc. So how do you think about their role in financial services and sort of potential impacts on your business?
A – Doug Buckminster
Look, they are estimable as both a partner and potential competitor. I would say the moves they have made to-date have – I think Apple Pay has been, like I know people gripe about the toll that Apple charges on it, but in general that has been accretive to the customer experience and accretive to card volumes overall in terms of a lot of what we estimate to be cash and debit conversion that’s taken place through Apple Pay.
We have a deep partnership with them. It is a global partnership. We have a common roadmap around things like wallet initiatives and other things we might do together. But do we keep a very careful eye and try and understand their intent in the U.S. and other markets around the world with respect to coming more directly into our business? We do.
But we do that with a range of technology companies, large and small right. We do it with Google, we do it with PayPal, we do it with Meta, and we do it through our venture investing activities as well, to try and understand the user experiences, services and features that are going to be important for customers, and then figure out how we’re going to deliver that to our customers, whether it’s on a proprietary standalone basis, through an acquisition or on a partnered basis.
Q – Lisa Ellis
All right, let’s switch gears and turn to the future and focus on some of the strategic long-term growth drivers in the various segments of your business. Let’s start with the bread and butter, the U.S. consumer. This is of course a large part of American Express’s business, but also relatively speaking, at least a relatively mature credit market. So what is your strategy to achieve or maintain at or above market growth in U.S. consumer?
A – Doug Buckminster
I think, to a very large extent it’s about ensuring that core payment and borrowing functionality is robust and constantly innovating through partnerships, as well as proprietary build-out, and then strengthening that moat of travel and lifestyle services that we build around that product set.
What gives us that pricing power that you observe in our card fee line is not – we had 2x points accelerators or we have 0% intro rates. It’s about our lounge network. It’s about the Resy value proposition. It’s about our digital entertainment bundle and other things of value as we describe it, travel and lifestyle services that surround a relatively commodity product and create that level of aspiration and desire and willingness to pay for that product in a differential way right.
Most credit card issuers are sort of 80% financing revenue, 20% fee-based revenue. We’re like completely different than that, right. We have a strong three-legged stool, which is card fees, merchant fee based revenue and those financing revenues. And I think we’ll continue to play the game we’re playing, right, which is look for partners that make a difference to our customers and continue to focus on those core value propositions, and that service layer that surrounds them, right.
We have a distinctive brand I would argue in financial services, right. We have a brand that speaks to aspiration, it speaks to travel, it speaks to service in a differentiated way and that’s what’s powering our share taking growth right now, and I expect it to in the future.
Q – Lisa Ellis
All right, I have a couple of additional questions from the audience, so I will layer those in. One is, a question may be a bit back on some of your comments about lending and deposits and, at what point is American Express’s loan growth constrained by your deposit availability and potential for credit provisions, just on the point that loan growth as you said, a lot of that’s been recovery, but has been a big source of growth recently.
A – Doug Buckminster
Yeah, I don’t think we feel like our loan growth is constrained by capital or funding availability, and while deposits has become a more and more important part of our funding stack, it is not the entirety of our funding stack in any way. We still do unsecured, we still go out in capital markets, we still do ABS. We make sure that we have a wide range of diversified funding available. And having said that, we still have room to grow deposits in a quite meaningful way if we wanted to approach the level of deposit funding that many of our competitors have.
So I feel like it’s not constrained by any of those things or by our ability to take the reserves required for those newly booked. What gates our growth is demand for our products and our marketing budgets to a very large extent right, because as I said earlier, we spend $5.5 billion dollars a year marketing to our customers and people think that’s like sponsorships and brand advertising and it’s not.
Really it’s direct marketing to consumers, where most of the expense is funding those acquisition incentives and channel costs that you spend, and we’re fortunate right now that because of those product innovations and refreshes, the demand for our products is very, very high, which gives us the luxury of requiring higher and higher levels of return when we look to underwrite customers or make marketing investments, which both, kind of drives our return on investment up, but it also tends to drive volatility out, and that our credit standards get higher as the demand for our products get stronger.
Q – Lisa Ellis
All right, I have another question from the audience that was also related to our next strategic topic on your U.S. commercial business. The question specifically is, Amex has been very successful in commercial cards. You are the largest U.S. commercial card issuer and this business has outgrown your consumer business over the last several years, at least looking over the fullness of time. How are you able to accomplish that? The question specifically is, what differentiates the Amex offering and strategy in the commercial business?
A – Doug Buckminster
I think in a lot of – when I talked about commercial and you talk about growth rates, I’m assuming you’re talking about small and medium enterprises, not like our large and global business, where we are a market leader as well, but growth is slower than it is in the SME category. It’s very much the same playbook, right. It’s very much around innovating those core value propositions. Every time we refreshed our U.S. Consumer platinum product, we’ve refreshed our U.S. Business platinum product, seen similar outcomes.
Now, what surrounds it is not a digital entertainment bundle. It might be opportunities and value delivered from Dell or some other business supplier, but sort of that same model that’s driving demand for those products, coupled with what I described earlier, which is a really well-honed ability to offer personalized credit access through our no-preset spending limit, is I think what has enabled us to capture the material share of small business growth that we’ve seen.
Q – Lisa Ellis
Then going forward, are there any – is there anything you’d highlight sort of different, new coming off of the pandemic that are pillars of your growth strategy and in U.S. SME.
A – Doug Buckminster
Well, I think you’ve seen a number of innovations out in the marketplace, right. I think you’ve seen that team, you know a couple of years ago launch a digital line of credit product, which was actually based off of technology and product that we acquired with our cabbage acquisition back in the depths of the pandemic. You’ve seen the launch of a business checking account and debit product, which is sort of in the same stage of evolution and maturation.
You’ve seen some modest acquisitions aimed at better serving B2B payments requirements like ARAP automation type capabilities. Make sure our – we’re able to capture the full range of payments that small and medium enterprises need to make. And then recently you’ve seen that team try to wrap that in a customer portal that allows small businesses to come in, understand their cash flow, understand the availability of borrowing products, payment products, checking products to them.
Its early phases for what is branded as business blueprint. But you see a very similar thing, which is – but instead of trying to surround a consumer with travel and lifestyle services, it’s surrounding that business with business centric payment saving and borrowing capabilities.
Q – Lisa Ellis
You highlighted international earlier, and as you highlighted American Express recently restructured your international business. International card services grew revenues 22% in 2022. This is a very large, but somewhat fragmented market for Amex. So how do you – what are your priority growth initiatives outside the U.S.?
A – Doug Buckminster
It is a large market opportunity for us. It is fragmented, but the opportunities are really concentrated in a few, you know call it two handfuls of major markets and they are the ones you would expect. You know the Anglo markets of U.K., Canada, Australia, Mexico is a really important high margin market for us. Japan has been just a tremendous growth story for us over the years. It’s a market where brands matter and our brand position in that market is quite strong.
You’ve got markets like India, you’ve got markets like some of the continental European markets; Germany, Italy, France that are important to us. But obviously in all those markets we operate at a scale that is quite different than our U.S. business, right, since our international business is maybe 30% of our volumes when you spread that over you know 15, 20 markets.
You have to think about how you’re going to achieve scale, right, and I think bringing our small business, issuing business together with our consumer business, to be able to build a common set of digital products, distribution channels, products, lending capabilities, was absolutely the right thing to do. And as I said, you know for the few years headed into the pandemic, international small business and international consumer were our two fastest growing business lines and they are again right now.
Q – Lisa Ellis
One just follow-on question or comment or question on that is, I know in many of these core markets as you highlighted, I think Mexico is a good example of this, your platinum cards commands card fees upwards of $1,200, well in excess of what they do in the U.S. What is it about the value proposition of American Express in some of those markets where you’re able to command that level of fee?
A – Doug Buckminster
Yeah, I mean some of it’s the core value proposition. Some of it is our positioning in those markets. We tend to be, we tend to cater to more affluent segments, but I would say the number one driver is a lot of our value on Platinum historically has been in travel and entertainment, right. It’s been in airport lounges, our travel and concierge service, our fine hotels and resorts program, and our international platinum customers travel more than our U.S. platinum customers do.
Just in general, our international customers have on average, I would say three to four times the percentage of cross-border spend that our U.S. Platinum customers do. And so they value a lot of those travel-related assets very significantly and are willing to pay that premium for them, which is what has led us to a number of our innovations in the premium space have happened outside the U.S. The first Centurion Card was launched in the U.K., and not in the U.S.
All right well, another one of your roles – you have a lot of roles. Well, another one of your roles as Vice Chairman of American Express is that you oversee all of Amex’s digital partnerships and investments. What areas in the digital arena, digital banking and payments, are you the most focused on?
Well, I mean, we’re doing a lot of work obviously with the big tech players. You saw us tokenize and streamline payment path with Google earlier in the year. I think that’s a foundational investment to some really interesting things we’ll be able to do together. You know, you’ve seen us bring P2P capabilities into the ecosystem through partnerships with PayPal over the years.
When I think about like what I’m most interested in, in terms of digitization, you know in the last, in the pandemic, we had such incredible volumes around folks that needed financial relief, right. Especially small business space, everything else that we fast-tracked a lot of credit and collection capabilities into our digital product set and I don’t know why we didn’t do it earlier, right.
Not only is it more efficient, but consumers and businesses that are having trouble, sometimes they want to talk to somebody. Often, it’s an awkward moment, and to the extent that they can self-serve into some of these financial relief programs and such makes a huge difference. We also made a lot of investments around traditional servicing, card replacement, ability to file disputes online, so on and so forth that have made a tremendous amount of difference.
It has been a game-changer for our travel business. Much more of our travel is booked online than you would ever imagine, and we have made a lot of investments to make sure that online we can personalize the offering, you can pay with points online, you can break things up into installments, you can make fine hotels and resorts, reservations. And so our ability to take what has been a multi-thousand travel council or business and start to reorient it towards online delivery, and not just the cost advantage, but the convenience promise for consumers who can do it at their own time, sometimes over multiple planning sessions, and to get a consistency of advice and service that automation and digitization promises, it’s been hugely important for us.
One last one, in some of your strategy roles, you also are heavily involved in corporate development and Amex’s ventures and your sort of big strategic partnerships. What are some of the newer investments or partnerships in that area that we maybe are less familiar with that you’re particularly excited about?
Yeah, I mean I think in the corporate development M&A side, obviously I’m not going to talk about specific ideas there, but I will say, by and large what we’re focused on is acquiring capabilities, right. We’re focused on acquiring products and services rather than trying to acquire scale, right.
What we’re trying to do is accelerate the pace to delivering relevant customer innovation in the form of new products or new services. So if you think about even your ability to book, travel, or serve through asynchronous chat that exists throughout our environment, that happened as a result of the technology acquisition. We could have built it our self, but we decided to acquire it, and that’s kind of the type of thing we’re focused on there, right. When you think about Resy or you think about some of our lounge finder infrastructure, those are all based on acquisitions. We talked about Kabbage earlier, which to me is a product acquisition.
In the venture space, obviously for us it’s a great listening post to see potentially where the puck is going, right, in terms of new user experiences and new services. And frankly that environment’s a little bit more conducive for us right now, right. We are a bank holding company, when we make an investment we go through a fair amount of diligence. There was a time in 2021 where diligence was like getting emailed a spreadsheet and having 24 hours to decide whether you wanted to be in or not.
Small venture companies are hungry for strategic partnerships, right now. And whether its fintech areas or travel areas, we’re deeply involved in the venture ecosystem to try and see what’s coming next and again, how we can accelerate, relevant service and product delivery to our customers.
All right, so one of our wrap-up questions. American Express turned 173 years old this year as you highlighted and you’re guiding to 15% to 17% revenue growth in 2023. That is double Amex’s revenue growth in 2019, which was 8%. What has changed to enable this level of growth at Amex and for the investors in the room, why is now the time for an investment in American Express?
Look, I think the biggest – when I think back, if you look at us, sometimes people ask me a question. Amex seems to take a lot of share coming out of crises, and why is that? I can’t tell you for all crises, but I can tell you for this past crisis, we really centered on the customer, we really understood what our biggest asset was and what the biggest risk to our business was in the long term, which is why and I think you and I discussed it last year, which is why in the moment of maximum uncertainty we decided to Invest $1 billion in what we call value injection into our products, right.
We were like, well the platinum product isn’t as relevant, because you can’t go to an airport lounge or stay in a hotel right now. So we are going to put wireless benefits, we’re going to put streaming benefits on the product and we did that and it both informed how those products evolved over time and it also informed, sort of gave us increased conviction in the wisdom of investing in our products and in our customers.
We had and we’ve talked about, we had 98% retention during the crisis because of the investments we made in those products, and it’s playing out today in the demand we’re seeing for those products, in the 7% growth in customer base and in the fees those customers are willing to pay. And by the way, those customers are younger and those customers are of extraordinarily high credit quality, that’s why I believe in the company.
Excellent! Well, that’s a great way to end. Doug Buckminster, thank you, Vice Chairman of American Express. Thanks for being with us.