AmEx to focus on retail, technology for growth

Ujjal K Basu Roy

Mumbai, May 7: AMERICAN Express Bank (AmEx Bank) will focus on research, value-addition and operating advantages like technology to make further inroads into the local market. The bank is also looking at entering into the housing finance market.

Said AmEx Bank’s senior director and country manager, personal financial services (PFS), KL Muralidhara: “Research has showed that AmEx customers are different from other bank customers in terms of average-spend, track-record, history and so on. In such a situation, it becomes very important that we choose the right products to sell to our customers because they depend on us. The AmEx brand name is at stake and we have to live up to it.”

The bank is also a player in the car finance and personal-loan market. It claims that it is one of the top five players in the car finance market and one of the top three players in the personal loan market on an all-India basis. It is active in the car finance market in six cities—the four metros, Bangalore and Hyderabad. It has branches in all six cities.

Housing finance is a new line of business that the bank is considering seriously. However, AmEx will look into the overall value proposition before doing so. It will research the market and also determine its economies of scale. AmEx will also look at the securitisation of its portfolio at a later stage.

The AmEx brand is associated with top-end charge-cards and a travel-house. In recent times, it has become an active, though a relative new entrant in other retail banking segments. It recently launched a credit-card with a balance-transfer option at a rate less than 2 per cent per annum. In line with its global policy, AmEx undertakes vast research before introducing any product. The research takes into account factors like the kind of product being considered, the size and economies of scale and a proper pricing-policy for it. For example, AmEx went back three times to its Indian customers when it was launching the ‘Money+’ product, asking questions about the concept, whether the product met a particular customer need and then acted on the feedback that it received.

AmEx also follows a policy of aligning with strategic partners world-wide. The idea is to provide maximum value addition to the customer. Customer benefits are most important—one reason why the bank has tied up with Franklin Templeton for its ‘Money+’ product. It is also looking at similar alliances with other partners.

AmEx seeks to use its operating advantages like technology to full advantage. The bank is well known globally as being very strong on technology. It is now seeking to leverage its tools, its knowledge base and its brand name in the Indian market. AmEx is one of the top 20 brand names in the world in terms of recognition.

The bank is looking to hawk insurance products through its network of branches and merchant establishments. Besides these initiatives, it will also increase the range of mutual fund (MF) products that it currently sells by tying up with more MFs. At the moment, the bank sells MF products from Templeton, Alliance Capital and ICICI Prudential. The bank is already in talks with three to four insurance companies to hawk their products. The talks are reportedly at an advanced stage. AmEx will sell both life and non-life insurance products. The bank has not decided on the vehicle and whether to have multiple partners or a single one. For any products that AmEx sells, it looks at the value addition that it can provide to the customer. The bank can sell insurance products through three routes. It can sell them to its customer base or through its merchant establishments or through its travel related establishments.