Amex technology eases bad debts
American Express (Amex) said technology had helped it get through the Asian economic crisis without chalking up excessive bad debts.
Rather than scaling back operations, chief operating officer and president Kenneth Chenault maintained this was a good time to grab market share.
'We're being prudent, we're being selective but this is a time frankly where if one has the capability you should go for market share,' he said during a visit to Hong Kong.
Unlike its rivals in the personal card market, American Express was more exposed to the potential for bad debts during the present crisis since it both issues cards and operates its payment network.
Visa and Mastercard do not extend credit directly but operate through issuing banks which take on the credit risk themselves.
Mr Chenault said he had recently looked in detail at the region.
'I went through an extensive review of our risk management in each market in Asia and I'm very pleased with the overall performance,' he said.
Mr Chenault said American Express had avoided bad debt problems because it used sophisticated modelling for different market sectors.
'What we have developed are customised models for a wide variety of segments,' he said.
The company said these tools meant new customers who were 'less risky' could be more easily identified and that they allowed appropriate controls to be put into place for managing the credit of existing card holders.
In the United States, Amex is trying to overturn bylaws that stop it from joining the Visa/Mastercard club of distribution through issuing banks.
In Asia it is not weighed down by such legislation and plans to announce four such deals with banks in the region. Mr Chenault would not say in which countries these deals were likely to be.
Hong Kong is one of its biggest Asian markets and it is likely to try hard to gain acceptance here.
However, it is thought that an approach to Hongkong Bank was rejected last year.
Amex claims to be the leading card in Asia in terms of charge volume.
One of its biggest problems has been acceptance by goods and service sellers compared to its main rivals, apparently largely a function of the higher commission in takes on transactions.
Rather than cut commission fees, American Express wants to get the message out that its customers spend more.
Amex believes it is within 20 per cent of hitting its internal targets across Asia for average acceptance in retail outlets.
'We understand we have some gaps but we will continue to close those gaps. In certain areas we need to do a substantially better job,' Mr Chenault said.