With competition on the rise, American Express has to re-think its strategies in India.Ratan Lal Bhagat writes...

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Wall Street could never have had a worse nightmare... But it saw one in broad daylight and became Fall Street in a matter of a few days! Giant after giant tumbled, and all in the white collar zone fled for cover... First the Fannie Mae and Freddie Mac episode happened. Then Lehman Brothers filed for bankruptcy. This was followed by AIG being bailed out. Next, Merrill Lynch was sold off and then followed Morgan Stanley’s and Goldman Sachs’ announcements that they would transform into commercial banks! Banks like Citi and HSBC are still hanging on, all thanks to their retail presence. In the face of all this, there is a giant who feels extremely uncomfortable, a giant by the name of American Express Banking Corporation (AEBC; it was known as AMEX prior to 2008) which sold-off its global retail banking arm to Standard Chartered during September 2007 for a mere $860 million! So does it make AEBC more susceptible to the ongoing bushfire, considering that it has a huge risk credit card business model in place? One primary reason why there still are survivors in this financial mess is because the survivors had invested in emerging nations like India, where high growth rates and low credit and default rates insulated them from becoming history. The story of American Express Banking Corporation (AEBC) is one of them...

Resilient and determined to fight the on-going battle of survival, this banking giant managed to find its way into the Indian sub-continent decades back. India soon became a huge hub, especially for its credit card and travel-related services. And the country soon proved to be a major engine of growth for AEBC globally.

But all things aren’t as rosy as the previous paragraph reads... Even in the country, AEBC has faced many obstacles – like the small urban consumer base (considering that as per World Bank, 47% Indians live below poverty line), increase count of defaults, intensified competition et al. So what is the future for AEBC in India and its strategies to achieve the imagined?

We caught up with Rob Hennin, Country Head, India, American Express Banking Corp. (read interview) and other officials in this American banker’s India unit to discover more about how it plans to grow, using India as the epicentre

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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