How American Express Digital Labs Creates Payments Innovations

Getting out of the habit of building everything from scratch has proven highly effective and so has not expecting the company lab to be the sole source of innovation, invention and ideas. Outside partnerships prove valuable when you can put pride aside.

Historically American Express had a “build first” culture, preferring to invent its own wheels from scratch when a new idea came to mind. That’s how the strategy for Amex Digital Labs began too, until leadership gave that philosophy a hard rethinking. Did it really make sense?

“We were very much building things 90% of the time,” says Luke Gebb, EVP of Amex Digital Labs during a Banking Transformed podcast. “But now we follow a very diverse set of strategies to determine when we will build, when we will buy, and when we will partner.” The point, he says, is to remember that the value is to bring appropriate innovation to Amex members and merchants in a timely fashion and in a way that targets as many pain points as possible.

Reality Check: Pride of invention may have to be ditched.

A good example of this new approach to innovation came in the area of P2P payments.

Amex saw the strong growth in this channel and considered ways to break into the business. For a time, the payments giant even considered launching its own entrant in the hot field, to compete directly with the likes of PayPal, Venmo and Zelle.

However, the company realized it was too far behind to join the race directly. Instead, it focused on making use of PayPal and Venmo a superior experience for American Express members.

Banking Transformed PodcastsHosted by top 5 banking and fintech influencer, Jim Marous, the Banking Transformed podcast examines major leadership and cultural challenges and the impact of digital disruption on the banking’s future.


One move concerned pricing: As things stood, Amex cardholders had to add a 3% fee if they wanted to use their account as a funding source for PayPal and Venmo. Amex negotiated that away. Then the company designed a portion of its card app so members could make P2P payments via PayPal and Venmo from within the app. Next came helpful digital features. These included the ability to split payments made with an Amex card with friends and family from within the app.

The app also made it possible for payments to go straight into the member’s American Express account as a credit, eliminating the need to move funds multiple times to cover the original Amex charge. Again, kill the pain points.

This service debuted in late 2020 as Amex Send & Split.

“Send & Split proved very valuable for American Express in 2021,” says Gebb, “and it continues to grow into 2022.”

This story illustrates just one gambit a financial company can use once it decides not everything has to be home grown.

“We think to ourselves, is there a player out there who could help accelerate our efforts?” Gebb, an Amex veteran, told Jim Marous, host of Banking Transformed and Publisher of Digital Banking Report. “It could come in the form of an acquisition. It could come in the form of a minority investment and operating agreement. Or it could simply be a partnership with another company.”

Innovation Has Multiple Addresses At American Express

A big part of the innovation process at the company involves listening and observing. Gebb explains that the company has the unusual opportunity, among card issuers, of dealing exclusively with both its merchant and customer bases — he calls it a “closed loop.”

Where an idea starts and where it gestates depend on many factors.

“When the business units don’t have the time, expertise or resources to get beyond a certain spot, that’s where Amex Digital Labs comes in. We might work with a startup. Or we might build something ourselves or work with some other tech entity. The goal is to create something a couple of years ahead of when the business unit might be ready to work on the idea.”

— Luke Gebb, Amex Digital Labs

Gebb adds that his operation doesn’t want to own a process or product indefinitely. “We’ll look to graduate it out to a business unit, to run it in earnest as it gets off its feet and shows some success.”

Amex Digital Labs works closely with American Express Ventures, the parent’s venture capital operation, which invests in startups that relate to the company’s businesses. About two-thirds of the venture subsidiary’s portfolio companies partner with American Express, according to a CB Insights’ 2020 study of digital innovation labs in financial services companies.

When partners, especially startups, are selected to help develop an idea, Gebb says American Express tries to find firms that can be good long-term partners. “We’d prefer to build with them on a consistent basis, not creating one-off partnerships but working constantly to ensure that our products and services are well integrated,” says Gebb.

Read More: Is ‘Buy Now, Pay Later’ the Future of Consumer Lending?

Is There a Super App in Amex’s Future?

The Swiss Army Knife of finance and ecommerce, the “super app,” has become a Holy Grail in some quarters. Widespread admiration among financial disruption fans of the super apps of Asia, such as WeChat, Alipay and Kakao, has led other financial companies, notably PayPal and other fintechs, to go in this direction.

Marous asked Gebb if Amex Digital Labs was likely going to develop a super app.

“In the U.S. market, there’s a fine line,” says Gebb. “We have looked very hard at some of the Asian super app players, to learn as much as possible from what has been successful there.”

Clearly, he continues, loading a multitude of functions, all using a specific provider’s payment tools for transactions, can help boost customer engagement with an app. He points out that the American Express app itself has been recognized by J.D. Power and has extensive functionality.

But should every potential app function be hooked into a would-be super app? Gebb has doubts.

For example, he points to Resy, a restaurant booking app that the company acquired. A case could be made for adding it to the Amex app. But Gebb says it makes more sense to leave it out of that.

“If a customer is going to deeply immerse themselves in finding and booking a restaurant reservation,” he explains, “we think that should be a separate app experience in our Resy app.” Gebb thinks other types of apps will remain independent, staying out from under the umbrella of super apps.

Crypto Beckons, But A Crypto Amex Card Is Not Around the Corner

Cryptocurrency has become a growing interest among banks large and small, but American Express is proceeding with cautious interest in some aspects.

“It’s a fascinating space, for sure,” says Gebb. “Certainly our members are using cryptocurrencies as assets and stores of value, and we want to help them do what they want to do.”

“You are probably not going to see an Amex crypto-linked card anytime soon.”
— Stephen Squeri, American Express

One example is Amex’s foray into NFTs — non-fungible tokens, digital artwork or other assets controlled via the blockchain. In this case the company sold NFT photos taken during a concert it sponsored by the rhythm and blues singer SZA.

Gebb says he expects the company to go further with NFTs, with Amex acting as a go-between helping “artists engage with super fans.”

The NFTs are stored on the Ethereum cryptocurrency blockchain, which Gebb sees additional uses for as time goes by. He thinks, for example, that the Ethereum chain could become a settlement layer for cross-border money movement.

An American Express card designed for transacting in crypto may be sometime off, yet. In fall 2021 Stephen Squeri, Chairman and CEO at American Express, stated at a Yahoo Finance conference that “You are probably not going to see an Amex crypto-linked card anytime soon.” He pointed out that “crypto is an asset class and that it is not something we need to do.” He referred to “tremendous fluctuations” in price and compared crypto to gold.

Squeri also added that “I don’t see it as really something that’s going to make inroads with a credit card perspective in terms of payments. Why? Number one, there are still tremendous fluctuations. Number two, you don’t have the service with it. You don’t have the dispute rights with it. You’re not getting rewards and you are not extending credit. All of those values that occur within a credit card do not lend themselves to cryptocurrency.”

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