At first glance, a financial services partnership between American Express Co. and 7-Eleven Inc., might seem like a case of industry convergence run amok.
To the companies, the alliance, under which American Express will provide automated financial service kiosks to 200 7-Eleven franchises by this summer, is a logical next step on fronts that range from check-cashing all the way to Internet commerce.
While 7-Eleven has no interest in owning or operating a bank, its intention to provide a wide array of financial products has long been apparent.
"We are already in the financial services business in a big way," said Jim Keyes, executive vice president and chief operating officer of 7-Eleven. "We are starting to offer services to the unbanked, but we can evolve slowly to the banked population and use banks as well American Express as financial partners."
For American Express, the program may be less about reaching out to the unbanked than building strong partnerships with their merchants.
Over the past two and a half years, American Express has been aggressively buying ATMs, building its arsenal to over 4,000 by purchasing primarily ATMs that are already deployed in retail locations.
"We decided to get into the ATM business to strengthen our relationship with merchants," said Eugene DeSilva, vice president of new business ventures for American Express.
Mr. DeSilva, who is spearheading the 7-Eleven initiative and works within the merchant division of Amex called establishment services, added: "Additionally we wanted to provide an infrastructure to support our customers, similar to our travel services offices."
Amex sees the 7-Eleven kiosks as an vehicle to support the needs of its Membership Banking customers - people who have signed on to Amex's new online banking service - and its cardholders.
The initiative, which will be run in 7-Eleven stores in Dallas-Fort Worth, builds on a pilot 7-Eleven launched in 1998 in Austin, Tex. In that effort, the convenience store franchise installed 37 souped-up cash dispensers and automated teller machines in its stores. Those machines provide bill payment, wire transfer, and check-cashing services to 7-Eleven customers who have limited banking relationships. The Amex kiosks will be smaller, offer all of the services offered in Austin, and eventually will have Internet capabilities.
"We always said we wanted to provide other financial services beyond cash dispensing through ATMs and this represents our first foray in that direction," Mr. DeSilva said.
If successful, the partnership could serve as one of the strongest examples yet of how retailers can put their convenience to work in battling for financial services fee dollars. Banks are well aware of the potential threat, having dodged Wal-Mart Stores Inc.'s efforts to secure a bank charter last year.
With 19,400 convenience stores worldwide, 7-Eleven plans to become a major distribution channel for people who make purchases on the Internet either at 7-Eleven stores or from their homes. 7-Eleven also wants to be the pickup spot where consumers have their goods delivered.
It already has a similar arrangement in Japan, where convenience stores are forming e-commerce alliances with Web companies. 7-Eleven's largest licensee, a Japanese franchise, is providing such distribution services.
Mr. Keyes said 7-Eleven believes the model in Japan will migrate to the U.S. The idea is that consumers can avoid having to be home to sign for an item that is being delivered, Mr. Keyes said.
In the past, "we looked at 7-Eleven as a bricks and mortar" business, Mr. Keyes said. "The way we look at it now is really as a portal. Electronic commerce is all about convenience and if we can make electronic commerce more convenient it fulfills our goal goals."
While Amex's reputation is rooted in serving well-heeled consumers, its foray into serving 7-Eleven-style customers is not a leap, Mr. DeSilva said. "Check-cashing is just not something we do," he said, but "we are targeting people who want to come into 7-Eleven because it's convenient."
James B. Shanahan, partner in Business Dynamics Consulting, Newark, Del., said American Express is one of the first financial institutions to put into a place a plan for "the next generation of ATMs. They have big ambitions in this area."
