American Express Co. is setting aside $100 million to partner with Silicon Valley startups.
The New York-based credit card company unveiled its plan on Tuesday, saying it would use the funds to invest in early-stage startups involved in digital commerce, including in mobile payments and online marketing.
Partnerships with early stage firms will help "accelerate American Express's digital transformation," said Harshul Sanghi, managing director of the company's Enterprise Growth Group, in an interview on Monday with American Banker.
American Express made its name lending to wealthy consumers, but it has been trying to step up business with young tech-savvy customers by ramping up its digital presence.
Over the past year American Express has launched its Serve "digital wallet" service and signed partnerships with mobile phone providers, including Verizon Wireless, and social media companies, including Facebook and Foursquare.
Given the pace of innovation in the field, the company is no longer able to simply develop new products and services in-house, Sanghi said, explaining the company's interest in early-stage startups.
"In the old world we were able to do that, but today we have to look at partnerships. We are acutely aware of that," he said.
As part of its focus on digital innovation, the company is also tapping executives from outside the traditional banking and credit card industries.
Sanghi is himself an example of one such hire. He joined American Express in September to head the company's new Silicon Valley office after leaving Motorola where he ran Motorola Mobility Ventures. He left Motorola as a large portion of it was being scooped up by Google Inc., which is developing its own "digital wallet" for consumer payments.
In the last few months American Express has leased office space in Palo Alto, CA, and started to assemble its west coast team, says Sanghi. He has also been busy "tapping into the ecosystem" of Silicon Valley and "getting back with all of my friends in the community," he says.
"We want to find the brightest and the best in the space," Sanghi said of the new startup investment initiative. "That's a benefit to our consumers."
The head of the Silicon Valley office also said that American Express's startup investments will focus on numerous aspects of digital commerce, including advertising and marketing, mobile transactions, security and customer service.
He added that early-stage companies could benefit from American Express's "unrivaled" customer service and its extensive base of card members worldwide. The card company has 94 million cards in circulation.