American Express Co.'s new bundled package of consumer financial services marks the biggest step yet in chief executive Kenneth Chenault's drive to use the company's flagship card business to drive growth at its struggling financial advisory service.
To succeed, analysts said, Mr. Chenault will have to integrate to Amex's various business lines much more tightly than has been done in the past.
The new account, called American Express ONE, is the company's first to bring cards, advisory and brokerage, and basic banking into one package. Since Amex has a customer base, particularly in cards, that has long been considered among the highest-end of the mass market, the move seems long overdue.
Ruediger Adolf, a senior vice president and the general manager of Global Brokerage and Membership Banking for American Express, said the integration of the accounts has been in the making for some time. Still, he acknowledged that the company's ability to draw on potential synergies had fallen short in the past.
"We have a very powerful financial advice business, but historically we have not deeply focused on working with card members," he said. "However, Kenneth Chenault went public in saying that we are going to put a significant emphasis on cross-selling. ONE is a component of this broader program that will create broader and deeper synergies."
Those calls by Mr. Chenault for better use of internal opportunities came up again in his public comments this week.
"Cross-selling has been the 'holy grail' in financial services for decades, but it has met with only limited success," Mr. Chenault told an investment conference on Monday. "Given the substantial economic advantages of this opportunity, I have made it a priority for both [American Express Financial Advisors] and our card organization."
For those who have watched Amex lag other financial services companies in their integration efforts, particularly on the brokerage and advisory side, the move looked like an effort to play catch-up.
"American Express has been better at accumulating and starting companies than at integrating them," offered Christopher E. Musto, the vice president of research at Gomez Advisors. A brokerage scorecard published this month by the Lincoln, Mass., firm ranked Amex 12th in the field.
"Effectively, the ONE account is catch-up with accounts offered already by Schwab, Fidelity, Merrill Lynch, and others," he said.
A key component of the new account is the reward it gives customers for consolidating their accounts with American Express. Only $5,000 is needed to open a ONE account, but, as with many such accounts, the benefits grow with the balance.
A customer who puts $25,000 of assets in the account gets some added benefits, such as a fee-free American Express Gold card and a $6 monthly reimbursement for using the provided ATM card at non-Amex machines. At $100,000 of assets, the account becomes fee-free. Smaller investors pay $80 a year.
The account will be marketed to both American Express Financial Advisors clients and holders its charge card and is clearly aimed at helping the financial advisory business, which has been hurt by the weak economy.
"Clearly there is an enormous growth potential by targeting our cardmember base," Mr. Adolf said. The top-down imperative to focus on cross-selling helped bring departments together, he said.
"With this product and the broader cross-sell program around it, we will make major progress in the area," he said. "Under Ken's leadership with the broader cross-sell theme, the pieces came together very nicely."
As it turns out, a free American Express card emerged as a powerful incentive for consumers in research the company conducted, according to Doretta Wright, vice president of marketing at American Express Brokerage.
"They may have an American Express card, but to receive that fee waiver, they may want to move" accounts from competitors, she said. "In addition, other features like bill pay that we used to charge for will be a free feature, based on household assets."
The company will offer more rewards for customers who consolidate their brokerage and card accounts with Amex, she said.
"This is our initial release," she said. "We intend to continually enhance it."
