At Amex: Help Wanted, Inexperience Necessary

For American Express' Nik Sathe, developers with no experience in the payments industry are among the best to hire.

"I like having people who bring a certain amount of naiveté to the company; it brings in new ideas that have been dismissed in the past," said Sathe, a chief technology officer at Amex who is leading the New York-based company's new Silicon Valley technology hub, which opened a week ago in Palo Alto.

The new hub currently has about 20 people, with plans to bring on about 200 by early 2015. Amex is leaning heavily on the local university and startup community, seeking people who have skills transferrable to payments, but not necessarily a heavy payments background.

"We want people who have a different point of view," said Sathe, whose own background includes executive roles at Google and PayPal. Amex also has development centers in New York, Ft. Lauderdale, Phoenix, Toronto and other locations around the world.

Some of the early work at the Silicon Valley hub will focus on Amex's mobile services, an area where the company is trying to gain traction . These efforts include building use cases for Near Field Communication and other types of contactless payments. Engineers are also working on EMV-chip technology, which improves security for plastic payment cards.

"We broadly focused on two areas: making payments more convenient and taking out friction, and unlocking the value of memberships in the form of offers that will drive more value to merchants," Sathe said, adding the hub is also developing uses for variants of NFC, such as host card emulation, a more device-agnostic form of wireless communication.

By growing its profile in Silicon Valley, Amex is placing more emphasis on spotting technology that can hit the market quickly.

"Traditionally our teams are aligned around building business applications," Sathe said. "Our purpose for introducing a hub in Silicon Valley is there is a lot of technology and startups that have matured. Examples would include cloud computing. The cloud was initially focused on hardware, but has now moved up the stack into software. App developers can innovate faster and get their ideas in front of the customer faster."

Amex's Silicon Valley will help the company's emphasis on mobile deployments. It was quick to make its card available on Apple Pay, and has also placed its technology in the Uber service and on New York taxis. Amex also uses responsive design, which matches the user interface to the form factor, such as desktops, laptops and mobile devices.

"If you look at taxis, for example, there's a broad population in New York that uses cabs, and that type of payment is popular with our corporate card customers," Sathe said.

Taxis are a popular venue to deploy and test new payment technology.

"It's an immediately relevant use case to a lot of business people who find the amount of friction in a card or cash taxi transaction to be annoying," said Thad Peterson, a senior analyst at Aite Group. "Also, it's a safe venue for trial. No one is watching, there isn't a queue behind the purchaser to worry about, and if it fails, there is always a fallback to the credit card."

Payment companies are under pressure to quickly spot and take advantage of new innovation, which is increasingly coming from sources outside of internal development techniques. Companies are turning to a variety of methods to bring alternative voices and methods to research and development.

Citigroup is using a World War II-era project management method to build new mobile payment and banking applications. PayPal has made recruiting developers a major part of its strategy, both through hosting hackathons and talent-based acquisitions.

MasterCard has hosted developer events, as have Barclays and FreedomPay. Other companies such as Dwolla have a business model that encourages outside development. And financial technology company Yodlee has operated a startup outreach program for years.