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Businesses should be prepared to overhaul their strategy to adapt to changes in industry – even if it causes a business shift, according to Kenneth Chenault, Chairman and CEO of American Express Company (Amex).
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Speaking at the NRF Big Show 2016 in New York, Chenault claimed the digital shift is causing large changes in the payments space, and sometimes in this situation “you have to have the willingness to cannibalise yourself”.
Chenault used the introduction of card payments as a parallel to the current shift towards mobile wallets and payments.
When Amex invested in introducing card payments, 90% of its business was traveller’s cheques, but the finance firm made the shift to survive in future markets. As with technologies such as mobile payments and blockchain, retailers and payments firms should see this as an opportunity rather than a threat, said Chenault.
“We didn’t just facilitate a payment, what we did was help with the entire travel experience from beginning to end,” Chenault explained.
“That is exactly what we’re doing in commerce and that’s what we have to accelerate.”
“We want to be where our customers are and that means you have to be in the right place at the right time with the right offer,” Chenault said.
Businesses – especially in the customer-focused retail and payments markets – will only survive shifts such as those caused by digital technology by focusing on constant reinvention and on core company values.
“You’ve got to get back to basics – what are the customer needs, what are the unique attributes of your business model?” Chenault said.
“How are you engaged in partnerships that get you where you’ve got to be?”
For American Express, Chenault said the next focus in its industry will be the “convergence of offline and online”, causing retail-focused businesses to concentrate on offering an overall experience, rather than a single service.
Chenault said American Express had the advantage of being on “both sides of the street”, with insights from both the retailer’s side and the consumer’s side – which allow it to provide insights on how retailers should treat customers across all channels.
The current digital shift has influenced customer behaviour. Chenault referred to technologies such as mobile payments, Uber and Air BnB as exemplifying the direction of the omni-channel shift leading to customers expecting more from brands.
For all customer-focused businesses – such as retailers or service providers such as Uber – this means providing an overall customer experience, rather than focusing on a single channel or product.
Chenault said 75% of purchases between 2014 and 2018 will be influenced by online, regardless of where the final purchase is made. He said this will be especially true of millennials who interact with a wide range of channels at the same time.
“We really have to think about the overall commerce experience and how we work with all participants in the overall commerce experience,” Chenault said.
“With software, mobility, cloud, the world has changed.”
For Amex, the future lies in embedding the company in the payments process of mobile applications – because this will provide a service to drive additional advantages such as membership, rewards, seamless signup and engagement.
“I really don’t care if plastic goes away,” Chenault said.
“People in commerce, in retail, in payments – we have to understand the interplay between this convergence of online offline and we need to be relevant there.”