So I'm delighted to start our keynote presentation of the day. It's really a pleasure to call to the stage Anna Marrs, Group President, Global Commercial Services, and Credit and Fraud Risk at American Express. And we're so excited. This is the first time American Express has been at our conference. Anna, good to see you.
Great to be here. It's wonderful to be here.
Thanks for making the trek up.
Not that far.
Not that far, that's true. So, yeah, a lot to learn from American Express as a global leader. And so I'm really excited about our conversation. Maybe the first place to start is just to give you an opportunity to talk a little bit about yourself, because I think you have a very interesting background. You joined Amex in 2018, so maybe by way of introduction, you can tell us about the journey that brought you to American Express.
Great! Kind of softball to lead in.
That's right.
Great. Perfect. All right, so first of all, thanks for having us. Scotiabank's a great partner of Amex's around the world. It's great to be here, and as you said, this is our first time at your Financial Summit, so thank you. And yes, I joined Amex in 2018, right around six years ago. Before that, my last job before Amex, I was at a bank called Standard Chartered Bank. You know, it's an emerging markets bank with presence across Asia, Africa, and the Middle East. I ran the commercial bank, you know, private banking business there, and also the region of ASEAN and South Asia, and before that, for about a decade, I was at McKinsey as a partner in the banking practice.
Commercial Services, which I run now, it's about 25% of American Express's revenue, about $14.8 billion of revenue last year, and so when I got the call about Amex, you know, what was it? What made me excited about joining? Cause I had a... I was on the other side of the world. In fact, I was living in Singapore when I got the call, but really, the first thing that excited me about the company was this Commercial Services business. We're very much a leader in what we do, and we'll come back to that, I'm sure, through the conversation today, but there were also a lot of opportunities to grow in different directions from that leadership position, so that was very exciting.
And then, coming from a more traditional kind of commercial bank, what American Express was good at, I thought was fascinating. So a real service orientation, customer, a marketing spine, so that was exciting. And then, when I joined, our then-new CEO was just taking over, Steve Squeri, and it was a really interesting time for the company. So he'd been with Amex for thirty-five-ish years, but he brought all this growth, drive, and transformation energy, so I wanted to kind of be a part of that journey, and it's been a fantastic journey, and great to be a part of the Growth Plan. So that's the background, and now I'm based in New York, not far from here.
No more softballs. Now, it's all hard questions from here.
Yeah. Good.
But obviously, American Express, hard to think of too many brands that are bigger than American Express, especially in financial services, globally. I want to start off by just getting your perspective on where we are from a macro standpoint. You have great insight to this question, I think, on an enterprise level, because you're in charge of credit risk across the enterprise, but obviously, in terms of your focus on the commercial business. Maybe first sticking on the commercial side, and then maybe we can broaden it in terms of: How healthy is the commercial side of the economy right now? And, you know, there's different ways we can cut it. We can talk about the U.S.-
We could talk about Canada. But maybe if you could kind of jump into that, and give us a little sense of what are you hearing from customers. What are you seeing in the data in terms of how strong the commercial customer of American Express really is?
Yeah. So when American Express answers questions about macro, we do often start with billings, because we're a very billings and fee-centric, spend and fee-centric company. And so I'll start to answer the question a bit from that billings lens. If you listen to our second quarter earnings, Steve and our CFO, Christophe, also talked about the overall billings landscape that we're seeing. We're seeing you know, good billings growth against even and stable billings growth against a more muted macro environment. And we've talked about the fact that we, looking ahead, we expect the overall economic environment to continue to be mixed. I think we all have that expectation.
But if I take that commercial lens and I go, in billings, I'll talk about it in some subsegments, and then if there are ones I left out, we can, we can come back to it. So, the first one I'll talk about is our U.S. SME business. American Express has a very large share of U.S. small business cards. It's around a 47% share of all small business card billings that comes through an American Express product. And over the last few years, U.S. small businesses have been through a lot, right? We all had pandemic closures, then we had the boom of spend that followed on the back of a lot of stimulus, inflation, supply chain disruption, and then in 2023, we saw that spend moderate.
We talk about our billings, about new billings acquired, about billings that we attrite, but then about this organic same-store sales line, and that organic line has been really interesting to follow. We had this boom and then this moderation into 2023. In the second quarter, our U.S. SME billings grew at 2%. It was a slight uptick from the first quarter, but it's still modest. It's still, you know, lower billings growth than we saw over the last couple of years. But there's some other good signs. We continue to acquire customers at very strong rates, you know, to retain customers very strongly. We continue to have best-in-class credit performance, and very critically in our small business business, and have actually seen our gap to competitors from a credit perspective widen since the pandemic.
So what we say is, we're ready, right? We have this large franchise. These customers have been through a lot, and we're ready to grow with them, as the economy accelerates. So that's U.S. SME. We can come back to any of that as you want to in the conversation. Then another slice I'll take is the global corporate T&E traveler. I look around the room, you know, I traveled here using my American Express Corporate Card, obviously. Hopefully many of you did as well. That part of our business is more T&E focused. We saw good recovery in T&E, you know, after. Imagine the Omicron variant. Remember that? That was a long time ago now, but we saw travelers hit the road again in 2021 , in 2022, in 2023 .
And what's really interesting in that segment of corporate travelers is you see really almost it feels like structural differences by industry in a post-pandemic world. So the kind of road warriors consultants investment bankers are spending at or above 2019 levels. Whereas technology companies we've actually seen them their T&E investments stay very muted where they kind of have gotten more used to a virtual world. But that business it's 5% of the company's billings overall. It's strategically important to us. We want all those corporate travelers insisting on using their American Express cards around the world and we'll be there as T&E trends develop over the next few years. But then finally I want to talk about international so for Amex that means outside the U.S. commercial and SME businesses.
There we've continued to see very strong growth. So, well, we grew 14% billings in the second quarter in that business. We used to grow at 20% pre-pandemic, and so we're excited about the long-term growth in that segment. And it's because it starts from a very different starting position. So I talked about the 47% share of U.S. small business. Outside of the U.S., we're one of the few players to have really dedicated charge value propositions for small businesses, but we have a much smaller starting share, so, you know, sub 5% in many countries. So there'll be a long runway for growth outside the U.S. So that's how I'd answer it. It's mixed macro, different growth rates inside the company, depending on our starting position.
We feel good about the long-term trajectory and potential.
That's very helpful. Wondering if you can provide any insights into Canada specifically. Obviously, a big focus for all of us here in the room in terms of, you know, what you're seeing in Canada. I mean, one interesting puzzle, and we've talked about this with the big bank CEOs here this morning, is, you know, Canadian macro indicators are definitely weaker than in the U.S., but the business of banking is actually stronger. We're seeing it particularly, commercial loan growth is a lot more robust in Canada than in the U.S. So I'm hoping maybe you have some insight into that from your perspective at American Express.
Yeah, and it's easier for us to comment using that billings lens on the U.S., given how broad it is, right? So if you have a 47% share of all U.S. small business spend running through your platform, you see a whole lot about how those businesses are spending, where they're contracting, you know, how they're paying. Here in Canada, we're much smaller. Our combined share of Canada debit and credit is around 4%. So we're more of a niche player, and like everywhere, we play very much on the premium end. And so our focus really has been investing to grow in Canada. As you say, it is an attractive overall landscape, and those investments for Amex often start with coverage.
You know, how do we make sure that the card is accepted in more places? I think what my Canadian colleagues told me is that in 2023, we actually added over 111,000 new accepting merchants here in Canada. We're investing behind our value proposition. So if you have a American Express Platinum Card or a small business Platinum Card, you'll see new features and benefits on it to make sure we are staying very competitive with what you, as you say, a great set, in fact, of local competitors. And then we also continue to invest in our brand, in all kinds of ways, including, like, sponsorships.
So if anyone goes to, like, the F1 in Montreal, you'll see American Express very present, cause we're really optimistic about our ability to continue to grow in that premium segment in Canada in the long term. So we'll keep investing right on through whatever macro is ahead.
I want to get more into the details, but first, a few more questions just on the macro. Maybe again, you know, focusing on the U.S., where you have that deep insight. Just in terms of, you know, give us a little bit of insight into travel spend and where it has come back, where it hasn't come back, but more broadly, in terms of where you really see demand thriving on the commercial side in the U.S., you know, maybe on a sectoral basis, versus areas where you're seeing more weakness, and is there anything sort of surprising in that picture that you're seeing?
You know, I think one of the things that was surprising when we saw the kind of belt-tightening that I described in 2023 in the small business billings kind of landscape was how broad-based it was. Really, it was an overall belt-tightening, and you can imagine the amount of analysis we did into these billings trends. It was very prevalent across small businesses. We cut it by size, by industry, by years in business, all the possible by ZIP code, all the possible permutations. It was very broad and very much pointed to this macro kind of, you know, taking a breath after all the stimulus and all the post-pandemic growth and being ready to navigate whatever is going to be ahead from a macro perspective.
One of the things that I love about our charge card business from a credit perspective is its very short-dated credit risk, you know, 30, 45 days. And it means that as you see trends in our modeling infrastructure, we can adjust whether it's line sizes or, you know, focus areas for acquisition for industries where we see sources of stress. And so as we went coming out of the pandemic, as interest rates increased, we tighten up, tune up from a focus perspective here and there. But for us, it's pretty at the margin. So I guess an example would be mortgage brokers, right? Super obvious, right? Interest rates are going up in the U.S. in 2022, 2023. People aren't refinancing as much. The mortgage broker segment was constrained.
And then another one where we always have eyes on is construction. It's obviously a big industry everywhere, also in the U.S. It's, you know, our portfolio is very diversified, but it's a piece of our portfolio, and there are pockets of stress and types of construction, like home builders for the same reason. So we always look to tune, but the breadth of the kind of step back points more to broader macro, in particular, the cost of borrowing. You know, it's much higher than it was pre-pandemic, and, you know, as interest rates come down, it'll make a difference to confidence and spend.
I just wanted to mention that Anna will be taking questions from the room, so we'll leave some time at the end. So just wanted to make sure, so you can start thinking of good questions. Just wrapping up this discussion on the macro, again, tying it to your overall enterprise-wide credit responsibility, what are you seeing on the consumer side is very similar to kind of the trends you've been talking about on the commercial side? Or is there anything different that you would highlight there on the consumer?
It's similar in terms of always having pockets that you have to keep your eyes on, whether it's student loans or debt settlement companies. You know, one of the things that I was really impressed by when I joined Amex was the depth of our decision sciences and modeling infrastructure. It's very much how we run the company, and so we'll always be looking for pockets, like that, but overall, we continue to have best-in-class credit performance. You've seen it as you look at the gap, or the, you know, outperformance of us versus competition, and you also see it in the fact that our delinquencies continue to be lower than they were, pre-pandemic levels. In small business, for example, our delinquencies as a percentage of loans and receivables today is 1.3%.
Pre-pandemic, it was 1.4%, and that's after a period of a lot of growth. We acquire almost twice the number of new accounts in our small business franchise today as we did pre-pandemic, with delinquencies that are very well controlled. So, there's always little watch outs. I think the phrase we use is a constructive paranoia, but nothing holistic that has us concerned, and we'll stay focused on it, clearly.
I like that, constructive paranoia.
Mm-hmm. Yeah.
Maybe, maybe I'll use that.
I think there's already, like, a book out there about it. I think someone got there first.
Sounds good. Wanted to dig into the strategy. I mean, you're touching on it here in terms of, you know, Amex focused on driving growth in the commercial market, SME in particular. So the question is: What makes it such an attractive opportunity? You know, when we think of SMEs, we tend to think of, you know, a lot more risk, I think, maybe that's the first thing that comes into mind. But what's so attractive here, and why the push in terms of SMEs in particular?
Yeah. And so people often do think of, like, the corner shop or the local restaurant when they think about small business. Our definition in the U.S. SME business is businesses ranging from very small, you know, $1 million of revenue, up to $300 million of revenue. So you can get into some very sizable companies there. And I think there's a few reasons why Amex, historically and going forward, really like the commercial space. The first is there are long-term structural drivers of growth in payments in small business. If you look back, like, a decade and a half, or maybe, like, to 2010, you'll see an industry payments growth rate of around 9%, and that's pretty good. That's almost double digits. That's a very nice wave to ride on.
And some of the things that underpin that payments growth are some really nice structural tailwinds. So, small business formation. You know, after the pandemic, small business formation in the U.S. increased by over 50%, and it stayed there over the last couple of years. So there's more small businesses, and they're paying more and more with digital payment mechanisms. This is a very specific aspect of the U.S. payments market. Back in 2010, two-thirds of all U.S. small business payments were still made with paper check. You're like, "Why in the world?" That is amazing. It's now about a third, so you've seen that digitization flow through, but there's still room for digitization to come. And from a small business perspective, you know, I obviously spend a lot of time with these customers, they like the card.
You know, they pay today, they pay us back later, you know, either 45 days later, or if they want to revolve longer, they get points. Their supplier likes the security of the receivable. So the space is growing, it's got some nice tailwinds, and it's appealing to customers, so we like the opportunity area, and then we start with this leadership position, that 47% share. A lot of times I do get the question, like: How is that possible? Over the last couple of years, we've actually slightly gained share, we were 45.8% share pre-pandemic, now we're 47.1%. Like, this is like too many decimal points for everybody, but it is a slight share gain, which is hard to do when you start at 45.8.
But we do that because our competitive advantage in this space are really relevant. You talk about credit, and yes, we need to make sure we manage our credit risk. We're very focused on ensuring we have that best-in-class credit performance. But our ability to provide large spend capacity to these customers, with all those decision scientists that we keep in the organization, that's a competitive advantage. It has been for a while, cause small businesses want to spend at scale. Great opportunity. We start with a leadership position for some good, you know, value proposition reasons. And then the third thing is, you know, we're optimistic on this space in the long term. Yes, 33% of payments are still made via paper check.
It used to be sixty-seven, but why in the world are a third of business payments still made with checks? Like, who is it good for? You know, it's. They get lost in the mail, they're hard to reconcile. So those longer term structural trends, we're excited about making sure that we continue to invest behind, right? To drive growth over the long term. Then just one more. On credit, absolutely, like, the strength of the business, in part, comes from the scale. That 47% share means we have a very diversified base that we're able to, you know, invest behind, adjust, and not get concentrated in any particular sector as sectors get into stress. So that's. It's a winning combination for us.
Just going back to the commentary, the comments you made on market share gains coming out of the pandemic. Just want to understand that better in terms of... Was it just a coincidence, or did the pandemic create some conditions that you were able to really capitalize on and it's not a coincidence that-
Yeah
You saw that market share gain.
Yes
In that period?
It's not a coincidence. The meetings that we had when the pandemic was really in, you know, full flow in 2023 were. I think there'll be a Harvard Business Review case study one day about this moment, but it was this year when there was just a vast amount of uncertainty, right? We all experienced that at our institutions. It was unsure how the write-off and delinquency and reserve lines would perform. We were unclear on revenue growth at the start of the pandemic. You know, all of our traveling customers stayed home. It was a period of tremendous uncertainty, but we, as a leadership team, decided to invest, coming out of the pandemic, to drive a different kind of metabolic rate of growth.
Steve has labeled it, like in a not complicated way, the Growth Plan, and we invested to drive a different level of growth into the future. When you look at our numbers, there was, I thought, a nice slide that Christoph did at Investor that took you back, you know, twenty years. Just post the global financial crisis, Amex grew revenue at 6% and EPS about the same. If you look at 2023, after we executed on that growth agenda and began to invest at differential rates in the business, we grew revenue and EPS at higher rates than 90% of the S&P 500.
And so it's from that different scale of a base that we now look into the future, and it definitely came down to those decisions to invest a little early into the cycle, and drive a different growth aspiration for the company.
I want to ask about how you think about, you know, fee pools in the space, and where are the attractive fee pools in terms of segment, geography, and if you kind of go a bit deeper in terms of, you know, where you see the real opportunities?
Yeah, so, fee pools, you know, coming into Amex outside from a more traditional bank, that's where my strategic head started, you know, and then, the very obvious chart that I had someone make was, okay, what share do we have in cards? What else is there that U.S. small businesses need, you know, and should we be thinking about expanding beyond that real fortress of our card position? So we have that 47% share of card. We knew that small businesses really love the brand. The brand resonates with our small business customers, and so we asked ourselves: What else, what else do they need that we could, you know, credibly provide?
And we began to build a series of what we then called Beyond the Card, cause we were a very card-centric organization capabilities for these small business customers. And what every small business talks about, for those, you know, who have had one or shop at one, which is all of us, is cash flow. You know, small businesses, when they go out of business, it tends to be because of mismanaging their cash flow, when they're receiving receivables and when they're making their payments. And so we said, really, we want to build for small businesses a set of capabilities that enable them to better manage their cash flow. In doing that, we get into adjacent fee pools, checking accounts. We launched a checking account. We began to scale it up in 2022.
We bought a fintech called Kabbage to build a very digitally native, easy-to-use line of credit products, so we get into the short-dated lending fee pool, and we put it together with a platform we call the Business Blueprint, which lets any small business, even ones that aren't our customers yet, go on, log in, link in an external bank account, see their overall cash flow position. If they need, for example, a business line of credit, they can easily access that. They can have an American Express checking account. They can take another card. And so it was designing... It was a strategic idea around fee pools, but also very at the heart of what small businesses need.
But some of the metrics that I think are most interesting in the platform is some of the engagement ones, right? So when a small business accesses this Business Blueprint platform, nearly 20%, 18% actually take another Amex product within three months. And I think it's a real reminder that, although it's a buzzword, the ecosystem strategy is effective. If you make it easy, particularly for a time-constrained small business, they'll do more with you. And so that's where we're continuing. We've got to maintain that card leadership position. There's lots of competition out there that's after that 47%, but also broaden beyond.
That's what I wanted to ask, you know, in terms of going beyond the card, when you think about it, we started talking about, you know, fee pools, but I think it's a lot more than just the direct fees that get generated from those and ancillary services, right? All the other benefits. And so you talked about, you know, that statistic on a secondary card. I'm wondering if there are other benefits as well in terms of... I don't know if you have any data on retention-
Yeah.
or on the credit side?
Yes. I mean, it's again, back to why the ecosystem play is a good one. There's a lot of great synergies in there. You get more data, so I mean, when you, you know, in a traditional bank, you know when you can when you have the operating account and you can see the cash flow, that's an incredibly important data source. We've built capabilities that let customers let us link in and have a look into their bank account through third-party services, in the U.S., but that's a great data source, right? So that's a synergy well beyond just an incremental product, and that helps you also from a credit perspective. It lets you provide a larger line size if you can see cash in the account or a good cash flow.
So that's a real benefit. And you also definitely see, over time, lower attrition, because customers do more with you, and then a willingness to do more over time. So it's a good strategy. Compared to our card business, which has been around since the 60s, this is still in early days, but we're excited about the growth potential and the stickiness. You know, we're very committed to small business at Amex. We want to make sure we help them continue to grow.
I wanted to ask about, interchange fee pressure.
It's very much a topic, and so how you deal with that pressure and sort of where you see it going from here, and so just if you could-
Yeah
... dig a little bit deeper into that, important topic.
Yeah. So when I joined Amex, it was late 2018. We were a few months away from declaring virtual parity in the U.S., which means anytime one of our card members takes out a card at any card-accepting location, if they accept cards, they accept American Express cards, and that was an extremely important milestone. Outside the U.S. and all of our international businesses around the world, we're continuing to invest behind coverage because our card members want to use their card at the maximum number of locations.
My colleague who runs the merchant services business always says, "In good economic times or bad, one thing we know we need is more coverage," and as we talk to those merchants about accepting an American Express card, of course, they talk about price, but they also talk about getting more customers and growing their business, and our conversation with merchants does always come back to our premium membership model and the fact that our average customer spend with these merchants is higher, so how do we continue to invest and innovate to make sure merchants see the value of acceptance beyond price, and we're different. You know, it's this integrated model from a pure network.
Interchange pressure will affect all networks, there's no doubt about it, but we've got to make sure we continue to focus on that differentiation because we know that we need to continue to grow coverage, including here in Canada. I gave you that stat. There's more to do.
I wanted to ask about sort of that line between the consumer side and the commercial side. I know for a lot of small businesses, and depending on the industry, it could be a very fluid line in terms of using a consumer card really for very much commercial needs. And so the strategy in terms of pulling from the consumer side to the commercial side, the value proposition of that, and is that a focus, or are you actually happy with, you know, a certain percentage of consumers using their consumer card really for business needs?
Yeah. So there are many things that Steve did early in his tenure that made a big difference to this Growth Plan and the agenda that followed. But one was a very strong insistence on enterprise behaviors and looking at things as overall company-wide opportunities. So those of us who work in big companies know that's not always the case, things can get siloed. But at Amex, we're very focused on maximizing the opportunity for our customers and the company overall. So over in consumer, there are nearly five million small business owners that have small businesses. So it's actually 4.9 million small business owners who just have a consumer product. And that's a lovely prospect base for us. The average FICO is very high. I think it's, like, around seven sixty.
And we're good with our analysis of billings trend, identifying when actually that's a small business owner. You can see it in their spend patterns. So going out and offering those consumer customers a small business card is an ongoing area of opportunity and focus, and one that we're very energized to continue to work through. Because it's not like you see a substitution. It's not like you have a small business owner that just uses their consumer card for everything, and then you have a small business card, and so it's just split.
What you see when you have a business owner on a small business product, and they're underwritten by our commercial models, so they have a commercial-sized line size, we actually see more than 60% growth in their spend overall. So it's truly a synergy when you can get customer, we call them duals, on both a consumer and a small business product. And we're gonna keep going because it's also good for the customer. Segregation like that is a good way to manage your business and your personal finances, and it's great for us, too.
Wanted to talk about credit risk. We touched on it, but just maybe first from just a technology point of view and how American Express uses technology to underwrite new business and to manage credit and how that's evolved over time. Anything sort of interesting that you can highlight in terms of how you use technology?
... Yeah, it's, I think it's an undercovered or under-understood part of American Express, just how much analytics and decision sciences are at the core of the enterprise. When you think about the way we continue to invest behind that decision sciences capability, we continue to pilot and innovate new modeling techniques. In fact, the first time American Express used AI in the company was back in 2010, in our fraud models. Now 100% of all our credit and fraud models use machine learning and AI, old school AI, as part of the modeling infrastructure, and it's a space we're always tuning, you know, adding new data sources, improving modeling techniques, and looking to optimize the opportunity for us and our customers, right? Think about fraud.
If you disrupt a point-of-sale transaction for a customer and it's not fraud, it's a very bad experience. So we're always trying to make sure we get that investment and balance right. And then in decision sciences resources, themselves, so we have a number of decision sciences centers in the company, and we recently opened a new one in Singapore, that focuses on AI, and GenAI, to make sure we have a good series of hubs that can draw on the best decision sciences talent. We need to leverage this data, this rich data we have as a company, and continue to drive that financial performance that we're focused on. So, it's the deep spine of the organization, and one where we know, cause things are evolving, we're gonna have to continue to invest.
And then maybe more broadly, also on the credit risk side, it always struck me, you know, how does American Express manage the risk of no preset spending limits? How does that feature get managed from a credit risk perspective?
We can't tell you, actually. It's the secret sauce, and many competitors are out there trying to copy it in a very, you know, upsetting way all the time. It's a very competitive industry, but I'll talk about... I'm just kidding. It's not that secret, but I'll tell you a little bit about it at a high level.
You have to kill me, but it's-
Yeah, if everyone else will have already heard, so. So through a series of data assets and models. Some of that data comes from third parties. I think, you know, we ingest a lot of third-party data from various bureaus and commercial data sources around the world. You know, probably deepest in the U.S., but we have these data sources globally. And we combine that with our own data, which comes from, in part, the integrated model. You know, when a card member is a merchant and a card member, you see a lot more. And we use that to score. And any time you swipe your card, anywhere around the world, it's a real-time decisioning engine that decides whether to accept or decline the transaction.
And it's that, I guess, like, the flexibility and the real-time nature of that, that means that we don't need to grant you a limit. We can look at that transaction relative to your recent transaction history, your overall balance. We know about your industry, we know about you and your personal FICO, and say, "Is that transaction a go or a no-go?" And it's that capability that means that we can when a small business is thriving and growing, and they're growing their spend, we can grow with them in a very dynamic way. But although I was kind of joking about not telling you, it is an area of competitive advantage that we do see people trying to copy. They haven't copied it yet, but it's great for small businesses. They really...
When they have the opportunity to invest and grow, we can be there for them, in a way that manages our overall credit risk.
I wanted to talk about capital deployment and ask, you know, where are you deploying capital, geography, and sort of any other details you can tell us in terms of the sort of capital focus?
Yeah. So Amex is a bit different. As more of a pure payments company, we have a 30% return on equity, which means that the capital deployment conversations are less, like, edgy than they were at my old bank. We generate a lot of capital, and so our overall capital management framework is pretty simple, right? We wanna make sure we maintain our capital strength, we wanna invest in the business, and we wanna give capital back to shareholders, dividends, share repurchases. But if I think about how we talk about capital deployment and those investment decisions, what are the hot topics? And I'll tell you some of the areas that we talk about a lot. So one area of meaningful capital deployment at Amex is marketing.
You know, the company is going to- is on track to spend about $6 billion this year on marketing investment to attract new customers, to deepen our relationship with customers, and that's up $800 million over last year. So, capital deployment into marketing, you know, we spend a lot of time on. I think the thing that I would say, which is very different to a traditional bank, is that the marketing capabilities and platforms that the company has are tuned to help us do that in an optimal way. So when you look at any marketing opportunity, a product in a channel, in a country, we calculate the return on investment from that specific marketing investment, and it lets us arbitrate across the company.
So I can say, in a quarter, "It's better to spend it here on small business than there in international, or vice versa," based on the math that underpins that marketing investment. Another area that all of us will spend time on from capital deployment is technology. You know, this business is a technology business at its heart, and so we're continuing to invest behind technology, both to support card member experiences and to you know continue to transact at the scale and pace that we do. We've also been investing in technology as part of our Growth Plan. I think the number is we're up about $600 million in technology investment over the last couple of years. I think it's about a 40% increase.
And we just acknowledge that, that we're gonna have to continue to invest to meet customer expectations of ease and integration. And then of course, the last area of capital deployment will be M&A. So when do you decide, when you have that build, buy, partner discussion, when do you decide that it's a buy and you deploy capital towards acquisitions? You will know, you'll see that Amex is not a large acquirer. We're very confident in the health and opportunity in our core business, so we tend to look at opportunities that are just adjacent, think additional capabilities we can bolt on for card members, and that's where we have invested. Like in our track record, right? So, I talked about Kabbage, that small business cash flow management platform that we bought.
It's one in my business. And then recently we bought two restaurant platforms that we're very excited about to augment our ability to book restaurants and have more dining inventory and better experiences for our customers. So that's where we'll continue to stay focused, but capital deployment, those are the big areas. I'd say as we look ahead, you know, you asked that question about what was it an accident that you got to these different levels of growth? And it's been through investing in those areas that we've driven this, and so we'll... we're very focused on continuing to invest to grow.
You know, you talked about Kabbage, a fintech. So leads me to the question, which is a common question, but I'm curious, you know, your perspective at American Express in terms of how you view fintechs at American Express. Are they competitors? Are they partners? Both? How do you see that from a competitive perspective?
Yeah. I think every traditional financial institution just can't spend enough time with fintechs, on fintechs. I think it's we have to be very always watching the overall landscape, because the answer is, in terms of competitor or partners, they're both. And so understanding that ecosystem is very important for looking for both. On the competitor side, what many of the payments fintechs have been very good at is looking for a very specific user problem, and then building a piece of technology that makes it better. So whether it's onboarding or, you know, cash flow availability at point of sale, whatever it is, they're very good at the spot solution and making it really easy, and overcoming kind of user barriers that traditional players kind of haven't gotten to.
But then the challenge with many fintechs is this: how do you scale? So you can scale to a certain point, but how do you get, you know, really scale? And that's when you begin to see partnerships kick in. And, you know, a mid-stage fintech working with a partner that's more experienced in payments, that's more experienced with dealing with regulators, like any of our traditional financial institutions are, there's a good value proposition there for a fintech, and we see that. But you don't know when they start out who's going to be the winner, right? So time wasting is a problem on both sides. The fintech can waste a lot of time working their way through a big organization, or we can, you know, waste time on someone that's not going to end up being a winner.
So we've built a series of much more turnkey APIs. It's a program called Sync. I think we're good, good marketers who named it. To make it easier for fintechs to hook in to the American Express payments ecosystem. So, like, if you want to have the provision of a virtual card in your platform, it's very easy to do via these APIs, and that's the way that we're going to have to keep focusing on it. You talked about... well, I joked about the, what did we say? It's like the paranoia, the constructive paranoia.
Right.
This is also, credit's a space for that and this is a space for that too. There's a lot of innovation happening out there, and we have to both learn from it and respond to it.
So, room for healthy paranoia-
Yeah
... on different levels. I think, we can open it up to questions. We have a few minutes left. If not, I have one or two that I can still ask, but let's see if there's any questions in the room. Maybe I'll, while people are thinking, we'll talk about fraud. You touched on it, but obviously a very important and fascinating topic. Curious, you know, given American Express, given the American Express model, how do you balance sort of security and ease of use? And you touched on it a little bit, right? You definitely don't want to go too far one way or the other. How do you-
Yeah
... do that effectively?
It has to come with a lot of continuous innovation. Our fraud team, the colleagues in fraud, I always remark at how, that they literally all get up every day and think about that tenth of a basis point of fraud loss and how they're going to work it out, or that tenth of a basis point of payment disruption rate, and it's this kind of continuous, optimizing, innovative system. Almost like culture inside our fraud teams. It has to be like that because fraud is a growth industry, and it's incredibly innovative. GenAI is a tool for big companies to improve security or productivity, but it's also a tool for fraudsters.
Their ability to generate code more rapidly, to spot new attack vectors, all that is increasing, and so it has to be a space of continuous innovation and focus. We are super proud of our fraud results. You know, I think seventeen for seventeen years, we've had the lowest fraud rate in the industry, and it's about a third of our, of the other networks. But it's not going to stay unless we continue to innovate and push to stay ahead, including with new modeling techniques, because fraudsters are... It's a growth industry.
And how does geography play into that? Do you see a big difference between the U.S. versus international? Is the problem worse in the U.S. or outside the U.S.?
It's everywhere. What you more see is, like, pockets of a particular type of attack or vector, but it can flare up anywhere in the world. I don't think it's a geographically specific problem, and I think the ubiquity of new modeling tools will make it, you know, continue to be a global challenge.
I don't know if there's any questions from the room.
I would say, though-
Yeah
... just coming back on that, that is an advantage of being a global financial institution, because there are times where we see, you know, an attack vector in one country that we can learn from in terms of globalizing into our overall capabilities so that kind of global learning is an advantage, although it can happen anywhere.
Right. So I think that's a good place to end the conversation. Again, I want to thank you so much for taking the time to be with us, and obviously a fascinating discussion. We can talk a lot more, but our time is up, and but thanks again.
Well, thanks for having me. Great to be here. Thanks, everybody.
Wonderful.
Thank you.
We will reconvene in a few minutes with Victor Dodig from CIBC-