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American Express Decides to Dismantle Parts of Its Serve Business Ahead of
Earnings Report
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Amex CEO Ken Chenault said "that to grow, sometimes you have to feed on
yourself."
Yesterday, Amex announced it was doing that by shuttering pieces of its
highly anticipated and touted Serve unit.
Ahead of today's earnings report Bloomberg reported Wednesday (Jan. 20) that
American Express, the credit card and payments company, is “dismantling”
its enterprise growth division, which had been put in place at least in part
to generate new flows to the company’s revenue line. But in recent months,
a slew of executives from the top ranks of that unit have left to make up a
departing roster that includes Neal Sample, who headed the division.
American Express purchased Revolution Money from AOL-famous Steve Case for $
300 Million and renamed it Serve. AmEx had hoped to become a big player in
the prepaid card division, but the revenue was just never there and the
acceptance of the card paled behind other large (and older, more established
) players such as GreenDot, Vanilla
It has been reported from people who have recently left the dvision that "
heads will roll, as job cuts should reach about 170 in New York and Florida
alone." Other indicators point to abandoned projects and the company has
closed its enterprise growth office which had been located in Manhattan.
As a part of the change in management in the division, they took a hard look
at analytical data which pointed to lower than industry margins on the
prepaid card division. After a tough year for American Express (with the
loss of its exclusive contract with Costco) and layoffs to reduce overhead,
the company also cancelled thousands of Serve (and Bluebird) prepaid
accounts citing "unusual activity" on many cardholders' notification emails
sent out around January 8, 2016.
Many people who have tried to close one product and open another have been
met with the "Unable to Sign Up" at the end of the process.
These actions came in the wake of the "Target debacle" whereby Target and
American Express had allowed credit card swipes to reload the co-branded "
RedCard" prepaid cards.
After a few months of that the two companies decided to eliminate the
ability of consumers to load their cards in this manner. Those actions
apparently drove many consumers to close their RedCard accounts in favor of
one of the varieties of the Serve or Bluebird (co-sponsored by Wal-Mart).
With "similar usage patterns" identified, American Express is attempting to
refocus its energies and investments on its core businesses.
It appears that American Express may be abandoning many of these products
in its effort to push broader into expanding digital offerings and
attracting different types of consumers. The lender has poured resources
into new products such as its EveryDay credit cards, which rewards spending
on necessities like groceries, and Plenti, a loyalty program that lets
consumers amass points and reap rewards from merchants including Macy’s Inc
. and Exxon Mobil Corp. Anyone that has walked through a mall recently has
no doubt seen the onslaught of AmEx's Plenti marketing.
Final Thoughts
It was only logical that after the abuses that we can only imagine occurred
with the RedCard, Bluebird and Serve products that AmEx would eventually
seal up the cracks. However, it seems that their intention is to eventually
shutter the entire project in favor of other products.
Also, growing watchfulness and wariness of the company, and prepaids in
general, are on the rise from federal regulators, even as demand grows for
the cards, where in the U.S., 8 percent of households do not have bank
accounts, and another 20 percent remain outside traditional banking,
according to Federal Deposit Insurance Corporation.
Earnings Report
Follow @laptoptravel
Amex CEO Ken Chenault said "that to grow, sometimes you have to feed on
yourself."
Yesterday, Amex announced it was doing that by shuttering pieces of its
highly anticipated and touted Serve unit.
Ahead of today's earnings report Bloomberg reported Wednesday (Jan. 20) that
American Express, the credit card and payments company, is “dismantling”
its enterprise growth division, which had been put in place at least in part
to generate new flows to the company’s revenue line. But in recent months,
a slew of executives from the top ranks of that unit have left to make up a
departing roster that includes Neal Sample, who headed the division.
American Express purchased Revolution Money from AOL-famous Steve Case for $
300 Million and renamed it Serve. AmEx had hoped to become a big player in
the prepaid card division, but the revenue was just never there and the
acceptance of the card paled behind other large (and older, more established
) players such as GreenDot, Vanilla
It has been reported from people who have recently left the dvision that "
heads will roll, as job cuts should reach about 170 in New York and Florida
alone." Other indicators point to abandoned projects and the company has
closed its enterprise growth office which had been located in Manhattan.
As a part of the change in management in the division, they took a hard look
at analytical data which pointed to lower than industry margins on the
prepaid card division. After a tough year for American Express (with the
loss of its exclusive contract with Costco) and layoffs to reduce overhead,
the company also cancelled thousands of Serve (and Bluebird) prepaid
accounts citing "unusual activity" on many cardholders' notification emails
sent out around January 8, 2016.
Many people who have tried to close one product and open another have been
met with the "Unable to Sign Up" at the end of the process.
These actions came in the wake of the "Target debacle" whereby Target and
American Express had allowed credit card swipes to reload the co-branded "
RedCard" prepaid cards.
After a few months of that the two companies decided to eliminate the
ability of consumers to load their cards in this manner. Those actions
apparently drove many consumers to close their RedCard accounts in favor of
one of the varieties of the Serve or Bluebird (co-sponsored by Wal-Mart).
With "similar usage patterns" identified, American Express is attempting to
refocus its energies and investments on its core businesses.
It appears that American Express may be abandoning many of these products
in its effort to push broader into expanding digital offerings and
attracting different types of consumers. The lender has poured resources
into new products such as its EveryDay credit cards, which rewards spending
on necessities like groceries, and Plenti, a loyalty program that lets
consumers amass points and reap rewards from merchants including Macy’s Inc
. and Exxon Mobil Corp. Anyone that has walked through a mall recently has
no doubt seen the onslaught of AmEx's Plenti marketing.
Final Thoughts
It was only logical that after the abuses that we can only imagine occurred
with the RedCard, Bluebird and Serve products that AmEx would eventually
seal up the cracks. However, it seems that their intention is to eventually
shutter the entire project in favor of other products.
Also, growing watchfulness and wariness of the company, and prepaids in
general, are on the rise from federal regulators, even as demand grows for
the cards, where in the U.S., 8 percent of households do not have bank
accounts, and another 20 percent remain outside traditional banking,
according to Federal Deposit Insurance Corporation.
