AMEX: Credit Cards Industry Steadily Growing

Interview with Priyan L. Attygalle CEO of American Express, Saudi Arabia

I’ve been with American Express in Saudi Arabia for eight years and I’ve been in the banking industry for a little over 23 years. I started my banking career with HSBC and I moved to Saudi Arabia with American Express in 2006.

How does the Saudi Arabian market for credit cards compare to the other GCC nations like Bahrain and UAE? Do we see a lower penetration rate and more of a cash economy?

Saudi Arabia, compared to the other nations in the GCC, has the largest population. It also has the largest local population. So the demographics mix is different. In the credit card industry, the way we deal with the customer base is very different because we are able to build long term relationships with the customers and service their needs as their requirements grow throughout their life cycle. Compared to other markets in the region our customer base largely consists of local Cardmembers as well as some expatriates, and much of what we do and what we focus on is geared toward servicing an international brand locally. For example, we know that our Cardmembers want to be able to make payments securely and easily both at home and abroad, and with American Express Saudi Arabia’s products and services our Cardmembers can confidently use their Card at home and when travelling.

Do you see lower penetration rates?

The penetration rate for credit cards is certainly lower than cash at present, but it is steadily increasing. I can see over the last eight years there has been a visible shift from a cash economy towards an electronic economy, in terms of cashless payments such as cards and the growth of internet payments and internet banking. It’s growing at an exponential rate and most of the banks and card issuers in the country are gearing up for that. The E Government initiatives are also a major factor behind the rapid adoption of E Channels.

What are some of the untapped opportunities in the credit card business that you see will be drivers of future growth?
There are a lot of areas of payment that are still cash or bank transfer only, for example, payments to the government and payments for utilities. There are a lot of traditional bank transfers carried out B to B (Business to Business), which could easily be done by a corporate card. For example, at American Express Saudi Arabia our Corporate Card offers businesses greater control over their expenditure by giving them clearer sight of their spending, helping to drive savings and efficiencies.

We have invested in growing our team and about 80% of our staff are Saudis and that percentage is growing steadily.

How do these opportunities reflect on your bottom line? Are you growing?

Yes, the Saudi market is growing at a much higher pace than most markets in the world.. It’s also very encouraging because the growth level also reflects on the number of people we employ. We have invested in growing our team and about 80% of our staff are Saudis and that percentage is growing steadily. That also helps the business grow.

What are the benefits of credit cards?

At American Express Saudi Arabia we offer a range of products that are tailored with the needs of Saudi consumers and businesses in mind. On the consumer side, we offer both charge cards, such as the American Express® Green Card, the Platinum® Card and the Centurion Card, and credit cards such as the American Express® Gold Credit Card. All of our products are characterised by outstanding benefits and features such as access to American Express® Membership Rewards, an award winning loyalty programme. With Membership Rewards our Cardmembers can earn points on virtually all their purchases which can be redeemed for a unique range of rewards such as flights, hotel stays, retail vouchers and luxury goods. Our cards offer a secure, convenient and rewarding way to pay.

Because of the unprecedented sustained growth in the economy, you find people’s needs and wants expanding. They want access to modern technology, the latest and the greatest gadget out there and they want to travel the world. To do all this, you need a tool to make payments and at times provide a little bit of credit to tide you over till you get paid.

You have other competitors in the market, such as VISA or MasterCard? How do you structure your competitive strategy?

Yes, so for us in American Express in Saudi Arabia, we concentrate very much on the high-net-worth consumers and corporates. These are two areas in which we are very strong and we have very unique products. With our range of products, we do cover the upper segment of the mass market. We feel we are in a space on our own among the high-net-worth consumer customers and the corporate customers.

Is the competition cutting into your market segment?

They always try but we are continuously strive to make our r products unique and attractive. In particular, consistent with the American Express brand around the world, we issue American Express-branded products which offer rich rewards and benefits which make American Express products and services unique, and which are founded upon our delivery of outstanding service to satisfy and exceed the needs of Cardmembers in Saudi Arabia.

For example, our American Express® Corporate Card is a powerful yet flexible tool that puts companies in control of their expenditure, delivering savings in areas such as travel expenses.

For consumers, we offer a range of innovative products designed with the needs of Cardmembers in mind, whether American Express® Gold Card or the invitation only Centurion Card for those seeking a unique level of personal service.

In addition, unlike our competitors, since we are the card issuer, the merchant acquirer and payment processor this enables us to gain valuable insights to help make our products even more tailored to the needs of Cardmembers, merchants and business partners.. For example, we are able to leverage our unique position and provide enriched data to our corporate customers. For example with our corporate travel account we are able to give the customer the ticket number, the airline he flew, and the class of travel whether business class, first class or economy, breakdown of the price etc. This enriched data helps them better manage their expenses and save money.

Do you build any strategic relationships with banks?

We have several strategic relationships. For example, with the Saudi Investment Bank, we issue and manage their corporate credit card program. Saudi Investment Bank is one of ASAL’s shareholders, however they selected our products for their corporate credit card based on the value and benefits our products offer. Any bank can also work with us for their corporate payments facility. and we could issue cards on behalf of other banks as well. We have not yet done that in Saudi Arabia but we are open to it.

What is your vision and strategy for 2014 and beyond?

The cashless payments sector in Saudi Arabia continues to grow which means there are many opportunities to grow our business in both consumer payments and corporate payments.

As companies continue to demand clear sight and control of their expenses, this presents an excellent opportunity to offer our corporate card products. These are designed to help companies better manage their expenses. Meanwhile, also in the corporate space, The growth in e-commerce has lent its way to new opportunities for the future. We see a lot of opportunities for us to be in there, supporting e-commerce aggregators. They are instrumental in the movement of trade to the Internet from the main street.

In the consumer space, we are just launching the titanium version of Centurion which is our flagship premium product – the invitation-only ‘black’ American Express card. This is our most exclusive Card, offering the ultimate in personal, expert service, combined with a unique package of benefits and features that are tailored to meet the needs of a very distinct and discreet group of customers.

Talking about your numbers, how much are you growing on a yearly basis?

It’s a very, very good number.

Are you growing in terms of transactions or new customers?

Both. Customers, transactions and value – all three fronts.

Is there still a lot of space in terms of acquiring new customers?

Certainly because as you said, with the expanding economy fuelled by the government led growth and infrastructure initiatives has resulted in a long term sustained growth in the local economy. This has improved the Saudi consumer’s household incomes levels. This has helped to drive unprecedented growth in our sector.

Can you speak about your new website and the OPEN forum initiative and other marketing initiatives you are trying to launch?

This is a global American Express initiative to assist small and medium size business in getting the expert support levels needed from peers and professional in the industry to help them grow. This forum gives small and medium businesses access to knowledge and best practices that was previously exclusive to big corporations.

Can you speak about the challenges? The market is growing, the economy is doing very well, consumer confidence is reaching all-time highs, so what are your major challenges? Is it associated with the growth – with growing properly and offering high standards to your customers?

We are a business that is known to provide excellent customer service. I mean, customer service is the cornerstone of our delivery. Our goal is to continually strive to ensure we continue to deliver outstanding customer service to our customers, whether Cardmembers, merchant or business partners. To ensure we meet this challenge we invest and train in our team – 2006 we had 150 staff but today we have close to 400 staff, so the numbers are growing. To recruit, train and retain staff is a challenge because the country is growing but this is an area on which we will not compromise – what helps make American Express Saudi Arabia unique is our innovative products underpinned by our commitment to customer service excellence.

You touched upon a very important topic which is the brand equity and brand recognition. How important is brand equity for the Saudi market? The high-net-worth individuals in this market are one of the most sophisticated customers in the GCC with – I can have it all attitude. Exclusivity is extremely important.

Yes, brand is key. If you take any of the top 25 financial services brands, American Express is right on top and the reason is because it treats its brand as one of its most valuable assets. The American Express brand is, in fact, over 160 years old and is set apart from the competition by its commitment to security, service and personal recognition. At American Express Saudi Arabia we recognise that the American Express brand values are very relevant -we leverage the expertise behind the brand to create compelling, locally tailored products for consumers and businesses in the country.

To ensure we meet this challenge we invest and train in our team – 2006 we had 150 staff but today we have close to 400 staff, so the numbers are growing.

You mentioned the advantages but there must also be an emotional appeal that the American Express cardholders are proud to hold the card.

Absolutely. I mean, our Cardmembers tell us that when they go to restaurants or shopping, the moment the waiter or salesperson knows that the customer is our Cardmember, the level of service is straightaway is uplifted. They can see it visibly and that makes them feel good. There’s a big feel-good factor in being an American Express Saudi Arabia Cardmember. So when they go to pay their bill and are asked “How are you going to pay your bill” and they say American Express, that makes a big difference.

They can feel it in their day-to-day transactions.

American Express is right on top and the reason is because it treats its brand as one of its most valuable assets.

Certainly, for instance, if you are an American Express Centurion card member travelling abroad they feel it on every step of their journey. For example, when they get off the aircraft our Global Diamond Air service is there to fast track them through the airport, then when checking in to a hotel and receiving complementary upgrades, and if they go shopping at a premium department store the Centurion concierge team can arrange a personal shopper to assist them. Those are unique features that we provide, so the Centurion Cardmember feels special at any time.

At the same time, we have new innovative payments systems such as PayPal and there is a lot of financial innovation. On the other hand, you are representing the traditional tested business model. Which do you think is the way forward?

I think there is definitely space for both in the Saudi market. There is a component that does a lot on the Internet but there is large proportion of the population who still cherishes the physical experience.