American Express on Wednesday said that it has set a target of reducing costs by $1 billion over the next two years as part of a re-adjustment of its expense base “to get ahead of the changes that are altering the dynamics of the payments business.”
The New York payments company said it approach focuses on three major dimensions:
“We need to do some things better and some things differently — with a ‘one company’ perspective instead of operating as a collection of individual businesses,” American Express chairman and chief executive Kenneth I. Chenault said in a letter to employees posted on the company’s website. “Among other things, this means taking a company-wide look at functions and processes that now exist in multiple parts of the organization and identifying opportunities to consolidate them into centralized utilities that provide support across business lines.”
The company is combining its banking, risk, and legal organizations into a single group. Paul Fabara, currently president of the global banking group, will lead the new global risk and compliance group, and has been appointed chief risk officer for the company.
Ash Gupta has been named president, credit risk and global information management, overseeing the teams responsible for American Express’ Big Data capabilities, performance marketing, and a number of its information management capabilities.
The company also announced that it was creating a new global marketing operations organization, which will bring together marketing execution activities — such as campaign set-up, review and approval, and campaign implementation and reporting — from different areas of the business into a single organization. Mike McCormack will lead this new group as vice president, marketing operations.
“American Express’ restructuring comes amid a difficult time for the company, as it not only competes with Visa and MasterCard but also faster-growing non-conventional payment companies like PayPal and Square,” USA Today wrote. “American Express’ adjusted profit per-share fell 11.5% in the fourth quarter to $1.23 a share.”
American express stock has declined 23% since the beginning of the year, mainly due to the loss of its major partner Costco last year, according to Business Finance News.