American Express Company (AXP) Earnings Call Transcript & Summary

All right, welcome back, everyone. Transitioning from our in-person model to a virtual session. This session, I am delighted, and I have to bounce back and forth between looking at the screen, where I can see Doug and looking at the camera, where you can see me. I'm delighted to be joined this session by Doug Buckminster, the Vice Chairman and Group President of Global Consumer Services at American Express. Doug, welcome, and thanks for being here. And before we dive into questions, are there any opening comments or anything that you'd like to make for the group?

Well, Lisa, it's great to be with you. Thank you for having me, and thanks for accommodating the virtual. I really appreciate that. Now I think I would just open by saying, we're in a -- we live in a dynamic and interesting world, but American Express and the consumer business feels like it's in a good place right now. And we feel -- we attribute that to the focus on our member-centered strategy, the resource allocation, decisions we made prior to the pandemic, but very importantly, in the pandemic. And then, the execution, the diligent execution of 60,000 colleagues around the world, and it has earned us something that's very precious, which is momentum. And you know this business, especially on the issuing side, is a momentum-driven business. And it's hard to get. And when you get it, you have to do everything you can in terms of strategic resource and executional adjustments to maintain it. And that's what we're doing at the company right now, as well as within the consumer business.

All right. Well, we're about to dive in, but quick housekeeping for folks on Q&A. [Operator Instructions] So let's start with a little bit of a context-setting question for you, Doug. You've led Amex's Global Consumer Services Group, which is Amex's largest business unit. It contributes about 60% of revenues. Since 2015, what are the top 3 or 4 ways in which that consumer business is different now than it was 7 years ago, when you took it over?

Seven 7 years sounds like a long time, right? But you throw in a co-brand partner exit, a couple years of pandemic, and it's actually a relatively short period of time. I think we've made good use of that time, though. The environment has changed, certainly. Everyone will talk about the digitization of commerce and payments, the way customers expect to interact with our products and services. But I think within the consumer business, it has been all about regrounding ourselves on our member-centered strategy and what that has led in terms of product diversification, what that's led in terms of our ability to efficiently acquire new customers, to engage customers, and as we talked about at Investor Day, drive a sizable portion of our revenue from existing customers. That's a big change from 7 years ago, as is the generational relevance that I think we've discovered with that diversified product and service set with a very large portion of our acquisitions coming from consumers under the age of 35. And all of that has played through into the retention and member growth stats you see. The final piece of the flywheel is it changes the way partners are willing to engage with us, the way they're willing to contribute value in exchange for that branded marketing reach, to that engaged scale, high-spending, high-margin customer base, and that's what kind of makes the whole thing spin. I mean, it sounds a little esoteric and wonky upfront, but when the pieces come together, it's actually quite powerful and differentiated.

All right. Well, speaking of that, the evolution of the consumer base of the U.S. consumer business, let's talk a bit about the attracting of millennials and Gen Zs, probably one of the biggest positive shifts for Amex over the last few years. You've highlighted now multiple times that they make up about 60% of new accounts acquired. I think that's up from about 40 back in 2016, if I remember right from Investor Day. How have you evolved the value proposition of Amex to attract this critical new generation?

I think if I went back 7 years, and I got this question a lot, 7 years ago, with, are we going to be relevant with this new generation of digital natives and consumers, I think the general thought process within the company and in the industry was that to attract younger consumers, you need an easy-entry product, a low-fee kind of stripped-down product. And over time, you kind of graduate them through the product line. That has proven to be untrue. This is a consumer generation that is willing to pay for authentic, relevant value that's easily accessible through digital channels, and they're willing to pay subscription-like fees for those services. They do it everywhere in their personal life, and they certainly do it in our space, with -- we've also said several times that 75% of our Gold and Platinum acquisitions are under the age of 35. That's a very powerful statement and a very big change from 5 or 6 years ago. And I think it's about the diversity of value within our premium products, whether it's travel-related value, lifestyle, commerce, value. And you know what, they engage with that value at very high levels, right, much more so than older consumers. And that's a good thing. We like that.

All right. Well, another area of growth within U.S. consumer has actually been retention. With a base like Amex, even the small improvement in retention has a very big improvement on your overall economics. The easiest way to gain clients is to not lose them, I think.

That's true.

So you've had retention increase by a full point during the pandemic, which has helped your net card growth figures drive up to higher levels than we've seen in the past. So what happened over the last couple of years to improve retention? And do you think that's a pandemic phenomenon or sustainable going forward?

I mean, it's an interesting question. I don't think it had to be this way, right? I think back to April of 2020 when we were in a very uncertain environment. One thing was certain, though, our travel-related products were less relevant, both to existing customers and prospects. And it was at that moment that we decided to invest $1 billion in what we call value injection to sustain the relevance of those products. And I think customers felt that. And against the backdrop of modestly increasing attrition, we saw a reversal back to historic lows. It also taught us some things about consumers. And that value injection has informed the way we build products and engage consumers today. And I think it all comes down to engagement. At the end of the day, trying to save unengaged customers is very challenging, and the economics of it typically don't work. So just like the best way to get a new customer is not to lose an existing one, the best way to retain one is to fully engage that customer with the value in your product set. And I think we're doing a really good job of that right now.

And so what are some of the examples? You mentioned the value injection, but what are some of examples of other things that you did kind of during the pandemic that you feel like contributed to the increased engagement in the base and that you might continue going forward?

Well, I mean, the value injection took many forms, right, whether it was bonusing everyday spend categories like grocery on our co-brand portfolios, streaming and wireless benefits on existing customers, some PayPal incentives on premium products. And the result for us, as best we calculated, is that we've actually gained a couple of hundred basis points of wallet share from our existing customers, even at a time when travel was depressed, and that's informed the way we think about our marketing. It's informed the design and content of our newest Platinum relaunch here in the U.S., right? And we're going to keep pushing in that direction.

All right. So as I highlighted, the retention improvements have helped net card growth. Let's focus on card growth, because one of the most striking measures in Amex's recent results has been card growth, proprietary cards-in-force, for example, were up 4% in 2021, and then, up 6% in the most recent quarter, including 5% within the consumer business. These are the highest levels I looked back since 2018 when actually, you were sort of in a recovery mode from the Costco loss. So what's accelerating this card growth over the last 4, 5 quarters or so?

Well, you noted that we're retaining about 1% more customers than we did in the past. And those retention statistics are net of voluntary attrition. We also lose customers for credit reasons. And due to all the liquidity in the system, as well as our financial relief programs, we are losing less customers for credit reasons as well, right? And that is continuing to amplify. But acquisition has been very, very strong, right? It's been strong, led primarily by our proprietary and premium products over the last couple of years, but you see our co-brand partnerships coming back in a meaningful way as well. I think we said on the earnings call that March was the best month ever for Delta co-brand acquisition. What's interesting is we don't actually kind of -- most of our metrics don't focus on cards-in-force. When we do our investment optimization, it's very much focused on acquiring billings and revenue, and the cards-in-force growth is more of an outcome of that.

All right. Let's talk a bit about the competitive dynamics in the affluent card space. Affluent cards, of course, Amex's core base is -- has been very competitive. It tends to come and go, I'd say, as you see some of the other big U.S. issuers lean into that space from time to time. Can you characterize what the competitive environment kind of feels like right now? And then, what allows Amex to hold and even maintain share compared to your open loop counterparts, the other big issuers?

Yes. Well, it is intense. It's always intense. I think the level of intensity that we feel now kind of goes back to the Chase Sapphire Reserve launch of maybe, 5 or 6 years ago. I think one of the advantages we have is, in many ways, we created the category. And our brand is inextricably associated with premium products. So when category interest goes up, the category leader often benefits from that segment expansion. Having said that, that doesn't work if you rest on your laurels, right? And so I think that's why you see us moving from a very travel-oriented proposition, which we've continued to strengthen with things like hotel credits and lounge expansion. But as we diversify into areas of lifestyle support, dining, commerce, I think you see the appeal of our premium products extend beyond the traditional traveler. And I think that's a key piece of it and that's what's enabling us to grow in a growing category and take share. I think the stats we shared at Investor Day said, we're growing at about twice the rate of the competition in the premium category.

And I just want to drive that home, because I know some of investors joining this session, maybe don't follow Amex as closely. Your view, right, is that the overall affluent card category in the U.S. is also expanding. You're gaining share in it, but the category itself is growing, right? What are the dynamics going on there?

Well, I think the dynamics going on there is consumers being willing to pay for value, right, being willing to pay for access to dining reservations, for lounges, for other travel-related value, as well as all the other value we bring into the product with partners like Uber or Saks Fifth Avenue, Equinox. I think consumers are willing to pay for value and we're doing a relatively good job of understanding what our consumers value, and then, putting that together often in partnership with and with financial contribution from some of our key partners. But yes, you're right. The fee paying or premium category is growing at about twice the no-fee rate right now.

One just follow-on question. I know, as part of the shift in your value proposition that you did during the pandemic when travel was largely shut down, you started getting into your consumers more everyday spending categories with some rewards targeted at that. Can you just remind us sort of when you look at wallet share amongst your consumers, how much of everyday spending is American Express typically getting? And is this a growth area for you going forward?

Yes. It's tough for us to break down our consumers' wallet by spend category, right, since we do it inferentially by looking at credit bureau data and other third-party data. But what we can say is that our goods and services spend on consumer has grown very robustly during the pandemic. Going into the pandemic, consumer spend was about 30% T&E and about 70% GNS. That is still -- that mix has shifted further towards the goods and services category, partially because of the restrictions on travel, but partially also, because of all of the work we did on some of those value injection benefits that I talked about earlier.

All right. Let's talk a bit about some of the competitive dynamics we touched on. Your traditional competitors, the big banks down the street from us here in New York City. But what -- let's talk about the -- some of the fintech-style competition that Amex is facing somewhat maybe indirectly from buy-now-pay-later specialists like in a firm or a Klarna, which in some ways, emulate aspects of Amex's business like the charge card functionality, digital -- specialized digital marketing. What's your view on the role of these players in the ecosystem? And then, how do you think about Amex competing with them, especially for that important cohort of younger consumers?

Yes. Well, I think the buy-now-pay-later firms got one thing right, and that is there is a generational shift in preferences towards more structured or closed-end borrowing. And we realized that 5 years ago or so when we started building Plan It, right, which is our installment payment capability on the card. Beyond that, I think a lot of the buy-now-pay-later providers are pivoting. They're in that business to be in other businesses, and I think with the current funding and normalization of credit, it will be interesting to see how they do. But I'm not here to talk about them. They largely are focused, if you look at their financials and disclosures, on a different segment of customer than we are. As far as the broader technology environment goes, we're an innovation-led competitor, right? We don't have thousands of branches and current account customers. We need to innovate in order to grow. And as a result, we need to be very plugged into what's happening in technology, evolving business models. And we do that a couple of ways. We do that through our strategic partnerships with very large tech players, be that Apple or Amazon, PayPal, Google, et cetera. And we also do it through our venture investing activity, which we're not in venture investing to drive financial returns. We're in that business to get the intimacy with some of the emerging technologies and business models that may inform how our customers make choices going forward, right? So that's kind of why we're in the tech ecosystem with both big and small players. It's to bring that innovation that we depend on so much inside, and allow us to meet our customers where they are and where they want to be, and be able to put our product and membership value in the right context and partner ecosystems.

All right. Let's switch gears slightly to the lending aspects of your business, where post-pandemic, we're still seeing loan balances earlier in their stages of recovery from the pandemic after consumers pay down a lot of balances during the pandemic. So what are some of the innovations that you're using at Amex to encourage or reaccelerate the push into consumer lending? Or maybe, said differently, as consumers start revolving again, making sure that they're doing that on an Amex card and not on another card?

Absolutely. So I do expect that as some of this excess liquidity burns off, that you will see a selective releveraging of consumers, including our consumers. A lot of folks think of Amex customers, they think of them as not borrowing on credit cards. That's not true. Our customers in the U.S. account for about 1/3 of all credit cards, spending in a very similar amount of credit card receivables, right? And I do expect that we will start seeing -- we have started to see the releveraging. It will be a spend-led releveraging. And if you were to look at our receivables, they've already got back to pre-pandemic level. The portion that's interest-bearing will take a little bit longer to come back, in my estimation. And our ambition is to do what we've done on the spend side, which is to emerge with a higher share of our customers' borrowing wallet than we had going into the pandemic. We were making some pretty good progress on that front. If you look at the 3 years leading into the pandemic, we grew at about 2x the industry rate, and more than half of that came from existing customers. So we are very focused on existing customers. We talked at Investor Day about putting full installment and revolving capability on our Centurion line products, what people think of as charge card products. I don't want our products to be defined by what you can't do with them. And historically, what you couldn't do with a charge card was extend repayment. I think that's going to be something that both increases the appeal of those products and the economics, and also drives some very cost-effective low volatility growth. We're doing things in the term loan space. We're doing things with Plan It. We just integrated it into Delta's purchase path, and we will look for other selective options like that as well.

Well, let's talk about the outlook for consumer credit quality then while you're on it, because card member loan net write-off rates are still sub of 1%, 0.8% in the most recent quarter, extraordinarily low. I know you've been around Amex for, I know, over 30 years. I don't know if you've ever seen anything this low before. And -- So how do you internally think about how those charge-off rates will evolve going forward, especially in the very volatile macro environment we've got going on right now? Should we be expecting they go back to pre-pandemic levels? Or are there structural reasons why they might not?

It's hard to say, and I'm leery of forecasting here. As you say, I certainly would not have forecast 0.8% write-off rates. And it's kind of the manifestation of 2 dynamics, right? All that liquidity we talked about has driven gross write-off rates down. But it's also enabled recoveries from historic write-offs to remain quite robust. And those 2 factors have combined to produce very low write-off rates, historically low, and ones that I think there will be a reversion, right? We will not see rates at that level a couple of years from now. The pace of that reversion and where it lands, I wouldn't hazard a guess on that. I would say that the segment that we deal with is increasingly knowledgeable about and committed to managing their credit extraordinarily well, that will help us. As well some of the programs we've put in place to help customers who face short-term cash flow disruption, like our financial relief programs. So I think we will continue to have a competitive advantage in terms of credit quality. The level of reversion, the pace of it, it's kind of anybody's guess, I'd say, right now.

All right. A couple of recent announcements. Amex recently announced a partnership with Vanguard, which I thought was very interesting, to offer a customized Vanguard investment offering directly to Amex cardholders. I don't know if it's directly available through the app yet, but I'm sure if it's not, it will be coming any day now. What are the goals of this? This is interesting to me, because sitting in payments land, we look often at some of the models around the world where you often do have this kind of financial super app concept where things like investment products or even insurance products are embedded right alongside credit products and banking products. So can you talk a bit about the strategy there?

Yes. There is a lot of talk about super apps. I mean, I do a fair bit of work with our joint venture in China, where they are quite prolific. And I don't know the form of how consumers will choose to interact with these services, but we know that we have the permission to expand the level of financial services we provide to our customers. And I think the first very strong indicator of that for us is when we launched our high-yield savings product back in 2008, 2009 and the level of resonance that, that had in the marketplace, but especially, with our existing customers. And so you've seen us make some moves to expand the range of service provision. Sometimes, we manufacture, like we've done with our checking account and debit products. Sometimes, we partner like we've done with our mortgage marketing activity, and as we've done more recently with Vanguard. I think when you look at 75% of our premium products being acquired by customers, consumers under the age of 35, those are folks who are at early stages of wealth building, and they are going to want to have a more active hand in managing that wealth, which means wealth tech and some of those robo capabilities are going to be important. But we also believe having human backup for really complicated high consequence decisions are going to be important. And that's why we partnered with Vanguard. And that's why we put a product together, an offering that has kind of very compelling wealth tech capabilities for self-directed investing, but also, has that human advisory backup for that peace of mind that consumers associate with American Express as well. And we think this will also help us serve our customers that are in our traditional products. If we know what their life goals are around home purchase and other things, we can do a better job of putting our loan products, our savings products, our mortgage products, our payment products in context and making them relevant for those consumers.

Well, Amex' mobile app, as you all have pointed out many times is as good of a digital bank as you often see out there with this huge influx of fintechs coming in. So given that you've got such a strong, in many ways, very stand-alone, certainly, digital wallet, but also, almost like neobank now that you're integrating in digital bank, integrating in some of these other offerings. Talk a bit about how you interact then with fintechs. You've highlighted the PayPal partnership a couple of times. How do you think about Amex's relationship with fintechs, given that you're in your sort of a frenemy dynamic, I think?

Yes, we are a frenemy for sure. And as I said earlier, we -- our venture investing is aimed at getting a level of insight, and where appropriate, partnership with fintech ecosystem participants. A lot of fintechs, while they may have really good emerging technology, and certainly, over the last couple of years have been extraordinarily well funded, one of the things they struggle with most is credibility and distribution reach. Those are 2 things that we can bring, right? So when you look at the hundreds of venture investments that we've made over the years, we're proud to say that well over half of them, we've done an integration, a proof of concept with. Now, these are small companies. You need to make that really lightweight. You need to be really good at doing that in a simple fashion. But that informs our innovation agenda. It also, occasionally, informs our M&A agenda as well.

All right. Well, we'll come back to that point in a little bit, because I have a number of questions on the M&A and investment side. But first, let's -- you cover consumer globally, of course. There's always a lot of focus on the U.S. market because it's the one big one and the one that we live in every day. But talk -- a lot of the opportunity, particularly in the affluent consumer segment is in other markets. Can you talk a bit about what's different competing in some of your core international markets compared to your home market here?

Well, they all tend to be smaller, right? So you need to struggle with the challenges of scale in those markets. So we try to do that by creating partnerships and platforms and expertise that can serve multiple markets at the same time. They have their own nuances, both competitive, as well as regulatory. But that's okay. Those nuances about how consumers and competitors act, again, informs our innovation agenda across markets, including in the U.S. as well. But we tend to be a little bit more of an underdog outside the U.S., right? We tend to face some formidable local competition. And I like what that does to our culture, right? It makes us really focus on resource allocation, allows us to take a little bit more risk, make us a little bit more scrappy. And in doing so, create some innovations like Member Get Member, the first Centurion product, our mobile app time line approach that we've imported back into the U.S. from international markets.

And which ones, priority-wise, looking forward to driving growth at Amex over the next, say, 3 to 5 years, what are the international markets that you see driving a lot of that growth?

We've talked historically about there being 10 to a dozen strategically very important international markets for us. All of whom, we estimate we were gaining share in prior to the pandemic. Now our international markets tend to be a little bit travel-centric in terms of the partnerships and in terms of the consumer behaviors. But I expect as that travel comes back, we will resume that share-taking trajectory in most of those markets. The big markets won't surprise you. Some of the large Anglo markets, the U.K., Australia, Canada are important markets for us. In the more developing market space, India and Mexico have been powerful markets for us. And then, you've got a range of Continental European markets. And Japan. Japan is one we don't talk about as much, but is a market where brands really matter, where we have been for a long time and where we see some very strong growth over the last decade.

And how do the economics of the card portfolios differ a bit? In other markets, like you said, the regulatory environments can be very different. So in some cases, you may be less able to charge MDRs or as high MDRs on the merchant side. Does that mean that the fee structures on the consumer side are higher or the rewards portfolios are different? Like what's -- how do you have to adapt your product when you're going into other markets?

Yes. I mean -- and it differs as you can imagine, considerably by markets. I think you have markets where MDR is under pressure, but where we have a robust fee-based offering, where consumers are willing to pay for those services. And then, it's really a mixed bag on financing, right? There are markets where borrowing on card is a norm, right? So think U.K., Australia, Canada, Mexico, and you have other markets like Japan and Continental Europe, where it's much less common, right? But generally, the levers we will pull are investments in rewards, how much we invest in financing capabilities and such. But I would say typically, consumers' willingness to pay fees for our products outside the U.S. is every bit as strong, perhaps even stronger than it is in the U.S.

All right. Let's switch. I want to spend a big portion of this session on your longer-term outlook and investment focus areas. Very notably, and again, maybe for some attendees here that are less familiar with the Amex story. We'd argue it's time to take a peak. Amex recently increased, and I think somewhat to the surprise of many investors, Amex has historically, always had a sort of a formula, a model that previously started with 8% to 10% revenue growth. And then, recently, however, upped that outlook to 10-plus percent revenue growth going forward. And that's not a onetime thing of a lapping dynamic coming out of the pandemic. That's a, "Here's the sustained expectation for the business now over the long term, is 10-plus percent revenue growth," pretty impressive. What are the top 2 or 3 factors that give you confidence that you can achieve that level of accelerated growth in the consumer business?

Yes. Well, I think it's important, when you think about that, to think about the foundation in the consumer business. If you were to look pre-pandemic, the consumer business had 9 consecutive quarters of double-digit revenue growth and averaged 12% for 2018 and 2019, right? So we had some relatively strong demonstrated momentum heading into this pandemic. And I think we've built on that momentum, right? We are blessed to have a relatively diversified revenue model, right, where with 20% plus of our revenue coming from card fees, coming from financing and coming from transaction or merchant fees as well. We talked a little bit about what we're doing to strengthen the financing growth and our confidence in our ability to grow its share-taking levels there. We talked a little bit about what we've been able to do in the premium product space, both in terms of the new customers we've acquired, the fact that we are continuing to price for value, right? Our U.S. Platinum Card went from $550 annual fee to $6.95, and we're seeing record levels of demand for that product, right? And you couple all of that with not every customer acquired is created equal. When you're acquiring younger consumers and you can grow with them as their financial capacity expands, and obviously, have a longer expected runway of membership with them. I think those things, put together, give us a lot of confidence that when some of these recovery dynamics subside, that we will find ourselves back in a situation where we can sustain that 10% plus revenue growth within the consumer business.

Yes. And just a follow-on, to drill in there a little bit and understand the different levers for growth there. In the -- given that you are -- the U.S. is the lion's share of your business, we are already at relatively high card penetration levels in the U.S., and I mean, Amex has disclosed e-commerce as over -- card-not-present is over 65% of your revenues. And so I would say that natural rising tide that the whole industry has benefited from just as folks move away from cash and checks, we still have plenty of runway. And more broadly, there's tons of runway over in small business land, but that's -- but focusing on consumer, so how do you think about -- in an environment where there's less runway just in that core consumer, buying pizza with their card as opposed to handing the guy $20 in cash. How you think about the other avenues of growth, the other -- the new customer acquisition or the new pieces of the wallet that you're going after?

Yes. I mean, I take your point that some of the cash conversion cycle may have played out possibly by now. But when I look at our share, even in our most Heartland segment, like premium products, we would estimate that we're at about a 20% share, right? So it's always easier to grow when the market is growing itself, right? But some of it comes down to our ability and belief in our ability to continue to grow and take share from a healthy, but still, quite modest penetration level of 20%. And then, I talked a little bit about lending and our existing customers as a source of growth there. As I said earlier, going into the pandemic, about 60% of our balance growth came from existing customers. Some of that was term loans, some of that was line expansion, some of that was the installment or Plan It functionality. But when you look at our customers, we typically only capture 20%, 25% of their financing wallet. We can and will do better than that. We're modestly gaining share over the last 5 years, and there is a long runway to continue to gain share there without distorting the overall risk profile of the consumer business and the company overall. And then, you talked about international, right, where our penetration and share levels tend to be more modest than they are in the U.S.

All right. Let's turn to investments. What are the priority investment areas for global consumer services over the next 2 or 3 years?

I mean, in large measure, they're what they've been for the last 2 or 3 years, right? We articulated a membership strategy where we wanted to expand the financial services and lifestyle support that we provide members. And those are the things that have led us into mortgage marketing, checking and debit, most recently, the Vanguard partnership we noted. They've also led us into other partnerships, right? They led us to acquire Resy and build out a global dining access program. They've led us to partner with a number of digital media and streaming companies, commerce companies. And that will continue to be where our investment focus is. How do we build out that range of lifestyle services, how do we work with partners to create and curate real differentiated value there that partners are willing to partially fund. And then, what do we do in terms of the investments in our digital capabilities to make it easy and cost-effective for consumers to take advantage of that expanded value, whether it starts to look more like a super app or the manifestation of it is different. The ability for consumers to easily find and consume and engage with our value is super important.

So specifically, in the app, because we've mentioned it a few times, then we have other speakers over the course of today and tomorrow. We are talking about their sort of financial apps coming at it through a different angle, typically. Talk about the roadmap there for the consumer app, the one I use myself personally all the time. What are some of the capabilities in the app now already that maybe, you're just starting to get traction with? And then, how do you -- what types of additional services should we expect will be coming in?

Well, I think when you build this expanded set of services, it puts pressure on your ability to integrate those into your digital products in a member-focused way, right? So fully integrating our banking capabilities, checking and debit, which is integrated into the app, but there's clearly a road map where we make that even more robust. Thinking about the interaction between the Resy app and our dining functionality with the main consumer app. Thinking about our travel and lifestyle services, which are still largely accessed through mobile web and how those become more native over time is important. There's a whole range of servicing journeys that we're focused on. I think we've done a really nice job on some areas like disputes and card replacement and payments, but there is more that we can do there. And we are digitizing some of our credit management and fraud management capabilities as well. And a lot of people think of it as -- well, there's a big cost savings opportunity. I think of it as an engagement in customer satisfaction opportunity first. As a byproduct, undoubtedly, there will be some operating leverage that comes from that as well.

Well, can you talk a bit about -- A hot topic on investors' minds. And I can say, certainly, one, we had dinner last night for the folks that are here in person in New York, and this was certainly a hot topic then. Can you talk a bit about the role of M&A in your investment strategy, particularly given that American Express' stock has been one of our best-performing stocks now over the last 18 months or so, and we're watching the carnage amongst all of these smaller fintech-y names that must start to be a bit tantalizing when they get to certain valuation levels. So can you just talk about how you think about the role of M&A and maybe, if there are particular areas of focus on the acquisition side?

Well, I mean, everybody says the same thing when it comes to this, and I'll say that same thing, right, which is for us, it starts with strategy. In many ways, it's less about price. It doesn't mean price never makes its way into the equation. We do a lot of work preparing for business cycles. I think it helped us a lot through the pandemic. And we're doing some of that work right now, whether it's with respect to inflation or a possible recession. And in doing that, we monitor names that represent capabilities that are really interesting to us, right? It's -- With us, it's more often about acquiring capabilities than it is about acquiring customers for scale. And so yes, we monitor those. And I think the areas wouldn't surprise you, right? Like what's going to strengthen our value proposition and financial services or lifestyle support. We really love Resy. I mean, one of the things Resy has done for us is it provides unique value for our customers with the Global Dining Access program. But it also provides a flow of new customers to us who encounter that value in the Resy app, and then, decide they should have a Gold card or a Platinum card. And then, in the B2B space, which you referenced, clearly, the digitization of B2B payments has captured the imagination of many investors and many companies like us. And we will continue to explore that area and we'll -- the cyclical drop in valuations accelerate some M&A activity. I would never say never, but for us, it's less about price and it's more about strategic fit.

All right. Well, I'm going to turn to our 2 closing questions as I've got the yellow light in front of me. First, talk about some of the underappreciated aspects of the consumer business. You interact with the investor community regularly. What are the 1 or 2 strengths of Amex's core consumer business that, in your view, are underappreciated amongst the investor community?

I mean, I think it comes down to the value of our membership model. And how our brand is relatively distinctive in our category, right? It means all of the safety and security things that financial services brands mean, but it's also an aspirational lifestyle brand. And that allows us -- gives us a lot of permission and allows us to build products and services that command fees, attract a large number of increasingly young consumers into our ecosystem. And the final piece, as I said, of that flywheel is when you've got consumers, high-margin consumers that represent sort of, let's say, 1/3 of the U.S. real economy, partners want access to them, and they want branded high-affinity access, and that allows us to do things in terms of Amex offers or our partner-funded value and our core value propositions that allows us to differentiate, not always on our dime, not always on our P&L. So I think that's one element. I think also, investors are too interested in the U.S. and not interested enough in international, the growth that represents and how it fuels our innovation agenda.

All right. Well, let's close with, we've talked -- we've covered a lot of ground. We've talked a lot about a lot of different initiatives. There are many growth initiatives underway in the consumer business at Amex. Looking out over the next couple of years, what do you -- what are the top 1 or 2 areas that you see having the greatest long-term potential?

Well, I do think -- I'd be hypocritical if I didn't say I think the international business remains a source of accelerated growth for us. You need to remember that heading into the pandemic, it was our fastest-growing segment as well between international consumer and our international SME business. And I continue to believe that that's a large opportunity. I'm also excited about our ability to expand the range of services that we provide our customers, sometimes for a discrete fee, sometimes bundled into those membership fees that we charge consumers. And what our opportunity is to allow consumers to even further personalize that membership experience, to put different pieces together that are relevant to them at that stage of their lifestyle, that stage of their life. I think those would be the areas I'd say I'm most excited about right now. And it's hard not to be excited in payments, right? I mean, you should be very excited in a payment-centric business, the way technology is transforming it; competitors, large and small, traditional and nontraditional. If you're not excited about being in this business, then something is not right.

Well, after the recent market sell-off, my takeaway is to go check out that high-yield savings account that you have going on.

There you go.

All right. Well, terrific. Doug, thank you so much for joining us, and thanks to everyone in the room as well as online. Doug Buckminster from American Express. Terrific. Thank you.

Thank you, Lisa.

Thanks.