This story was delivered to BI Intelligence "Payments Briefing" subscribers. To learn more and subscribe, please click here.American Express posted astrongquarter in Q3 2017, which marked the close of the first full year since the firm sold its Costco co-brand portfolio to Citigroup and Visa.Thats good for the issuer because it shows that it's recovering from the anticipated two-year impact of the Costco sale more quickly than expected.But it also means that the firm needs to turn over a new leaf, and is therefore transitioning its leadership. CEO Ken Chenault will step down and be replaced by current vice chairman Steve Squeri as a means of starting a new chapter, according toBloomberg. This could reposition the business in a rapidly shifting industry.Amex has found a path to organic growth.In 2015, Costco comprised 8% of Amexs $1 trillion billed business. And so expectedly, once the portfolio sale was completed last summer, the company did see a downturn in billings overall, posting sub-zero changes across the board for nearly a full year, though impacts were positive if Costco was excluded.But now, the firm has returned to organic growth without Costco, indicating that the strategies its been using to replace the gains Costco brought inlike doubling down on new customers and engaging existing onesare beginning to pay off.And under Squeri, Amex will likelycontinue to grow.In Amexsearnings call, he noted four key strategic priorities, two of which could be particularly instrumental:Premium card leadership:Amex is a legacy leader in the premium cards and high-income space. But as rewards become increasingly important for attracting consumers in an environment where credit appetite is high, the space is heating up, with products like Chase Sapphire Reserve pulling customers that might have otherwise gone to Amex. Thats leading the firm to amp up its rewardsthough that naturally comes with a spending increaseand deliver personalized benefits and lending offerings as a means of further propping up its offering.Digital initiatives:Amex is working hard to become an important part of customers digital lives. This effort can already be seenin some of its newer initiatives, like Pay It/Plan It, and will become increasingly important as customers engage more frequently with mobile payments and digital banking. Amex has already seen strong digital successthe firms monthly mobile users doubled from 2014 to 2016, with logins increasing by 50%and so digital innovations are likely to propel it further and could become an area of leadership. But its also an area where the firm is under threatPayPal recently surpassed Amexs market cap, pointing to impending digital payments dominanceso getting on board could help Amex cement or improve its positioning in an ever-shifting landscape.Ayoub Aouad, research analyst for BI Intelligence, Business Insider's premium research service, has compiled a detailed credit card rewards explainer that:Identifies the costs associated with offering rewards for issuers and how they have increased over time.Details why credit card issuers continue offering high-valued rewards.Analyzes how the industry has evolved since 2011Explores how credit card issuers will advance in order to continue reaping the benefits of offering rewards without assuming increased costs.To get the full report, subscribe to an ALL-ACCESS Membership with BI Intelligence and gain immediate access to this report AND more than 250 other expertly researched deep-dive reports, subscriptions to all of our daily newsletters, and much more. >> Learn More NowYou can also purchase and download the report from our research store. Join the conversation about this story
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