00:00American Express built its brand on elite travel benefits and luxury perks.
00:04But now it's shifting to win over a younger audience, Gen Z.
00:08That's the powerful backing of American Express.
00:12In the first quarter of 2025, millennials and Gen Z drove over 60% of new global Amex signups,
00:20fueled in part by influencer-driven buzz.
00:22Hear me out, get the platinum Amex card.
00:24It's metal and it goes ding, ding, ding.
00:26At the heart of this growth is Amex's loyalty and rewards program.
00:30So especially as everything costs more, if you can get champagne travel on a beer budget,
00:35that's a lot of what Gen Zers and millennials are trying to achieve.
00:40Here's a closer look at how this 170-year-old credit card giant is evolving
00:44to stay relevant with the next generation of cardholders.
00:47For decades, American Express was the go-to card for luxury travelers and the business elite,
00:57built on prestige and premium perks.
00:59My name is Tina Fey.
01:00Oh, go right in.
01:01Really?
01:02That worked?
01:02Are you aware that you can access over 120 lounges simply by showing the platinum card?
01:07But that image, and its older customer base, is shifting.
01:10In 2023 alone, Gen Z and millennials accounted for 75% of Amex's new platinum and gold card accounts.
01:19Gen Zers are actually bigger risk-takers with their money.
01:22They came of age, though, at a different time.
01:25It was actually around the pandemic time when money was actually flowing freely.
01:30People got all that stimulus money.
01:32A lot of Gen Zers' introduction to money, at least in adulthood,
01:35was more gambling on meme stocks and crypto.
01:38We've actually seen Gen Zers proving a lot more risk-takers with their money.
01:43And that includes taking on debt and also taking on riskier investments.
01:48A study from TransUnion found 84% of Gen Z consumers aged 22 to 24
01:53had at least one credit card by the end of 2023.
01:57That's a 23% higher rate than millennials at the same age a decade ago.
02:02Millennials were famously debt-averse, very slow to get credit cards,
02:05perhaps because they have hefty student loan burdens,
02:08and many grew up around the time of the financial crisis.
02:12Gen Z spends differently, too.
02:14Unlike older generations, who prioritized travel upgrades and airport lounges,
02:18Gen Z is putting more of their money towards experiences, dining, and lifestyle.
02:23And Amex is leaning in.
02:25They'll get you a free global entry or TSA pre-check membership.
02:29They have their own special lounges at certain music festivals and sporting events.
02:34You get a little bit off your media subscriptions.
02:37You get a little bit off Uber.
02:39You get a little bit off these food delivery apps.
02:41But it is sticky, and it keeps people coming back for more.
02:44Amex's business model makes it uniquely positioned to build out this rewards ecosystem.
02:49Unlike many of its competitors that just run the payment networks,
02:54Amex operates in a closed-loop system.
02:57That means it handles everything in-house,
02:59functioning as the issuer, the acquirer, and the network.
03:03Amex has a unique business model in that they're both a lender and a payment processor.
03:08Visa and MasterCard dominate the network side of things,
03:11but they're not lenders.
03:13They're not extending credit.
03:15Amex is playing both sides of that.
03:17That full-picture view from both shoppers and merchants gives Amex an advantage.
03:22It knows where customers are spending and can tailor company rewards to keep them coming back.
03:28There's something about getting 4x points when paying for dinner with this card that just hits different.
03:32Gen Z and millennials use their Amex cards for dining nearly twice as much as other generations,
03:37according to the company.
03:39Amex saw an opportunity and moved fast.
03:41In 2019, the company acquired Resi, a restaurant reservation platform that gives cardholders early access to in-demand tables.
03:51And in 2024, it expanded its dining ecosystem by acquiring the high-end restaurant booking service Talk,
03:57as well as Roam, a mobile payments app.
04:00When you're with Amex Gold, you can stack 4x points on restaurants around the world.
04:06Amex has really leaned into dining as one of their key experiences.
04:10They have elevated dining rewards on a bunch of their credit cards.
04:15But that also relates to the experience aspect, where they can help you book a table at a fancy restaurant.
04:22They can sometimes offer chef tutorials and meet and greets.
04:26And I'm right here in New York City for the American Express Platinum Coast dining experience.
04:32Amex also taps into brand partnerships to appeal to a younger audience.
04:36Y'all already know by now that my first job every single year at Coachella is always the Amex experience.
04:43Influencer marketing is a big deal.
04:44They do these activations at film festivals and concerts and music festivals and things like that.
04:51It is a way to reach young people.
04:53These rewards are designed to keep younger cardholders spending.
04:57This boosts transaction volume and, in turn, drives up revenue.
05:00Everybody wants a freebie, right?
05:03So especially as everything costs more, if you can get champagne travel on a beer budget, that's a lot of what Gen Zers and millennials are trying to achieve.
05:12It really keeps people loyal, keeps them spending.
05:16That loyalty has been key to Amex's growth.
05:19Even with hefty annual fees, nearly $700 for premium cards like the Platinum, younger cardholders are still signing up.
05:27The annual fee thing is interesting because that shows how sticky their audience is.
05:33That every so often, every few years, they introduce new features on a card and they raise the annual fee.
05:39And the renewal percentage is apparently very, very high.
05:42The people are loyal to these cards.
05:45They like the perks they're getting.
05:46But competition for these young and affluent spenders is fierce.
05:51The rewards race is on.
05:52And competitors like Chase, Capital One, and MasterCard are catching up.
05:56It's a copycat industry and we're seeing a lot of that.
05:59But pointed to the company's affluent customer base as a buffer.
06:02When it comes to luxury travel cards, getting you into the airport lounge, building out their own proprietary lounges.
06:10That was something that Amex really pioneered.
06:12Take the Chase Sapphire Reserve card.
06:14It offers premium travel perks, dining rewards, and access to lounges.
06:19Once a hallmark of Amex's Platinum card.
06:22They have a lot more challengers now than they used to.
06:25And in fact, Capital One's a real up-and-coming competitor.
06:29They're in the process of acquiring Discover.
06:31That's going to make them an even more worthy competitor.
06:34They've been building out airport lounges.
06:36They've been introducing premium luxury travel cards.
06:39Chase had a big shot across the bow in 2016 when they introduced that Sapphire Reserve card.
06:46And that's going toe-to-toe with Amex Platinum.
06:49And American Express is watching for more than just competition.
06:53It's also bracing for broader economic headwinds, including the potential impact of rising tariffs.
06:58Market volatility and investor jitters over tariffs already contributed to a dip in the company's stock price.
07:04People are already worried about inflation and the high cost of living.
07:09If tariffs make that more expensive, there's a fear that we could tip into recession.
07:14And that this could kind of be the straw that broke the camel's back.
07:16A recession is still bad news for any sort of payments provider.
07:20If people are spending less, that pie is shrinking.
07:24In its April 2025 earnings call, Amex CEO Steve Squary acknowledged those risks.
07:29But pointed to the company's affluent customer base as a buffer.
07:33If you look at our card base now versus our card base in 2019, it is more premium than it was at that point with higher FICO's.
07:44And the other thing that I'll say, our millennial and Gen Z's are performing significantly better,
07:50both from a FICO perspective and from a delinquency perspective, than the industry.
07:55That high-spending, low-risk consumer base may help shield the company from some economic turbulence.
08:01The companies that would likely fare the worst in a recession are those that cater to more of a subprime audience.
08:08Those who have customers with lower incomes, lower credit scores.
08:11The Amex audience is very resilient.
08:13Delinquencies across the industry have gone up.
08:16They haven't gone up as much at Amex.
08:18And that's also reflective of the customer base and could bode at least better if there is a downturn.
08:24Amex.
08:26Amex.
08:27Amex.
08:28Amex.
08:29Amex.
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