American Express 2004 Annual Report Download - page 14

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We expect the spin-off will be completed in the third quarter of 2005, subject to regulatory
approvals and certain conditions.
Across our businesses, we believe the opportunities for growth have never been greater. We
think about them in three categories: organic, expanded, and joint ventures and acquisitions.
Organic Growth: Unlike many of the largest financial services firms, American Express has
generated most of its growth organically, rather than through mergers and acquisitions. Our
spend-centric business model in cards and the financial planning and advice approach at
AEFA, which I will discuss later in more detail, have unique competitive advantages. In
addition, our commitment to delivering premium value through our products and services
has significantly increased retention and loyalty among our best customers and attracted
many new ones to our franchise.
The opportunity for additional growth in spending on payment cards is huge. Today, global
spending on general-purpose cards exceeds $3.2 trillion, and that is only a small portion of
what economists estimate to be a market of more than $20 trillion in consumer spending
alone. Even in the United States, the world’s largest market, cards account for only about
one-third of total consumer spending. There is plenty of room to grow the global market
and our share of it — for both our proprietary payments business and our network business.
The same is true for AEFA, which we believe is well positioned to meet the growing planning,
advice, asset management and insurance needs of its target segment — “mass affluent” indi-
viduals and families.
Expanded Opportunities: In addition to organic growth from traditional sources, we are also
focused on developing opportunities in rapidly emerging areas of our business. We refer
to these as expanded opportunities because they leverage existing products and capabili-
ties in new ways. The most prominent example is the launch of our Global Network Ser-
vices business, or GNS, in the United States.
In October 2004, the U.S. Supreme Court refused to hear an appeal of lower court rulings
against Visa and MasterCard in the antitrust case brought by the federal government. This
decision effectively struck down, once and for all, Visa and MasterCard rules that had pre-
vented U.S. banks from issuing cards on rival networks. With these illegal restrictions now
abolished, banks can work with any network they choose and consumers can benefit from
greater choice and marketplace innovation. For our company, partnering with U.S. banks
that want to issue American Express-branded cards is a significant new growth opportu-
nity, on top of the tremendous existing opportunities in our proprietary card business.
Our Brand. Late last year, we launched a major marketing campaign to
promote the American Express brand worldwide. “My life. My card.” features
prominent cardmembers such as renowned actor Robert De Niro and award-
winning talk show host Ellen DeGeneres.
AXP
AR.04
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