American Express is the leading company in the financial industry that uses big data analytics and machine learning technologies to enhance its customer services and make data-driven decisions. This article gives an overview of the company and how the company was before and after the adoption of big data analytics.
Table of Contents
1. Company Overview
American Express is an American multinational financial services corporation headquartered in New York. It was formed by combining their companies, namely Livingston Fargo & Company, Wells & Co., and Butterfield & Wasson in 1850. It provides services like credit card issuing, processing payments, travel checks, tour packages, credit cards, personal travel planning support, hotel and car reservation services, and other travel-related services.
It expanded its services in 10 states and opened its first European office in 1895 in Paris. It later expanded internationally to other countries like England, Germany, India, Brazil, Japan, China, and others. The federal government nationalized the company in 1918 by combining all the domestic operations under the American Railway Express Company.
As time passed, the company acquired many banking institutes like insurance companies, publishing, and investment companies and became one of the world’s topmost multinational banking corporations. Today, American Express operates in more than forty countries successfully. The Vision of the corporation is to provide the best experience to its customers, and the mission is to deliver different products and services to help customers achieve their aspirations.
2. Challenges Faced By American Express
As American Express operates in multiple countries and provides multiple services and products to its customers, it has adopted the technology and transformed itself to meet the changing demands of customers. Initially, it was just a simple shipping company and then entered the travel and tourism business, and now it is known as a major credit card issuer in the United States.
Some of the changes adopted by the corporation in the last few decades are electronic payments, eCommerce, credit or debit card issuing, and others. The organization used to communicate with the customers through emails, direct contact, and online form communication. This has increased opportunities to innovate new products and services, but at the same time, the company used to face difficulties in ensuring the privacy of the customer’s data.
They started to lose economic expansion after World War II, and credit card issuers started to demand forward-looking economic indicators to predict future recessions and make effective decisions. The corporation used to store the data in traditional databases would create problems in handling the large data sets and would not give accurate data reports to make effective decisions. Later, the corporation upgraded to big data analytical solutions to increase productivity and performance and achieve high customer satisfaction.
3. Solution: Big Data Analytics And AI
Big data analytics was the solution to all the problems of American Express. Data analytics, machine learning, and data mining algorithms are the heart of the American Express decision-making system. Big data analytics are used in areas like customer and merchant interaction systems, fraud detection in transactions, and credit card issuing systems.
They used the Hadoop platform to store, process, and represent the big data of the corporation. Data mining is a technology used to process raw data to remove noisy and incomplete data. The data mining algorithms and machine learning algorithms help to analyze a large set of data and provide an analytical report to the decision-makers.
Some of the machine learning algorithms used are classification, clustering, segmentation, regression, similarity, correlation, itemset mining, and associations. According to Ash Gupta, former president of global data risks and information management at American Express, they have built and deployed the best machine learning models and used the latest technologies like deep learning and machine learning on various decision-making processes to leverage the implementation of big data analytics.
American Express is a 170-year-old company where that maintained a culture of collaboration, contributing to the business goals, and embracing new technology to make better and faster decisions. They challenged themselves to explore deep learning techniques to generate innovative data sets with human-level intuitions. The deep learning techniques helped the company to detect and prevent fraud in the credit or debit card issuing systems.
According to Gupta, American Express has deployed a technology that helps to achieve high competitive advantages in the financial service industry. Some of the competitive advantages accomplished by Americans express our high customer satisfaction, detection and prevention of frauds from the credit card systems, and monitoring of the business systems in real-time to ensure the integrity and security of the data.
Using the machine learning algorithm in the fraud detection models helped them maintain the lowest fraud rates in the credit card industry. At American Express, machine learning algorithms are used in information management systems, fraud detection systems, customer service, marketing, customer management, and loyalty marketing areas.
Challenges In Implementing Big Data Analytics
Gupta also described the challenges faced during the implementation of big data analytics within the corporation. They are
- Adopting new technology requires the organization to transform its culture. This makes the old processes obsolete, and the new technology demands new skills and expertise to achieve success.
- The corporation had to recruit new talent with big data technological skills. This again created new challenges, such as the new talent having to understand the business context but comes from experience, and it has created retention challenges as they need to seek challenges in the big data continuously.
- The marketing process has to transform continuously to attract customers and provide a better experience at American Express.
The American Express team continuously learned and understood the machine learning concepts that enabled them to implement the technology successfully within the business operations. They began implementing big data technology from the risk management system. They opened a big data and cloud computing technology centre where all the new talents worked in Silicon Valley.
In this area, retaining the data science talent in the company became challenging as other competitors also started to deploy the technology. The company is also trying to upgrade artificial intelligence in systems and make the recesses faster than before. The company took further steps to build a big data culture within the organization by using the latest technologies related to big data within the decision-making systems.
The company empowered the people to work closely with the local customers and interact with them effectively. The company estimated 10 years to implement and achieve success from big data technology, but it leveraged it within five years. They are achieving more than expected benefits from the technology. Today, the company has more than 800 data scientists working globally.
4. Conclusions
American Express successfully leveraged big data analytics with the support of top executives. In this long-term implantation, higher executive support plays an important role. They have faced many challenges, but the collaboration and cooperation among the members of the organization led them to achieve success.
The corporation has become one of the top financial service providers across the globe. The corporation also assesses the future opportunities and risks to business using machine learning algorithms. They provide real-time predictive reports to their investors and customers to help them make an effective decision that benefits them and the company
. The company has created a culture of data within the workplace where every employee works together to accomplish the corporation’s goals and mission. American Express is a place where every employee respects and works together to achieve the goals. It not only satisfies its customers but also satisfies and retains talented employees within the corporation.