LOS ANGELES American Express is raising its bet that there's money to be made by providing cheaper financial products to consumers who are shut out of the mainstream banking system.
The New York company introduced its Bluebird prepaid card two years ago, and won praise for reducing the price of what's often been a high-cost product. Now Amex, a brand long associated with affluence, is taking a series of steps to further alter its image.
In the highest-profile move, American Express commissioned the production of a short documentary about the lives of the unbanked. The executive producer of the movie, titled Spent: Looking for Change, was celebrated documentary maker Davis Guggenheim.
Dan Schulman, group president of enterprise growth at American Express, said the film has already been viewed more than one million times since it was posted online last night. The heart-tugging documentary shows the travails of low-income Americans falling further behind as they try to get ahead.
"If you spend 38 minutes watching this documentary, my insight is that a quarter of you will have tears in your eyes after watching it," Schulman told an audience at "Emerge: The Forum on Consumer Financial Services Innovation," an industry conference held by American Banker and the Center for Financial Services Innovation. "It's a heavy documentary. This is a very heavy problem that we're trying to address."
Schulman argued that financial service firms have a "moral obligation" to rebuild their products so that poor people can build savings rather than fall further into debt.
"Our goal should be to take half ... of these unnecessary fees and figure out a way to send those back to families," Schulman said.
His 30-minute speech did not touch on how American Express plans to earn a profit from its products for low-income consumers. Prepaid industry competitor Green Dot has raised questions about the sustainability of Amex's pricing model.
But in a question-and-answer session, Schulman said: "You obviously have to make money."
"You want this to be an ongoing thing," he added, "not just a one-time thing because you're feeling philanthropic."
Schulman is a former chief executive officer at Virgin Mobile USA, and he made clear that Amex is trying to disrupt not only check cashers and high-cost prepaid cards, but also traditional banks.
American Express' prepaid cards are built on its Serve software platform, and Schulman said that the incremental cost of adding new customers to a scaled software platform is negligible. "Software platforms, I think, are the future of most of our companies," he said.
The new documentary, of course, serves as a stealthy form of marketing for Amex's prepaid cards.
In another example of nontraditional advertising, the company is encouraging the public to write their members of Congress to pass the American Savings Promotion Act. That bill would make it easier for banks to award prizes to their customers as a way incentivize saving.
Amex also announced June 5 that it is adding personal financial management tools, which will categorize spending and allow consumers to establish budgets, to its Bluebird and Serve prepaid cards.