Thought Leaders in Financial Technology: Gina Taylor Cotter, SVP & GM, Global Commercial Financing, American Express (Part 2)

Sramana Mitra: Let’s double-click again one more layer into that. I’m going to give you a proxy of what we learned from our coverage of Kabbage and OnDeck. I would like to hear you describe the heuristics based on which you are evaluating these loans.

In the case of OnDeck or Kabbage, in the segment of e-commerce transactions for example, they would look for a certain number of transactions and a certain number of months of being in business. These are some of the heuristics that they use to approve a loan. What are the heuristics that you use to evaluate your loan applicants?

Gina Taylor Cotter: We certainly look at similar information. In addition, we have information about our card member behavior over a period of time. We understand where they’re spending, how they’re spending, and how they’re making payments back. We are able to leverage that in addition to all the credit information and business banking information that we may have access to.

Sramana Mitra: What types of signals exist in the American Express users’ data? Give us some visceral examples of the kinds of heuristics that can be derived out of that data.

Gina Taylor Cotter: We might know the types of suppliers that they are traditionally paying and we might know the amount that they’re paying. We know the spend on the card and payment history. Those are all important indicators of how that business is operating. That’s important as we provide them access to capital.

Sramana Mitra: Is there any other technical aspect that is worth covering in this conversation in the context of the technology itself that enables you to process and assess in 60 seconds?

Gina Taylor Cotter: Our business financing offering, like business loans, is something we make available to American Express business customers. With that, we have all of the information about their behaviors internally that enable us to pre-approve or pre-qualify a customer for the offering that I’m talking about. We don’t have to wait for them to come in and apply and answer many lengthy questions. It is a very seamless process for that pizzeria owner when he comes to our portal. It’s having that information in advance that enables us to provide that real-time offer.

Sramana Mitra: It’s pre-approval that you are capable of doing just because you already have all this activity and data in your system, and that is a unique advantage that you have versus your competitors.

Gina Taylor Cotter: It is. Now the application may be one question or two questions. It may be confirming information and defining your need.

Sramana Mitra: I do have some nuances of this to ask you about. Not all the transactions in your customer’s system goes through American Express. I’ll give you another example. We’ve been American Express customers for a long time – probably 18 years. I have an American Express business card for 18 years. We have a merchant account for probably seven years.

However, all our transactions do not flow through American Express. A lot of transactions flow through the payment processing system and get deposited directly into the corporate banking account. There are transactions that flow through our Citibank business card. How do you take all those factors into account?

Gina Taylor Cotter: For the offering that we are speaking about, we don’t take that into account. We use our knowledge or the credit performance of you as a business and we use the information around how you’ve been transacting within the American Express ecosystem.

This segment is part 2 in the series : Thought Leaders in Financial Technology: Gina Taylor Cotter, SVP & GM, Global Commercial Financing, American Express
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