American Express exec on small business lending, use of AI

Anna Marrs, American Express Group President of Global Commercial Services and Credit & Fraud Risk, joins Yahoo Finance Live to discuss how the market is impacting small business lending.

Video transcript

RACHELLE AKUFFO: All right. We'll take a look at small business. Small business confidence dropped in April to 89, the lowest level in more than 10 years, according to the NFIB. Owner pessimism driven by a looming recession and worker shortages. Now, American Express took a deeper dive with its first ever small business financial confidence report. For better understanding that broader influences weighing on smaller shops, I'm joined now by Anna Marrs, Group President of Global Commercial Services and Credit Fraud Risk at American Express alongside Yahoo Finance's own Diane King Hall in a Yahoo Finance exclusive interview. Thank you so much for joining us this morning.

ANNA MARRS: It's great to be here.

RACHELLE AKUFFO: Congratulations on this report. Of course, thank you. So talk about this deeper dive that we get from Amex's new report versus what we would get from the NFIB.

ANNA MARRS: OK, absolutely. Well, we all small businesses are important, right? They provide about half of all the jobs in the US economy. And we see small businesses today as navigating kind of twin peaks. On the one hand, they're recovering from a pandemic, from supply chain issues. And on the other hand, they're preparing for a more uncertain macro environment. And so what we found in the first American Express small business financial confidence report is a lack of financial confidence in small businesses. So we found that around 50% of small businesses feel truly confident when taking financial decisions. And that number falls even lower to the smallest of small businesses. Only 29% feel financially confident.

And this has a real impact. In fact, 40% of the businesses in the study said that they didn't take growth opportunities on the back of a lack of financial confidence.

DIANE KING HALL: So one of the things that may not have been pulled out in this, but it's top of mind right now, does it come up when you're talking to small businesses about the debt ceiling? Are they worried about the debt ceiling?

ANNA MARRS: Well, it's certainly in the news. We all see it in the news. You know, American Express, we don't employ economists, but we all look at these reports and this-- the news that's underway. There's no doubt that a shutdown of the US government would be another shock on the US economy, and it's yet another thing for small businesses to have to navigate. And so absolutely, it would play into something like the optimism report that Rochelle talked about at the start of the segment.

DIANE KING HALL: Right.

RACHELLE AKUFFO: And, Anna, obviously, we're in an environment you have high inflation, but you also have tighter lending conditions that stem from some of the banking fallout. How are some of these smaller businesses managing cash flow?

ANNA MARRS: It's directly related. You know, small businesses, cash flow is the perennial problem. It's actually through the world over. Understanding the money that's coming in, the money that's going out contributes to their lack of confidence. And when credit gets tight, clearly cash flow gets tight. And so at American Express, that's been a big focus of us. How do we get small businesses to have more transparency into their cash flow? We actually created a whole digital hub called the Business Blueprint. Small business, any small business can go on, get a login, link in their bank accounts, and see their cash flow.

So what's coming in, what's going out. They can access an easy to access line of credit if they want to augment their financial position and really make sure they do have that confidence to take those growth opportunities, which will help grow our economy, as well as their business and give them what they need to thrive.

DIANE KING HALL: And I want to ask you about jobs in particular, because as you mentioned, small businesses account for a great chunk of the job market, and the job market has been very resilient in recent months, especially as we see these-- the jobs reports. What are small businesses saying about staffing, and what their needs are, and how they're able to even meet those needs?

ANNA MARRS: They absolutely say it's still a pain point. In fact, half of the small businesses in this report say they're struggling to get the staff that they need. They say they're hiring and they struggle to get the staff that they need. And about a quarter of small businesses say it's a major issue for them. And absolutely, it's another area of uncertainty. When you think about taking on those big projects, am I going to have the staff that I need to capture those growth opportunities? So it's absolutely a pain point.

DIANE KING HALL: OK.

RACHELLE AKUFFO: And, Anna, building on that because we know that AI is the buzzword that, you know, we're seeing it on the markets everywhere. If you're a small business and you're looking at this-- as we look at how they're planning to deploy it, you saw in the study, saving time, data security, customer service. What sort of support though do they need to actually bring that to fruition, and as we mentioned, to have the skilled workforce to be able to provide these services?

ANNA MARRS: Yeah. We would describe these findings in this report as small businesses are at least AI curious. I'd say that's how we'd describe it. 40% say they're already using AI in some way in their business. And I have to say that really surprised me. But then when we dug into it and what they're using AI for and what they're excited about, it's actually a very typical with an entrepreneur's profile. So the number one use case they want to deploy is finding more customers. That's always the first thing a small business wants to do. So think marketing, thinking ad optimization. Then they want to use AI to better service their customers. So make it easier for customers to find what they need and do more business with them.

And what I found was really interesting is many small businesses saw AI as possibly leveling the playing field. They see many of these tools as being much more widely available. So they say, hey, maybe AI is going to help me compete better with the big guys.

DIANE KING HALL: Let's-- speaking of that, let's go back to like staffing. Do-- did any of the small businesses talk about-- because we've had conversations-- many conversations about AI and robots, do they expect to employ more automation in that respect and using literal robots to do some of the work that they need?

ANNA MARRS: You know, there was a really funny comment from a small business owner who talked about the next generation. So he has a kids who are in the business. He's hoping that AI helps make his kids smarter and maybe make up for the fact that they don't work as hard as he does. But he hadn't gotten fully to robots yet. He was looking for a way to enhance his staff base, which included his family members. I think the fact that small businesses are hiring, are struggling to hire what they need, they're no way in robot yet. They start with the customer always, and that's where they're focused on deploying AI.

DIANE KING HALL: All right.

RACHELLE AKUFFO: Well, apart from you sort of banking on our kids to be the next generation to fix all of this for us, I do want to ask you, when you talk to some of these small business owners, what do they see as the top barriers to really growing their businesses right now?

ANNA MARRS: Well, small businesses are always focused on getting more customers. You know, I was looking back at this thing we have at American Express called small Shop Small or Small business Saturday. Hopefully, you'll see the ads over the summer. You'll get out there and shop in the small businesses around the corner. That's a program that we launched in 2010. So really in the middle of that recession that you are showing earlier, because small businesses always have this long-term need to grow their customer base. Then we talk about cash flow in an uncertain environment, that pain point clearly gets, you know, more acute and really making sure that small businesses have those tools. Even in a tighter credit environment, it's really critical, flexible, easy to access, line of credit products.

Of course, we also have a series of small business cards that many business owners use to run their business. And that's where we're going to stay focused to navigate whatever's ahead.

RACHELLE AKUFFO: We do thank you for joining us this morning. Anna Marrs there, American Express Group President of Global Commercial Services and Credit Fraud Risk and Yahoo Finance's Diane King Hall. Great conversation. Thank you for joining us.

ANNA MARRS: Thank you.