Diversified financial services company American Express receives government approval to become a bank holding company, in a bid to attract deposits from customers and thus compete for additional funding on the same market as rival banks and large credit issuers regulated by the Federal Reserve Board.

American Express is thus to experience an increase in regulatory oversight and operate under the same rules and regulations as its main competitors JPMorgan Chase, Citigroup and Capital One. The bulk of American Express’ problems derive from a severe increase in its customer delinquency rate, which surged 57 percent over the past 12 months, with an increasing number of customers finding themselves unable to pay off their monthly balances.

Another card-related problem American Express has to tackle is the growing customer demand for debit rather than credit card services. This fast-developing trend constitutes another blow to the company’s business model, as the revenues it derives from transaction charges leveraged on merchants are to decline. As a result, the company – which does not currently offer debit card services – will have to come up with a solution to compensate for the revenue loss.