Corporate card issuers are dramatically beefing up analytics and embracing sourcing controls, as banks weigh the severe implications of falling behind the curve.
"It's important for banks to differentiate themselves, to provide more information around the payment," says Aaron McPherson, the research manager of payments at IDC Financial Insights. "It's no longer just about the payment, but the services around the payments. Corporate customers need a means to manage payments."
Companies such as Spendvision and Ariba are offering a growing arsenal of white-label tools to view, manage and analyze procurement and travel that banks can in turn offer as a product to their corporate card customers. With these tools, customers analyze spending in myriad ways and run custom reports to help make more informed sourcing decisions, set and refine travel and entertainment policies that fit the organization's needs, and identify ways to wring out even more savings - such as negotiating rates with suppliers. "If you have a complete view of all hotel bills, that's powerful leverage when it comes to pricing," says Andrew Bartolini, vp of global supply management research at the Aberdeen Group.
The demand among corporate card customers for these services is unmistakable. A report published by CFO Europe Research Services in collaboration with Amadeus late last year found that less than 40 percent of CFOs are satisfied with the savings delivered by corporate travel programs in their company. Meanwhile, 71 percent of CFOs believe it is very important to integrate travel technology with expense management systems, even though just 18 percent say their companies' have highly integrated these systems.
And banks are responding. For instance, Toronto-based BMO Financial Group and Citibank last year linked up with Ariba's Web-based tools to provide clients with better data and control of spending in a source-to-settle solution. Corporate clients can automate purchase orders, invoice reconciliation and the settlement process, initiate electronic payments, gain access to Ariba's 160,000 suppliers and better monitor and control contract creation and performance. At around the same time, Atlanta-based SunTrust created its own Enterprise Spend Platform, powered by Spendvision. In the months following the implementation, SunTrust transitioned 600 customers to the platform and saw average card spend increase from $400 to $1,600. Barclaycard also uses Spendvision.
Other players in the expense management/transaction management space include American Express, which last year partnered with Concur, the largest provider of travel and entertainment management services; and MasterCard, which last year purchased Orbiscom.
As new as these offerings are, Bartolini expects they will quickly become the norm. "In two to three years, it will be table stakes; it'll be baseline for commercial card providers to offer analytics and link to expense reporting systems."
In response, Spendvision is upping the ante, rolling out a new level of dynamic transaction management that can better control procurement and travel expenses on the fly. The dynamism helps the corporate customer manage the payments process end to end, and it also helps the banks themselves to manage their own capital commitments.
Spendvision has streamlined the process of applying and canceling cards, changing PINs and credit limits, all with the goal of eliminating the need to use a bank's call center and keep the process online. Robert Kirby, CEO of Spendvision explains that if someone with a typical $2,000 spending limit is traveling for the next two weeks, a corporate card customer could temporarily lift that limit to $5,000, and sunset that credit line on a certain date, at which point it would revert to the original $2,000.
Of equal interest to some banks are the very tight controls on spending that can limit fraud and streamline the entire payment cycle. For instance, if an employee wants to buy a Dell computer for $1,000, with Spendvision the bank can simultaneously fund a zero balance corporate credit account to $1,000, send a requisition to Dell for the computer, as well as an alert to Dell that it has 24 hours to process the payment; the entire transaction feeds directly into the company's accounting system. "The loop is closed," Kirby says.
By allowing the bank to fund the card accounts for the precise amount at the specific time a transaction is occurring, the bank avoids tying up excess capital in the form of an unused line of credit. "This impacts banks credit capacity for other uses," Kirby says, adding his company will announce partnerships with more than 100 banks in the fall.