Banks are starting to take a three-pronged approach to the technology gap that exists between them and their small business clients: remote deposit capture, social media and, in the case of Citizens Financial Group, corporate spend controls.
The $132-billion Providence, RI-based Citizens is offering a new program called accessCARD Command, which uses MasterCard's inControl platform to offer small business owners (which Citizens defines as those with annual revenues of less than $25 million) the opportunity to place similar parameters on corporate spending as those imposed by larger corporates — only through a streamlined product for smaller companies.
By offering the new product, Citizens is hoping to increase automation in a sector of financial services that often remains hamstrung by manual processes. Much like other bank automation products such as remote deposit capture (RDC), installing corporate employee spending controls at small businesses often falls through the cracks between consumer solutions and products for larger businesses — leaving small business behind the curve.
"About [two thirds] of transactions that occur are still being done by cash or petty cash or by personal cards that the employees use and then expense back to their firm," says Stephen Wooters, head of commercial cards for Citizens Financial Group, who discussed the new Citizens platform during an interview with BTN.
Wooters based his numbers on internal research conducted with MasterCard. The firms polled small businesses and found that only 32 percent use a company credit or debit card, about equal to the percentage of small businesses in which the owner uses cash reimbursement or handles all of the expenses him or herself.
Zil Bareisis, a senior analyst at Celent, says that card spending controls are expanding in all sectors of finance, including consumer and corporate, creating a potential market for spend controls for small business.
"It's not just for large clients," he says, adding it depends on what type of small business is being targeted. "If you are a small 'mom and pop' shop, your need for spend control is small. But if you have a small fleet of trucks with drivers, these kinds of cards can be helpful to you."
Wooters says the current reluctance to use corporate cards at small businesses comes from a concern over misuse of the corporate cards, as well as fraud. The new Citizens corporate spending platform, which can be accessed through the bank's small business banking website, is designed specifically for small business owners, which incur spending expense by employees, but have less internal resources for spending oversight and management.
"A larger firm will have a full-time program manager who is dealing with all of these corporate spending details," Wooters says. "A smaller business has a more streamlined approach [for the spend controls], and the owner has many different things to do."
Wooters says one of the differences between the spending platform for larger organizations and the new platform for smaller businesses is the small business tool is less complex, containing fewer detailed parameters to account for the lower employee count and less complicated supply and travel procurement needs of a smaller business. Citizens hopes that will help move spend controls downmarket by reducing cost of ownership.
"The program administrator at a large business needs a bulldozer, the small business needs a shovel," Wooters says.
Users can set up and manage where, when, how and for what types of purchases their employee cards may be used; set up limits and budgets for certain types of spending; establish how and when to receive text or email alerts to guard against overspending and be informed in real time about attempted card activity; and create limited use, virtual card numbers so spending controls can be set for individual transactions or recurring use. "The small business owners can set controls such as time of day, amount of transactions, or merchant categories, etc.," Wooters says.
AccessCARD Command leverages inControl, a spending management product for corporates and consumers developed by MasterCard and Orbiscom, a tech firm later acquired by MasterCard. MasterCard's inControl faces competition from Visa's IntelliLink Spend Management. A Visa spokesman told BTN that it's available to companies of all sizes and provides visibility and control over expenses, as well as access to information through dashboards and alerts. The platform also has the ability to track both card and non card transactions.
Citizens' new spend control product is the third in a series of new products that Citizens is offering for small businesses, including a mobile banking platform called accessMOBILE and accessBUSINESS Manager, a cash management product.
Other banks are also trying to increase automation in the small business sector through a variety of tech plays. Fifth Third, for example, is tying an RDC platform to other services such as lock box; while
