Deutsche Bank, at the vanguard of what appears to be a second wave of banks offering electronic bill payment and presentment to corporate clients, is seeking to trump its competition by building an elaborate multicurrency, multilingual payment system.
The Frankfurt banking company says its agreement with iPlanet E-Commerce Solutions, an alliance of Sun Microsystems Inc. and America Online Inc., will expand in a big way on a much simpler business-to-business billing service the bank has operated successfully in Asia since July. Deutsche is iPlanets first customer for business-to-business billing, though the company has worked with several banking companies, including Citigroup Inc., on business-to-consumer applications of electronic billing.
Deutsche Bank said it sees enormous opportunity for electronic billing services in the corporate market, and several other bank heavyweights have made the same conclusion. Northern Trust entered the corporate billing field a year ago, and sold the system it had developed to Bottomline Technologies.
Also last year PNC Financial Services Group formed a business-to-business company, called BillingZone, with Perot Systems Corp. Banks that have more recently begun targeting the market include J.P. Morgan Chase & Co., which late last month said its corporate customers would soon be able to send electronic invoices to their business partners.
Deutsche Bank said that what sets apart its service, called db-ebills and has delayed its own entry into the field is that it is trying to build a global system capable of accommodating many currencies, languages, and local business practices. It is to be pilot-tested this summer by a handful of large corporations in the United States and Europe.
There are very few concrete solutions out there in the marketplace, and those are mostly dollar-oriented, said Peter James, the banks director of product management for the Americas. We are looking at this right from the beginning as a global application. He acknowledged, however, that the trickiest part of all is linking it in to all the enormous variety of payment systems around the world.
Deutsche Bank, which is targeting large multinational corporations, is not late to the party, Mr. James insisted. If you look around and ask yourself how many corporations actually are using this on a day-to-day basis today, then the answer is very, very few, he said. We didnt feel that going through maybe a slightly longer process was a disadvantage to us.
The db-eBills system will become a key piece of our global cash management solutions for our identified customer prospects, said Geoff Garden, head of Deutsches global cash management for the Americas. Deutsche Bank has taken a very carefully planned approach to the development and rollout of its cash management business globally.
Corporate customers will gain all the advantages typically associated with Internet invoicing, including more efficient dispute resolution and collections cycles, and reduced costs, Mr. Garden said.
The arrival of a global bank like Deutsche in business-to-business electronic billing signals that banks and their corporate clients are starting to allocate more funds for conversion to online payments, said Jeetu Patel, vice president of research at Doculabs, an Internet consulting firm in Chicago.
B-to-B for billing is going to be a substantial application that impacts money management at large organizations, Mr. Patel said. Up until now, we only saw a commitment made by technology vendors and the venture community. Now we see Deutsche is going to commit its sales force and resources toward building this product and rolling it out to market.
Mr. Patel said the German bank is one of the thought leaders in the space now. Theyve had a lot of sophistication and evolution in their thinking with what they want to do with the global aspect of the B-to-B settlement.
But he warned that it has a difficult road ahead and will grapple with different countries ways of dealing with exchange rates, taxes, tariffs, dispute resolutions, and accounts-payable procedures. Any kind of significant organization dealing in multiple continents must deal with how money moves and settles across those multiple continents, he said.
Mr. Patel also pointed out that 60% to 80% of alliances between banks and technology companies eventually fizzle out.
Just because they created a partnership doesnt mean theyve created history, he said of Deutsche Bank and iPlanet, which announced their agreement Monday. It just means it is a good first step.
Joseph Marino, an analyst at Current Analysis in Sterling, Va., said the bank is on the right path.
Deutsche is beginning to take rather large conceptual infrastructure steps, he said, and will start going into the operational phase of Web-enabling some of their cash management processes.
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