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The automated corporate payments world is too vast to be dominated by a single bank, and for U.S. Bank that means a strategy of collaboration and standardization is the best way to grab share. "We can go to market alone and get a bigger piece of a smaller pie. But we want a smaller piece of a larger pie globally," says Rob Abele, svp and president of corporate payments services for U.S. Bank. "No one bank is ever going to own the [corporate] payments space. It's $67 trillion in payables globally and $17 trillion in the U.S."
October 1
Sluggish global economic growth has placed pressure on international corporate activity, but it is also providing an opportunity for corporate payments automation providers such as Syncada that peddle more efficient processing.
"We have about $20 billion in throughputs in the system, and we're seeing that despite the economic uncertainties," says Kurt Schneiber, CEO of Syncada, a joint Visa/U.S. Bank venture that combines U.S. Bank's electronic payment technology and Visa's network of global relationships with corporates.
The global corporate payments market is estimated to be in the tens of trillions of dollars in yearly transactions. But the market's been slow to automate, hamstrung by proprietary payments systems from competing banks, as well as differing local regulations and standards, as well as the varied tech capabilities of local suppliers to submit invoices -- more than half of such bills still come via paper.
But Syncada hopes pressures on corporate balance sheets will give the firm more fuel to sign new bank partners, thus giving its network more size and heft around the world to increase automated payments. "We're growing faster than the economy overall, and that's been driven by the aspirations of large corporates to reduce expense. In our case, accounts payables efficiencies are our signature, and it gives corporates better control on their document flow with suppliers and decreases volatility in their supply chain," says Schneiber, adding the firm has added staff in Brussels and Singapore to help the firm develop payments processing technology that can accommodate differing local styles.
Syncada has signed Citigroup and the Kansas City-based Commerce Bank as partners thus far. Schneiber would not say how large those banks' pipelines were. He also says Syncada is speaking with banks that have interests in the Asian market about partnerships. To help in its effort to lure more banks, Syncada is enhancing its technology to process cross border trade faster, and is adding to its ability to process different types of documentation that supports U.S., European and Asian cross-border trade.
Suppliers and buyers use Syncada to submit invoices, contracts and other documentation. Syncada's web-based software audits the documents to verify amounts and other data. Buyers can also decide how they want to respond to invoices and automate payments.
The model is designed to make payments faster, more accurate and provide more control to buyers. It also creates a means for banks to offer their corporate clients a simpler, more centralized way to navigate varied bill presentment modes, and the different regulations of the local jurisdictions where the corporates' suppliers reside.
Syncada grew out of U.S. Bancorp's PowerTrack invoicing and trade finance system, which the bank has used to process payments in the freight industry. Beyond automating processing, services like Syncada can also aid smaller suppliers in procuring credit, or obtaining better terms, by providing an automated means for banks to view pending payments to small suppliers from larger buyers.
"Because of regulations and a need for transparency, there's more of a focus at corporations in making invoices electronic," says Nancy Atkinson, a senior analyst at Aite.
Syncada faces myriad competitors in the global corporate payments market. Lots of tech firms and banks offer processing engines, such as HSBC, JPMorgan Chase, Bottomline Technologies, SunGard and others.
JPMorgan Chase is also pushing a collaborative approach among banks. "Financial institution clients see their corporate clients expanding rapidly into new geographies to gain access to new, high growth markets as well as diversified supply chains and labor pools," says Christine Doria, Managing Director, Global Product Executive USD Clearing, JPMorgan Treasury Services.
JPMorgan has developed a service called Reference Accounts, in which its bank clients can leverage JPMorgan's platforms in local markets, or though its multi-currency account solution to provide their corporate clients with access to local payment and receivables capabilities. These accounts are opened at JPMorgan in the name of the financial institutional client. Doria says the advantages of these types of accounts are reduced fees and charges, and simpler Standing Settlement Instructions.
In the past, bank propriety has hindered open corporate payments networks. Atkinson says efforts such as Syncada may now benefit from a more cooperative posture among banks than has existed in the past. "The investment to set up [supply chain finance] yourself is considerable, and most banks don't have the money to spend on IT," she says.
