Commercial cards have been a core offering for banks for decades and over recent years, this market has undergone significant transformations.
We believe that driven by a mix of new product offerings and changing business expectations that commercial card use has risen dramatically. However, we also believe that the renewed growth in these products has been overlooked by commercial banks and many of their larger more traditional counterparts.
In fact, in our opinion, the majority of commercial banks have long considered commercial cards to be a stagnant part of the market and, as such, have failed to update their commercial card offerings. However, we believe the market is changing and that commercial cards are now among the fastest-growing products for banks, with spending continuing to increase. This presents commercial banks and card providers with a chance to take advantage of the opportunities thus far missed by their larger more traditional counterparts.
The growth of the commercial card market is so substantial, we estimate that by 2020 spending levels will have increased by 71% from 2013 and the compound annual growth rate will reach 8%. As a result of this growth, commercial cards are now moving up the agenda as an investment opportunity – one which should not be missed by commercial banks. Investing in their commercial card portfolio will in turn fuel an expansion in capabilities and increase broader competition within the market. Organisations that do not invest in their commercial card capabilities are likely to see themselves quickly fall behind.
Commercial banks should look to harness the potential of this valuable market by expanding their existing card portfolios, developing new product and service lines, and deepening their relationships with their corporate and business customers. Additionally, by placing an emphasis on flexibility and delivering on customer needs, they will strengthen their offerings in a highly competitive market. As a result, they have potential to gain market share and increase their balances in the market.
Taking the more consumer-focused approach often used by retail banks could help commercial banks to tap further into the potential of this market. For example, banks should look to dedicate more resources to mid-size and small customers to offer greater flexibility in commercial card program design and administration. For example, this could range from billing cycles and program portals to card branding. Commercial banks could also channel resources into offering help to customers that may lack internal expertise on setting up commercial card programs and integrating them into enterprise back-end systems.
By following the approach used by many retail banks and looking at customers on more of an individual basis, commercial banks have the chance to take advantage of opportunities missed by their more traditional counterparts. Not only will this help them secure a larger share of the valuable commercial cards market, but it could also be beneficial to customers, offering them more customer-focused, bespoke commercial card services.
SIGN UP TO OUR NEWSLETTER TO RECEIVE MORE NEWS LIKE THIS STORY
NAB appoints new group CEO and MD
National Australia Bank (NAB) has named Ross McEwan (pictured above) as its new group chief executive officer and managing director...
The Co-operative Bank extends free SME banking offer
The Co-operative Bank has extended its free banking introductory offer for new SME customers by a year...
Cloud migration: Key considerations for financial services
More than ever, it is imperative for financial services organisations to migrate to the cloud...
Maria Harris set to leave Atom bank
Atom bank has revealed that its director of retail mortgages Maria Harris (pictured above) is set to leave to become an independent consultant in the mortgage market...
Handelsbanken reports 6% surge in UK lending
Handelsbanken has reported a 6% increase in UK lending to £21.4bn in Q2 2019, compared with Q2 2018...
Tandem reveals development of new mortgage product
Tandem Bank has revealed that it’s developing a new mortgage product which will be suitable for first-time buyers...
Goldman Sachs invests €25m in Raisin
Goldman Sachs has provided €25m of funding to Raisin...
The power of partnerships
Since our launch in September 2015, we have proven our ability to innovate in the UK savings market, which has been recognised with various savings awards...
N26 rebrands premium account
Mobile bank N26 has launched a premium accounts product named N26 You...
Sesame adds Investec Private Bank to panel
Investec Private Bank has been added to Sesame’s panel...
84% would change financial services provider due to poor complaints experience
More than eight out of 10 customers (84%) claim that they would change financial services provider due to a poor complaints experience, according to the latest research...