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
Unity Trust Bank opens new Manchester office after 47% lending growth
Unity Trust Bank has opened a second commercial office as part of its expansion plans...
Tide to launch first premium account
Tide has announced that it will launch its first premium account to all its members by the end of 2019...
Shawbrook launches portal to ‘dramatically’ reduce BTL product switch times
Shawbrook Bank has launched a new online system that aims to reduce the time taken for BTL customers to product switch...
Santander to stop writing new asset finance business by end of 2019
Santander has announced that it will stop writing any new asset finance business by the end of the year...
Shawbrook adds new relationship director to business finance division
Shawbrook Bank’s business finance division has named John Hunter (pictured above) as its new relationship director for its South East regional team...
National Australia Bank updates cloud strategy with Google Cloud addition
National Australia Bank (NAB) has added Google Cloud to its cloud technology strategy...
PMS Mortgage Club and Sesame Network appoint Reliance Bank to lender panels
PMS Mortgage Club and Sesame Network have added Reliance Bank’s range of mortgage products to their respective lender panels...
FCA aims to improve awareness of no-deal Brexit impact on businesses
The FCA has stepped up its efforts to ensure firms are aware of what they need to do to prepare in the event of a no-deal Brexit...
Alba selects Temenos as core banking platform
Temenos has been selected as the core banking platform for Alba...
An interview with Peter Izard: 'I would like to see the wider banking industry become even more transparent'
In an interview with Specialist Banking, Peter Izard, business development manager at Investec (pictured above), talks about training staff, incorporating tech and changing trends in private banking...
Paragon names new managing director of mortgages
Paragon Bank has announced that it will appoint Richard Rowntree (pictured above) as its new managing director of mortgages, subject to regulatory approval...