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Banks Pushing Into B2B Portal Market
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January 08, 2001 (Computerworld) -- With a virtual product and a customer base of people and companies that are steadily moving online, banks have joined the rush to set up e-commerce portals for their business and retail customers.
Banks want to hang on to their high-margin cash management and transaction processing businesses rather than let third-party e-marketplaces snare that business from them, said Avivah Litan, an analyst at Gartner Group Inc.
The biggest U.S. banks - including Citigroup Inc. and Charlotte, N.C.-based Bank of America Corp. - already provide payment processing services to third-party business-to-business exchanges. Setting up e-marketplaces of their own allows them to play yet another market segment, Litan said.
But in a recent survey by Stamford, Conn.-based Gartner of 130 major U.S. companies outside the service sector, respondents said they viewed technology companies as more aggressive and more competent when it comes to putting invoicing and payment services online. Only 10% of the respondents said banks will have a leading role, Litan said.
"Banks are not set up to sell these solutions. They're not set up to integrate them. They don't have consulting teams to go out and integrate old technology into these marketplaces," she said.
But according to Bank of America spokeswoman Eloise Hale, banks do have an advantage over third-party exchanges in that they can more easily provide money-handling functions.
That's the case with Bank of America's e-marketplace, she added, where businesses have access to an easy-to-use procurement system (www.bankofamerica.com/businesscenter).
"Say you as a manager authorize two or three employees to make purchases," Hale said. "You can automatically set a dollar limit for each person, and should they request something over that, an e-mail automatically goes to you for authorization."
Bank of America began rolling out its e-marketplace in September, starting in the Baltimore/Washington area and parts of the North and South Carolina for corporate customers. Hale said the bank will expand it to other markets across the nation this year.
San Francisco-based Wells Fargo & Co. has one of the most successful business portals among major banks, according to Litan.
Wells Fargo's e-commerce portal was launched last quarter, allowing corporate and retail customers to acquire office, printing and computer supplies online.
Like Bank of America, Wells Fargo has an online procurement service with built-in checks and balances already up and running, said Deborah Ball, a senior vice president of the bank's wholesale Internet solutions group.
Wells Fargo doesn't offer industry-specific products such as auto parts, chemical supplies or computer components through the portal (http://biz.wellsfargo.com/index.jhtml), but it may start moving in that direction later this year, Ball said.
So far, however, business customers have primarily asked for office supplies and other materials used in day-to-day operations, Ball said.
That makes Wells Fargo's portal, and other banks' e-commerce sites, an ideal venue for office supply vendors such as Itasca, Ill.-based Boise Cascade Office Products Corp.
"We're currently on about 10 bank-sponsored e-marketplaces," said David Wilson, Boise Cascade's e-business development manager. "I think bank exchanges have a great chance of success because of the built-in loyalty of the small business banking customers. There's a reason to go to the Web site - to conduct banking business. So it's logical to take advantage of the office supply storefront while there."
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