portfolio and the businesses served by it on a global scale, and a
series of major international partnerships and alliances is in the
pipeline. Charles Davis looks at how the bank’s
investment in data networks and commercial cards is paying off
.
BMO Bank of Montreal – one of the top ten commercial card issuers
in North America – intends to upscale its cards operations, along
with its industry profile. Terry Wellsley, managing director of
Bank of Montreal’s BMO Harris ePurchasing Solutions unit, and Mary
DiRenzo, senior manager for market development for the commercial
card sector, said that the bank would use technology to help it
create a global network of partner banks to compete against large
competitors in the commercial card market.
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“We’ve been sort of under the radar to date,” Wellsley said. “Those
days are about over, as we will announce a series of major deals
here in the coming months.”
One deal already is official: the Toronto-based bank has added five
banks to its commercial card alliance. China Merchants Bank,
Commonwealth Bank of Australia, Mizuho Financial Group’s Credit
Saison, the Malaysian unit of United Overseas Bank of Singapore and
Crédit Mutuel Group in France will all work with BMO Bank of
Montreal to provide data to BMO Harris ePurchasing Solutions,
enabling BMO Harris’s corporate clients to obtain details on their
global spending, including data on spending by individual country
and a worldwide summary in a single currency.
$5bn portfolio
BMO Harris issues commercial cards for more than 87,000 companies
worldwide, which has produced a $5 billion portfolio. Through BMO
Harris Details Online, its proprietary global database for
reporting, analysis and management, clients have the ability to
review spend by both individual country and a worldwide roll-up in
a single currency. The suite of global reports provides customers
with greater expense oversight, streamlined activities and better
cash flow for their business transactions at home and,
increasingly, abroad.
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By GlobalData“The client will deal with the bank directly in that country, and
we facilitate the process,” DiRenzo said. “The data that is
collected on that local level is then integrated and rolled up to
the parent company. It tells them what suppliers, what negotiated
rents, if they are using the corporate discounts available to them,
and it also opens new opportunities to save money.”
BMO Harris already had three partners in its global commercial card
network: Royal Bank of Scotland Group, Nordea Group and the Chilean
unit of Banco Santander Central Hispano. All the partners are
issuers on the MasterCard Inc network, Wellsley said. He said the
company is in negotiations with a dozen more banks around the world
to further extend the alliance’s reach, and will look for the best
practice providers in each market before settling on new
partners.
DiRenzo said that BMO Harris worked closely with MasterCard to
formulate global standards for data formatting so that corporate
clients can access detailed spending information through the BMO
Harris DetailsOnline database for reporting, analysis and
management. “The reporting features are much more robust as a
result,” she said. “These days, it’s often a matter of integration,
and the better the formatting standards, the better the
integration.”
Taking on the big players
Wellsley said that the global alliance allows BMO Harris to go
head-to-head with larger commercial card issuers such as JPMorgan
Chase, Citibank and American Express.
“To compete in the commercial card business, you’ve got to be
willing to invest in the infrastructure, and we’ve been fortunate
enough to have a deeply committed management team,” he said. “We’re
starting to measure up on a global basis, and we’re getting
attention in the market now because of that investment.”
Its link to the US market through Harris gave it an early start in
commercial cards, said Wellsley, adding that BMO Harris is
currently in negotiations with another dozen large banks around the
world.
“The strategy is, we have customers that are multinational, and we
have a proprietary data system that gives our clients a worldwide
view of their card-based spending,” he said. “If we can build out
that network and maintain the integrity of the data through
correspondent bank relationships, we feel like we really have
something to offer.”
Wellsley said that BMO Harris’ approach is not unlike that of
American Express, which has created a closed-loop data network that
allows business card clients to track spending across the globe.
“We’re not that far apart in terms of the general idea,” he said.
“We’re tying in best-of-class correspondent banks so that we can
use those banks to build out from the network.”
Moving beyond North America
The company wants to establish partnerships across Europe, Asia and
Latin America, Wellsley said, adding that Europe would be the first
market targeted. “The European market, then Asia, are both great
opportunities for commercial cards,” he said. “We’ve focused on
European markets but we are seeing Asia as a huge market, and
whoever gets in there is way ahead of the game.”
Wellsley said that another goal for BMO Harris is to broaden use of
its procurement cards beyond purchases for things such as office
supplies and into markets such as travel and entertainment and
fleet services.
“There are many clients out there who really need a card product
that can blend procurement with travel and entertainment
[T&E],” he said. “Professional firms and much of government
needs solutions that can blend T&E with purchasing.”
While BMO Harris has largely targeted larger corporate clients on
the commercial card side, Wellsley said that the middle market has
the greatest potential for growth. “Midsize, and even smaller
companies, those ten-plus card companies, are really emerging as
the next global story,” he said. “We’re going to divide the market
by 12 to 14 industry segments, and then divide that by T&E
versus procurement. We see tremendous opportunities in that
process.”
Wellsley said that commercial card success ultimately comes down to
how good the data is, and the level of functionality offered by the
issuer. “We’re the new kids on the block, but we are building this
alliance so that we can demonstrate to all those potential clients
out there that we have what it takes,” he said.
