The commercial card sector is growing strongly within a flourishing B2B payments market. Many banks recognise the opportunity that offering commercial cards to clients represents to grow revenues and enhance customer experience. However, there is more potential in commercial card schemes than end-user convenience and provider banks need to understand this by enhancing the technology used to support these schemes.
Today, though, even larger institutions with far-reaching commercial card programmes often lack the necessary systems to analyse spend per account, recognise potential to grow revenues from specific programmes or detect customers that are growing faster.
There are many reasons why banks should consider implementing technology to drive up value for themselves and their customers by achieving smarter insights into their commercial card programmes.
Payment automation
Providers that can give customer decision-makers a dashboard view of where spend is happening and identify trends deliver transparency where it’s most required. Payment automation and the ability to capture all spend types makes financial tracking easier, helping find sources of non-compliant spend and enabling financial directors to act quickly.
Beyond this, banks also have the potential to leverage enhanced technology to underpin commercial card offerings and use that to drive important customer analytics.
Metrics to track performance
Key metrics for a bank to track to improve card delivery and performance in this area while also enhancing client engagement include spend per account (SPA), average transaction value (ATV), operational costs and profitability.
A higher SPA is likely to mean improved profitability and ROI for the issuer and greater client satisfaction with the product. Higher ATV scores generally result in greater profitability for the issuer. Moreover, tracking operational costs helps identify controllable costs which can be rapidly minimised without impacting service, while monitoring profitability helps pinpoint opportunities to extend the surplus of revenue over costs.
Added to this, the technology has the potential to track further metrics. These include delinquency rates, which, if low, offer the potential to increase issuer profitability and end user ROI and also client retention, which, if high, will reduce costs and increase the net present value of accounts booked. Other key metrics include end user cardholder perception and client perception of the banking relationship.
Grow your customer base
Taken together, analysis of these metrics will help banks understand where greater marketing effort is needed and whether the products that the customer is using are fit for purpose. Beyond this, by being able to segment the customer portfolio, marketers can prioritise products and manage incentives to keep growing their existing customer base and share of budget.
Technology alone is not a sales point for any client or commercial card provider. However, the associated benefits from delivering convenience, analytics, speed and efficiency combine to improve client retention and their overall share of wallet.
Great experiences are key in the B2B environment. If a product is easy-to-use and provides added value, customers are less tempted by change. Card owners see their costs of client acquisition fall and lifetime value increase. Payments technology can deliver strong revenue growth for issuers, even within the context of budgetary constraints.
by Kyle Ferguson, CEO at Fraedom
