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.
“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.
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.
“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.