Whether it’s online or in person, purchasing cards are being used pretty much everywhere. Kevin Phalen, Managing Director at Bank of America Merrill Lynch, shared with PYMNTS his first-hand perspective on the global expansion of procurement cards, and what lies ahead in the space.
Bank of America Merrill Lynch has claimed the top spot in purchasing card volume this year. You’ve seen growth in p-card, corporate card and prepaid card. How were you able to achieve that?
KP: It was obviously a good year and, quite honestly, it starts with one thing and one thing only: our client focus.
We’ve spent a lot of time with our clients to understand what their needs are, and we’ve continued — over the least five years or so — building out capabilities that are important to them.
To help ensure that we’re delivering for our clients, we have to talk to them not at a product level, but rather at a level from which we can address their payables needs overall. It may be ACH; it may be digital disbursement; it may be card-based payments; whatever it is, it’s got to be part of an overall strategy.
The client focus combined with that payables strategy helps drive the results that we have. One additional contributing factor is that we have a consistent focus on investing in our capabilities on behalf of our clients. They can expect us to continue to invest in the business and deliver on their needs in the future.
What investments have you made over the years to enhance and extend the capabilities of your corporate cards offering? Where have you put your focus?
KP: We put our focus in a few different areas.
First, there’s our investment around the globe, by which we continue to add new product capabilities and new geographical footprints. Every quarter, we try to add another country or region where we offer our capabilities, following the client to wherever they need us to do business with them.
Beyond that, we’re always exploring how to take what traditionally existed in a walk-in, plastic environment, and move it to a virtual one. For example, we took the virtual card infrastructure that we’ve had in the B2B space, moved it into the travel space, and created a new offering called Travel Pro that we launched in EMEA (Europe, the Middle East and Africa) last year. It got some great recognition in the market, and now we’re taking it around the globe, as well.
The third component would be making sure — as mobile continues to be important for our clients — that we’re delivering against our mobile strategy. That strategy is really a mix of a few elements: providing data and exchange of data to and from clients, giving them access wherever they need it, and moving into the payments space with mobile capabilities.
You might be in a particularly unique position to view how companies use purchasing or procurement cards. Can you share some of those insights?
KP: Over the last couple of years, what we’ve seen is almost a bifurcation in the usages that are occurring.
First, we continue to see individuals carrying plastic — for what I call low-value payments or MRO (Maintenance, Repair and Operations) type of activities. These are potentially store managers or operational managers that have a purchasing card they need to utilize locally, and they’ll go out and pay for the services that are important to their organization.
On the flip side, we have clients that have very much integrated the capabilities of purchasing cards — or ePayables, as we call them, from a virtual perspective — into their accounts payable group and their accounts payable organization. Now they’re using this infrastructure for high-value payments and addressing a need there, as well. With that obviously comes a strategic conversation with suppliers, from an acceptance perspective, but we continue to see great adoption in that area.
Given these different types of uses of purchasing cards, we’re making sure that all the necessary capabilities are available around the globe.
Based on what you’re hearing from your clients, do companies see the benefits of integrating purchasing cards with expense management systems?
KP: That’s a good question. I would say that it’s something we’ve seen emerge probably in the last 18 months, where a lot of organizations have invested heavily in their expense management systems for low-value payments, especially in the purchasing card space. Integrating the payables from a purchasing card product into those systems is somewhat of a natural evolution.
Going back to that example I used for low-value payments: You basically have a store manager or a local operating manager that can utilize that expense management system to track what they’re doing from a purchasing perspective, in a manner similar to the way you and I might track our travel expenses.
It’s a great way to create visibility; it’s a great way to understand — from a reporting perspective — where they’re spending their money, and it hopefully gives them some great auditing capabilities on the back end.
What’s next for Bank of America Merrill Lynch’s Global card and payables units? What projects do you have in the works that you can disclose?
KP: Fundamentally, it goes back to what our clients are asking of us. As I said at the beginning, where our clients want us to go — and where they see value in the services we provide — is where we will continue the investment.
Couple of areas in particular: We’re going to continue to expand mobile. We have mobile capabilities in various parts of the world; we’re continuing to expand those, including the number of alerts that are available through mobile devices. We’ll be getting into mobile payments more holistically in 2015 and 2016.
We’re also continuing to expand our footprint, doing business where our clients want us to do business. We will soon be entering a couple of new countries in the Middle East, and we’ll continue to expand globally.
Just as important is our progress related to the virtual solutions we discussed. Historically, those solutions were in more developed countries where purchasing cards were well grounded — like Australia, the United Kingdom and North America. Our virtual capabilities have now allowed us to bring those solutions into 31 countries, and we’ll continue to expand our B2B virtual solutions into countries where card-based solutions are a natural evolution within the payments infrastructure.
One more thing we’re focusing on is figuring out how to make it easier for our clients to do business with us. Part of one of the largest initiatives across the firm is simplifying the way we do business with our clients: make it easier for them to engage with us, hopefully reduce some of the paperwork that is required on their part, give them more self-service tools, and give them data at their fingertips when they need it.
That’s generally where we’re going to continue to invest, going into 2016 and beyond.