Helping Community Banks Reclaim Commercial Card Control

Commercial card technology remains an important component of B2B payments digitization — and as more financial institutions (FIs) seek to help their business customers embrace electronic payments, their corporate card offerings have had to step up to add value in new ways.

No longer is it enough to offer a card product alone. Businesses large and small need ancillary services, including rebates and rewards, integrated expense management and controls, and features that can support higher-level payments modernization initiatives.

It’s a tall order for large banks to fulfill — yet for smaller community and regional banks, meeting businesses’ commercial card needs can be too expensive and cumbersome to achieve. Traditionally, explained Brandon Lorey, president of Bank of Clarke County in Virginia, community banks take the agent bank route to commercial card programs. While relying on a partner to facilitate card offerings can bring efficiency, it has serious drawbacks for smaller banks.

In a recent conversation with PYMNTS, Lorey discussed how Bank of Clarke County positioned itself to retain ownership of its commercial card offerings, and reflected on some of the ways in which community banks can use corporate cards to drive modernization of B2B payments for their business clients.

Retaining Control

Working with agent banks to offer commercial cards has its advantages, but with businesses now looking toward card products as more value-added tools, smaller FIs may not be as willing as they once were to let go of the customer relationship and product ownership when it comes to their own offerings.

“That customer is not yours. It’s a referral business,” Lorey explained. “You’re getting some revenues off of the referral, and some ongoing revenues, but it’s not your customer.”

The emergence of value-added features attached to the commercial card, like embedded expense management, has not only turned the product into a powerful financial tool for business clients — Lorev noted that it’s also created a valuable incentive for new business customers to become full-fledged clients of a financial service provider to embrace that card-related feature set, as well as other products.

Today, the commercial card can be an effective customer acquisition strategy — and as such, community banks may be seeking new ways to retain control over the card product and the relationships with the customers who use it.

That was part of the motivation behind Bank of Clarke County’s recent partnership with Corserv, which is implementing its commercial card program for the FI while enabling the bank to retain revenues from interchange fees and interest, as well as the client relationship.

“We offer a hybrid program where we have developed a turnkey system that allows the bank to provide the underwriting and take on full P&L responsibility, and enjoy the high-earning assets that credit cards provide,” Corserv’s President Anil Goyal told PYMNTS.

Fueling B2B Payments Modernization

By enabling smaller banks to keep commercial card programs within their own walls, those FIs are also able to play a more prominent role in the digitization and modernization of B2B payments for their customers.

Lorey noted that empowering businesses through cards can come in several forms, and often depends on the business client itself. For larger corporates, value-added features like integrated expense management and spend control have become important ways for managers to gain visibility into capital outflows. Smaller firms, meanwhile, are looking to take advantage of rebates and rewards programs.

And as businesses’ adoption of cards grows, Lorey noted that FIs will be critical partners in enabling firms to adopt the products for other use cases, including accounts payable (AP).

“As the advent of these cards becomes more flexible and available, it’s going to be a natural flow into that process of business,” he said of cards’ emergence in supplier payment workflows. “Since I’ve been here, the businesses that we’re working with initially said, ‘No, we will only take an ACH,’ but many of them are moving to taking the card as merchant services become more readily available.”

The opportunities to create more lucrative rewards programs, more valuable ancillary services and more effective use cases attached to commercial card products continue to grow. For community and regional banks in need of ways to compete against large incumbents as well as agile FinTechs, the business credit card may be a key avenue to boosting revenues and customer retention — if they’re able to maintain control of their own programs.