Budget scrutiny and reining in expenses is in vogue for both consumers and businesses. For Robert Blair, the timing is perfect. The recently named SVP of commercial card services at SunTrust Banks ($179.1 billion in assets) wants to help businesses manage their procurement and travel and entertainment (T&E) expenses and streamline their payments processes as he seeks to grow the Atlanta-based bank's commercial card practice.
BS&T: How is the commercial card business different today than it was five or 10 years ago?
Blair: One of the biggest changes I've seen in the last five years is the huge increase in both the dollar volumes transacted on commercial cards and the number of cards being issued. We believe these increases will continue into the foreseeable future.
According to the most recent RPMG Purchasing Card Benchmark Survey, annual purchasing card spending in North America grew from $110 billion to $137 billion between 2005 and 2007. Purchasing card spending in North America is expected to increase to $218 billion by 2012, growing at a rate of about 12 percdent per year between 2007 and 2012. Those figures are not surprising to us.
What is driving this growth?
Blair: The industry's general migration from paper to electronic payment forms is an obvious reason for the growth. As an electronic payment form, commercial cards are simply less expensive to process than paper payments. That's one reason why we expect to see spend volumes and adoption going up at a rapid pace year after year even in a tough economy.
We've also seen our clients renew their focus on solutions that help them manage the complexities of their day-to-day payments needs. Our Enterprise Spend Platform provides clients with control, security and visibility into their electronic payments.
Describe the Enterprise Spend Platform.
Blair: Enterprise Spend Platform is a self-service, Web-based flexible spend management solution built with our clients' needs in mind. It has a strong focus on procurement, payables and T&E. It's a scalable platform; it's not one-size-fits-all. It answers our clients' need for control. It's simple for their employees to use so it is adopted well into their treasury departments. At the end of the day, it improves their bottom line.
Can you quantify the cost savings?
Blair: It really varies by rate of internal adoption and enterprise spend, but I will say that the savings are important enough that the commercial card program quickly becomes a key part of our clients' agenda. This is getting their attention.
What role does technology play?
Blair: Technology is a key component in the success of commercial card programs because it provides clients with visibility into the back office. But to be most successful, the technology needs to be a differentiator for the entire treasury relationship in addition to the card program itself.
Why is the commercial card business strategically important for SunTrust?
Blair: We're not just talking about a simple T&E card anymore. We've heard from our clients time and again that a commercial card program allows them to focus on cost management and financial oversight. Treasury officers are under increased cost pressures, and replacing paper checks and invoices with an electronic payment methods lowers expenses.
The only way for us to grow the business is to bring a comprehensive, end-to-end commercial card and treasury management solution to the market. It's a price of entry and part of a solid treasury partnership with our clients. We consider the commercial card business strategic because our clients consider it strategic.