US global banks have much to learn from their Latin American neighbours in the implementation of B2B banking strategies, says a report from consultancy Bain & Company.
Bain says that Latin banks such as Bradesco, Unibanco and Banamex have positioned themselves to be successful in the business-to-business e-commerce banking sector by collaborating with customers; forging corporate partnerships from the start; leveraging and complementing technological capabilities and moving early to market and exploiting lower levels of competition.
Bain notes that the Latin American Internet market is about two or three years behind the US market, but it has been evolving much more quickly. According to Bain, Latin banks moved relatively earlier to the business-to-business market in creating exchanges and in providing e-payment solutions (credit authentication, back-end processing, payments and settlement) to clients and Web businesses.
Major US banks such as Chase, Bank of America and Wells Fargo did not announce their e-marketplace ventures until early 2000, which created a significant late-mover disadvantage, says Bain.
Unlike the Latin American banks, the US banks will find tough competition from early moving start-ups the consultancy believes. To succeed, they will need to quickly roll out comprehensive, high-quality payment solutions and aggressively sign up major exchanges and corporate customers. US banks that are unable to do this will be relegated to offering commoditised, low value-added services such as transaction execution the report concludes.
"Global business-to-business is expected to grow to $6.3 trillion by 2004, providing banks with enormous opportunities," says Eric Aboaf, vice president at Bain & Company. "However, money will not be made in the exchanges space by simply executing transactions. The path to profits lies in deepening the customer relationship by offering a wide selection of value-added services such as in-bound logistics, inventory management/securitisation, credit services and e-payment and settlement."