Wells Fargo, Chase Manhattan, American Express and others have moved in recent months toward building communities where their customers will be able to buy and sell goods and services online with their purchasing cards.
American Express will raise the stakes Monday when it offers 700 customers some early features of its business portal, which will open fully by the end of the year. That portal, called @Work, will target companies that want to ease expense management by providing multiple services--including travel, hotel booking, expense report tracking and office supply buying--from one central site.
Yet all of these companies face a basic question: Will customers go to their financial institutions to do anything other than bank?
"People don't turn to banks for portal-like services," said Bob Chatham, an analyst with Forrester Research, who questioned whether small to midsized companies will even use such a portal. "Just because banks can move money around, it doesn't mean they know anything about services or managing the procurement process."
The financial firms beg to differ--or are at least willing to give it a shot, with so much potential money to be had. The market for business-to-business e-commerce is expected to reach $1.3 trillion by 2003, according to Forrester Research.
And with millions of customers already, the banks say they are the perfect candidates to build sites that would enable users--particularly smaller businesses--to try to get the lowest possible price for everything from computer equipment to consulting services.
While they're at it, the financial services companies believe they may strike gold in hosting these sites by charging transaction fees or taking a cut on aggregating services.
"The financial industry has a very compelling opportunity here," said Tim Minahan, an industry analyst at Aberdeen Group. "For years they've delivered credit cards and business loans...This is an opportunity to extend their services and their brand to the Net."
Last month, Chase Manhattan joined hands with affiliate Intelisys to begin building its own purchasing community. The bank, which will build its service on top of the Intelisys e-commerce portal, plans to allow businesses to buy directly from office supply companies, as well as sell their own goods on the marketplace, which is expected to launch by year's end.
Not one to be left behind, Wells Fargo is testing RightWork's procurement software, which will enable bank customers to buy from an electronic catalog.
But Chatham believes American Express has the upper hand in this competition as a broad financial services company already versed in the complexities of booking travel and hotel services.
American Express is testing the first version of its @Work portal with customers Dun & Bradstreet, BASF, insurance company Nationwide and technology company Scientific-Atlanta. Amex has 57,000 business-to-business suppliers who could possibly participate in the marketplace, the company said.
Also next week, Amex is expected to announce that it has chosen Tampa, Florida-based Tradex's Commerce Center software as the platform that will enable a network of buyers and suppliers to buy and sell using one standard delivery system. The software is designed to handle large numbers of customers registering on Amex's marketplace, manage contracts, pricing and work flow.
The overall market for buying and selling goods and services on the Internet is growing fast. And the market for companies that provide software to build trading networks is expected to grow to $180 million this year to $1.36 billion in 2003.
"The market will grow 102 percent annually," IDC analyst Albert Pang said. "It's not something that you can sneeze at."
But it remains unclear which financial services company will win the race to build a successful marketplace.
"They're all still in implementation phase," Minahan said. "It's an open ball game."