Bank of America today said it is teaming with e-business software maker Ariba to create an Internet-based financial marketplace to provide financial services, such as payment, financing, wire transfers and purchasing services to Bank of America's customers.
The financial firm will use Ariba technology to build Bank of America Marketplace, a new company that will launch and run the business-to-business marketplace for the bank's 2 million business customers.
"The digital space needs more financial capabilities," said Kenneth Lewis, president and chief operating officer, Bank of America, at a news conference today. "The B2B market is greatly outpacing the online credit card payment market. With this alliance we will try and meet these financial needs and others."
Mountain View, Calif.-based Ariba and Bank of America will share in transaction-based revenues from the alliance.
Bank of America said the marketplace's services would include electronic invoicing, extensive payments capabilities and a foreign money exchange. The alliance will gather Bank of America's roughly $7 billion in yearly worldwide purchasing from outside suppliers and streamline the bank's procurement process, the companies said.
Ariba has made a number of alliances in the financial sector. One of the most recent being its partnership with American Express to develop and market new electronic payment services for business-to-business marketplaces.
The number of online marketplaces is growing daily. Recently, traditional automotive manufacturing and retail firms such as GM, Ford, Toyota and Sears Roebuck jumped onto the Web to simplify procurement and corporate purchasing.
The rush by companies to catch the business-to-business wave has obscured some of the challenges the industry faces, however. Some businesses and government officials have voiced concerns about the potential need for government regulation over marketplaces that concentrate tremendous purchasing clout among a handful of large companies, opening the possibility of collusion.
Others have noted that despite the tremendous attention the area is receiving from investors, security issues and technology standards to improve cooperation between marketplaces need to be addressed if the sector is to continue its rapid growth.