Even though Citi manages to maintain a reputation as a superior corporate bank in the eyes of many customers in the US, they've fallen behind the eight-ball relative to Chase and American Express from a Spend Management Perspective of late. In the past couple of years, Chase has gone deep in both global trade and EIPP (electronic invoice payment and presentment) by acquiring Vastera and Xign. American Express has also taken some major plunges into the space by picking up Harbor Payments and through its close relationship and investment with Rearden Commerce. Now it's Citi's turn, albeit they're doing it in partnership -- rather than acquiring or investing in -- Ariba. According to the news, "Citi will integrate Ariba Invoice and Payment with its own electronic payment and supplier finance offerings to enable end-to-end financial supply chain management for its clients."
Is this a bellwether deal? Perhaps, if you're a banking customer, it is. It signals that the downstream side of Spend Management is going mainstream and banks want their piece of the puzzle -- and will create, repackage and bundle a set of solutions to bring to market based on customer demand and the competitive dynamics of the marketplace. But it also shows that these solutions are really just the ante for banks to compete for mind and wallet share as financial institutions, software companies, BPO providers and others build increasing influence in the payables and transaction world. If Citi did not do this deal -- or one like it -- they'd find themselves marginalized down the road. Fortunately for Citi, I'm hearing lately that Amex and Chase are not exactly capitalizing well on their recently acquired EIPP packages yet, so perhaps this deal is not coming too late for them to become a Spend Management contender.
Stay tuned for further analysis on this deal later in the week.
- Jason Busch