Mercator Blog

Commercial and Enterprise Payments Advisory Service Update - February 2018
Date: February 13, 2018
Steve Murphy
Director, Commercial and Enterprise Payments Advisory Service

Hello,

Welcome to the Q1 2018 edition of the Commercial and Enterprise Payments Advisory Service newsletter. We provide a recap of recent Mercator Advisory Group research publications, which include detailed reviews of the Dodd-Frank’s impact and blockchain advancements, as well as coming research during the next several months in 2018.

Report Summaries:

Dodd-Frank and Corporate Banking: Still Murky After All These Years
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Corporate Banking Now Peeking Through the Blockchain Window
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U.S. Commercial Prepaid Cards: 2015–2020 Forecast
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2018 Outlook: Commercial and Enterprise Payments
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U.S. Commercial Cards: The Drive Towards Mainstream Payables
A detailed report on the latest trends in commercial cards, including forecasted volumes through 2020

U.S. Faster Payments Is Sorta Kinda Here
A viewpoint document that discusses the current and ongoing state of technology as it applies to this much-anticipated emergence of real time payments

 

Dodd-Frank and Corporate Banking: Still Murky After All These Years

The Dodd-Frank Act (Wall Street Reform and Consumer Protection Act) is now seven years old and its requirements have yet to be finalized and take effect in all ways that may originally have been intended. Initiatives are underway to amend the legislation, and part of this will entail repeal of certain sections. The original legislation covered 850 pages, contained 16 titles, 37 subtitles, 1,500 sections and at the time of passage, required almost 400 subsequent rules changes through various federal agencies. In this research report we examine the legislation with a view toward understanding how it has affected corporate banking entities and what might change should various possible adjustments be made during the current presidential administration.

In the report, we present our detailed analysis of the Dodd-Frank Act’s sections that are most directly related to corporate banking businesses, considers the incremental compliance costs and possible benefits, compares scenarios for the liquidity coverage ratio’s impact on balance sheet flexibility, and discusses the recent proposed changes to the law and most likely outcomes. We also suggest decisions that banks can make to best manage their portfolios going forward.

See more at: Dodd-Frank and Corporate Banking: Still Murky After All These Years

Corporate Banking Now Peeking Through the Blockchain Window

Awareness of blockchain technology has expanded both vertically and horizontally across the financial service industry by multiple paths. The industry has allocated substantial resources for understanding this technology and developing use cases. It is difficult to determine exactly how much of banks’ IT budgets are being used for blockchain technology projects and development, but the investment momentum clearly continues. There have also been direct funding rounds for various blockchain-related start-ups by banks through their venture capital arms. This Mercator Advisory Group Viewpoint reviews the progress of blockchain technology in corporate banking through 2017 and considers the view ahead with respect to this sector.

The research describes the different types of digital currency, then ventures into some of the key corporate banking use cases that we see emerging as potential scalable solutions during 2018. These include trade services as well as cross-border payments among other things. Mercator Advisory Group believes that the early ultra-hype regarding blockchain technology has subsided, replaced by a more sober understanding of the technology. We see the substantial investments of money and resources during the past two years showing signs of paying off as the corporate banking industry moves into 2018.

See more at:
Corporate Banking Now Peeking Through the Blockchain Window

 

U.S. Commercial Prepaid Cards: 2015–2020 Forecast

Commercial prepaid cards are effectively a subset of the overall prepaid market that Mercator Advisory Group has been covering since 2004. The factors distinguishing commercial prepaid from purely consumer prepaid are essentially that commercial prepaid products are sold through either a corporate or business banking arm of a commercial bank rather than a retail or wealth management business unit, and there are fewer categories and segments in commercial prepaid product sets. Despite fewer categories and segments, the load volumes and use are substantial enough to track separately. Mercator identifies 6 categories and 17 segments of usage across the commercial prepaid market. We examine the ongoing growth scenario in the U.S. market, discussing trends, technology dynamics, and opportunities likely to arise over the next four years.

Key insights include a detailed definition of commercial categories and segments, as delivered across both open-loop and closed-loop networks, and overall commercial prepaid spending totals by network type. We also forecast load volumes by segment through 2020, including government versus private sector spending ebbs and flows, and offer insights on trends and potential areas for growth in prepaid commercial cards.

See more at:
U.S. Commercial Prepaid Cards: 2015–2020 Forecast

2018 Outlook: Commercial and Enterprise Payments

Members highly anticipate this Mercator Advisory Group annual prognostication in order to keep a finger on the pulse of an industrial market space as important as commercial payments. Our purpose is to provide insights across the complete cash cycle, including treasury, trade, and alternative lending. To anticipate the future trends effectively requires glancing back to determine if previous expectations materialized to the extent anticipated and within the assumed time frames. We at Mercator have done that and believe the focus and direction of our 2017 Outlook on Commercial and Enterprise Payments were on target and have not substantively changed as we look ahead into 2018.

Mercator anticipates commercial payment developments will revolve around four general themes: (1) payments efficiency, (2) financial institutions’ fintech collaboration, (3) real-time payments, and (4) risk management. Each of these areas has various subthemes that will define the agenda for Mercator’s Commercial and Enterprise Payments Advisory Service in 2018.

See more at:
2018 Outlook: Commercial and Enterprise Payments

Coming Research

During the next several months, we will be addressing topics such as:

Artificial intelligence in corporate banking

International cards markets, including trends and volumes

APIs and how they are being used in corporate payments

As always, feel free to reach out to Mercator Advisory Group to talk about anything payments and potential research topics that would be of interest to you and your team.

Thanks, and feel free to send a message to me at any time. My email is smurphy@mercatoradvisorygroup.com. You can also call me at 1-781-419-1710.

Regards,

Steve

Steve Murphy
Director, Commercial and Enterprise Payments Advisory Service