FinTech innovation has challenged traditional banking and lending and opened up significant opportunities for tech advancements to improve the customer experience. And it's not an exaggeration to say this has disrupted the conventional banking industry.
As traditional lenders struggle to keep up, their industry grew by just 2.7% from 2016 to 2021 compared to FinTech companies, which grew by 25% per year. Why? Banks have a lot of legacy systems and processes built over time. When they add new features, they are often "bolted on," leaving clunky integrations and poor user experiences. And sometimes, when digital tools are added, they simply mirror long-standing processes without improvement. Traditional banks have difficulties matching the speed and ease of systems constructed for today’s digital environment.
Company Credit Cards
Company credit cards are a great example. For decades, traditional banks have pretty much operated the same way. An employee uses their card for a purchase. At the end of the month, they gather receipts (if they can find them all), prepare an expense report, and submit it to the accounting team. Then, someone reviews all submitted reports, ensures they are accurate, chases down any outstanding receipts or reports, and reconciles spending to a bank statement.
For some cards, statements must also be downloaded from a portal at the end of the month, and once approved, the expenses are then manually entered into the general ledger.
At best, this is an inefficient and error-prone system.
Modern credit and spend management programs offer simplified platforms that streamline processes, integrate with accounting software, and offer greater visibility and accountability.
FinTech Offers Better Credit Card Controls and Processes
FinTech platforms have reengineered the entire process for managing and controlling corporate credit cards. Digitally-native solutions allow accounting teams to maintain tighter controls and eliminate risks like employee credit card sharing.
Digitally-Native Tools
Digital tools allow fast online access to:
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Limit, pause, or disable accounts
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Provide pre-approval for purchases
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Real-time account monitoring
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Alerting tools on purchases that fall outside company guidelines
With the right platform, there’s no waiting until the end of the month to discover unexpected charges or that your employees made purchases that don't meet protocols.
Virtual Company Credit Cards
Another FinTech innovation is the virtual credit card. Virtual cards can be issued on demand, providing even greater control over spending. While masking the master account number, virtual cards can be used for online purchases or anywhere that accepts card-not-present (CNP) spending.
Besides the same digital controls as physical cards, you can also limit spending to:
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Pre-set amounts
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Pre-authorized expenses
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Particular accounts or vendors
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Individual employees
Virtual cards can be single-use and only authorized for one transaction. They can also be used for recurring online transactions, such as software subscriptions. You can pre-set limits to avoid overspending and have cards automatically reset monthly, which makes it even easier to view spending in particular categories or with certain vendors.
By limiting transactions to a specific vendor, you can ensure employees spend with your preferred vendors rather than buying goods or services elsewhere.
Automated Digital Processing
Instead of time-consuming processes, automation makes things fast and less prone to errors. For example, instead of processing expense reports, automating lets employees use their phones to snap a picture of a receipt. That’s it. There’s no need for expense reports, chasing after employees for receipts, or waiting for month-end statements. Every transaction is automatically categorized and is available for review by accounts in real-time.
Integration with business software further eliminates manual data entry and automatically syncs approved transactions into other systems and the general ledger upon approval.
Other Benefits
There are other benefits to using modern credit and spend management programs.
Credit cards may be more accessible to businesses with poor credit ratings and some cards also come with cash-back options and more flexible terms.
With greater accountability and transparency, you can also benefit from more secure transactions. You can issue physical or virtual cards - but eliminate card sharing completely.
Improve Efficiency, Transparency, and Flexibility
Many companies continue to work with their legacy credit card issuers, not knowing there’s an easier way to do business in today’s digital environment. It’s simply the way they’ve always gone about it, and they don’t even know there’s a better, more flexible solution available.
FinTech credit card and expense management solutions provide a faster, simpler, and more secure solution that provides greater transparency and accountability.
Learn How Torpago Can Help
Torpago is a financial services and spend management platform on a mission to disrupt traditional corporate credit cards and modernize spend management for businesses of all sizes. We'd love to show you your options! Request a demo!
