B2B Competition Heats Up

Citigroup Monday declared itself the latest entrant in the business-to-business marketplace with the formation of FinancialSettlementMatrix.com Inc., a joint venture with Enron Broadband Services, i2 Technologies, S1 Corp. and Wells Fargo & Co.

Each company will have an equal stake in the venture and will be represented on the FinancialSettlementMatrix.com board. FinancialSettlementMatrix.com will operate as an independent, private company.

The new company is envisioned as an end-to-end financial services solution for B2B marketplaces. It is intended to connect buyers and sellers with payment processing, credit and other services through multiple participating banks and financial services companies. FinancialSettlementMatrix.com is targeting B2B marketplaces as its customers, giving buyers and sellers access to services provided by any of the participating banks or financial services companies, including payments, credit services and ancillary services like invoicing. Citigroup said the new company will be designed to reduce the financial risk of B2B e-commerce and provide the ability to safely make payments online.

“As an independent intermediary that can work with any marketplace technology, FinancialSettlementMatrix.com will be open to any e-marketplace and to multiple financial services providers,” said Steve Ellis, executive vice president of Wells Fargo’s wholesale Internet solutions and treasurer of the new company.

“Our goal is to integrate with leading financial services providers using industry standard transactions so that an exchange or e-marketplace can deliver the broadest range of financial services to their buyers and sellers and provide a choice of financial services to their participants.”

The Enron Intelligent Network will be the delivery platform for FinancialSettlementMatrix.com. The Intelligent Network is a global broadband network that bypasses the public Internet. All the company’s services will be integrated with the i2 TradeMatrix e-business solution. TradeMatrix utilizes an open architecture, making FinancialSettlementMatrix.com’s services available to any e-marketplace, whether or not it is powered by TradeMatrix. S1 will provide its Internet-based payment processing technology, messaging capabilities and corporate suite infrastructure.

The new company is an attempt to stake a claim in the B2B space, which research firms predict will see tremendous growth in the next few years. Forrester Research has said the transaction volume in B2B e-marketplaces will grow 70-fold by 2001 and will account for 53 percent of the $2.7 trillion that will be spent in B2B e-commerce by 2004. Jupiter Communications Inc. has gone further, predicting that the U.S. B2B market will surge to more than $6 trillion in online trade by 2005. Meanwhile, The Yankee Group has forecasted growth to $3 trillion by 2004.

Fred Dumas, of S1, said FinancialSettlementMatrix.com is in a good position to capitalize because the company is already beyond the concept stage. He said a working prototype will be launched by the fourth quarter this year.