The untapped trillions: Why tier 1 banks must modernize commercial cards now

Commercial cards should be one of the most powerful growth engines in a bank’s portfolio.

The numbers tell the story:

• Global commercial card spend surpassed $4 trillion in 2023.

• It’s projected to reach nearly $6 trillion by 2029.

• And yet, cards still cover less than 10% of U.S. B2B payments (just ~3% globally).

That gap is a once-in-a-generation opportunity. But it’s not just about capturing spend — it’s about embedding financial services into the daily fabric of business.

And here’s the thing: Tier 1 banks already hold every advantage they need to dominate this market.

Everything, that is, except one.

The Advantages Banks Already Hold

When you look at the assets Tier 1 banks bring to the table, it’s clear why they should be leading in commercial cards:

• Balance sheets big enough to fund large-scale credit lines and working capital programs.

• Regulatory trust built over decades of compliance and risk management.

• Deep client relationships that stretch across treasury, FX, payments, procurement, and operations.

• Global reach with multi-currency capabilities and jurisdictional expertise.

These are unmatched strengths. They’re the structural advantages that agile challengers simply don’t have.

And yet, despite holding all these cards, banks are still ceding ground. Why?

The Missing Ingredient: Real-Time Configurability

The gap isn’t in resources, relationships, or regulatory expertise. It’s in configurability — the ability to create flexible, differentiated products quickly, and put those tools into customers’ hands in real-time.

Legacy infrastructure wasn’t designed for a real-time, digital-first world. It was built decades ago for stability, not adaptability. That rigidity has opened the door for new entrants to show what’s possible when products can be tailored at speed.

Today’s business clients expect card programs that can:

• Offer tailored solutions for different customer segments, from SMEs to multinationals.

• Adapt in real-time with flexible credit, spend limits, and controls that reflect business needs.

• Empower choice at the card level, from instant virtual issuance to embedded credit features to personalized spend limits and controls.

Without this flexibility, banks will always struggle to keep pace. But with it, they can leverage their inherent advantages to retake the lead.

Progressive Modernization: The How

The challenge for banks is obvious: how do you deliver configurability without tearing out the systems that keep you stable?

The answer is progressive modernization.

Instead of betting billions on multi-year core replacements, banks can layer modern issuing and ledger capabilities alongside their existing cores. Think of it as a sidecar: a modern, API-first system working in tandem with legacy infrastructure.

This approach enables banks to:

• Launch new products in months, not years.

• De-risk transformation by tackling it one use case at a time.

• Deliver immediate ROI with new fee income, deposits, and customer engagement.

• Preserve the trust and stability regulators expect while still moving at fintech speed.

I’ve seen firsthand how powerful progressive modernization can be. When I scaled PayMe from HSBC in Hong Kong, we took a sidecar approach by building on the Episode Six platform. That allowed us to move fast, scale quickly, and outcompete the Chinese digital giants Ant Financial and Tencent.  The result?  We captured 70% of the P2P market, more than doubling the combined market shares of Alipay and WeChat Pay.

That experience proved that bank modernization doesn’t have to take years to yield results — done smartly, it can be a competitive weapon that rapidly turns the tide in the fierce battle for digital payments market share.

Why Now Matters

If this is the opportunity, why aren’t more banks moving?

Inertia and risk-aversion are part of it. Banks are still making money on existing programs, so the urgency to act doesn’t always feel immediate. But every year they wait, the competitive gap widens.

Consider what’s happening today:

• Challengers like Ramp, Brex, Aspire and Pliant are winning business by providing agile, software-driven platforms that adapt quickly to client needs.

• Marketplaces are embedding payments and issuing branded cards.

• ERP systems are offering credit and embedded cards into business operating systems.

Each of these developments pulls client relationships further away from banks. And as a transaction banker knows - once those relationships shift, they’re hard to win back.

Meanwhile, technical debt compounds. The older a bank’s systems become, the harder and more expensive they are to maintain. The pool of engineers who can support them shrinks. And the gap between client expectations and product capabilities continues to widen.

That’s why the time to act is now. Waiting only makes modernization harder, riskier, and more costly.

The Untapped Trillions Are Within Reach

The commercial card market is massive, but the real story is how much of it remains untouched. Less than 10% penetration in the U.S. is not a sign of maturity — it’s a sign of opportunity.

Tier 1 banks are uniquely positioned to seize it. They have the balance sheets. They have the trust. They have the relationships. They have the reach.

What they’ve been missing is the ability to deliver modern, configurable products at speed and in real-time.

Progressive modernization is how they close that gap.

By layering modern infrastructure alongside legacy systems, banks can bring new digital-first products to market in months, not years. They can deliver the flexibility clients demand while leveraging the advantages no challenger can replicate.

The ingredients for leadership are already there. Progressive modernization is simply what brings them together.