9 Spokes secures contract with Bank of America, deal signals entry into US market
9 Spokes has entered the US small business market after signing a deal with Bank of America.
Business insights company 9 Spokes (ASX: 9SP) has officially entered the US market after securing a deal to provide its technology platform services to the nation’s second largest tier one financial institution.
The New Zealand-based company announced it had signed a three-year contract with Bank of America to provide the bank’s 3.5 million small business customers with access to its white-labelled business operations platform.
The multinational bank will incorporate 9 Spokes’ platform into its existing Business Advantage 360 cashflow dashboard to give customers with a holistic online view of their finances and reveal key information about their business performance.
Users can connect their cloud software to 9 Spokes to get a comprehensive picture of their business activity through a single smart online dashboard, while also being able to access a range of recommended and accredited apps to suit their industry.
Connecting to more apps can give users a bigger and more detailed picture of their business.
Small business focus
According to 9 Spokes co-founder and chief executive Adrian Grant, the concept has proven to be a compelling model and can act as a “bridge” between the Bank of America and its customers to facilitate better financing decisions.
“We understand small business and have positioned ourselves over several years to be a strong player in [the small business] space and ultimately that is why Bank of America chose to engage with us,” he said.
“Bringing our small business platform to the largest and most entrepreneurial economy in the world has been a key part of our vision … today marks a major milestone in delivering on that vision and we could not be more delighted that Bank of America is working with us on this journey.”
Material value
The “significant material value” of the Bank of America contract will be generated from once-off implementation fees, annual licence fees and re-sale margins on apps purchased by the bank’s customer base.
While exact figures could not be disclosed, the company confirmed the annual fees will equate to more than 25% of total revenues for the 2019 financial year.
“The licence fees will be a fairly large figure under this contract and we can guarantee that level of revenue for the next three years at least,” Mr Grant said.
“Most of the apps will provide a re-sale margin and when you multiply that by the size of the bank’s customer base, it becomes an absolutely critical part of the commercial mix that we want to drive over the next few years.”
Brand banks
Having already partnered with dominant brand banks in Europe, UK, Asia and Australasia, Mr Grant said the Bank of America deal positions 9 Spokes “exceptionally well” to target additional small business banks.
“With Bank of America now on board, the strategic foundation for this strategy has been well and truly cemented,” he said.
“We believe it will generate market confidence and be a good catalyst to our further success in the region.”
At midday, shares in 9 Spokes were trading 8% higher at $0.027.