E-Auctions: Coming, Coming, Here

Whether in the purchase of a house or a signed first-edition Ulysses, there is nothing that will stop a prospective buyer in his tracks faster than a bidding war–that is, unless you are a treasurer looking to buy a service from a bank. While there was always a modicum of healthy competition when a company put out an RFP for banking services, pioneering treasury organizations are setting off a small frenzy within the banking community by moving online to buy products and services via e-auctions. “This is a new phenomenon,” observes Susan Skerritt, a partner of Treasury Strategies Inc. “Only a handful of companies have tried it so far, but if bankers are not shaking in their boots, they should be.”

The reason? Unlike most auctions that tend to push prices up, an e-auction, held by a corporate treasury, forces participating banks to cut prices as they bid against each other to win a corporation’s business. Obviously, banks aren’t crazy about the new tactic, to put it mildly, but thus far enough are playing along to create spirited bidding. And not surprisingly, for those who’ve tried it, e-auctions have translated into big savings.