Banks have focused much of their innovation efforts on retail in recent years, with corporate banking services taking a backseat. As banks try to upgrade their business services, one approach is acquiring smaller companies that specialize in business clients.

Capital One announced on Friday that it was acquiring BlueTarp, a business-to-business credit company. Capital One plans on using BlueTarp’s technology to expand its business offerings.

“BlueTarp allows Capital One to expand its commercial servicing capabilities and offerings, including risk management, technology and information security,” said Buck Stinson, senior vice president of card partnerships at Capital One, in an email to Bank Innovation. “We will integrate BlueTarp’s innovative technology into Capital One’s card partnerships business and enhance our servicing capabilities.” 

BlueTarp helps suppliers provide a credit option for the suppliers’ business customers when they make an online purchase. The suppliers get paid up front and can choose 30, 60 or 90 days for repayment, with BlueTarp providing lines of credit of up to $1 million. If the customers meet the financial requirements, they get instant approval, and they can pay online, over the phone or by mail. 

Wells Fargo has long been the biggest lender to business clients. Stinson said the acquisition of BlueTarp will strengthen Capital One’s own business banking relationships and entrench the bank in the business-to-business payment space. In addition, the technology BlueTarp uses to reach financing decisions will be available to Capital One’s co-brand and private-label credit card partners. 

BlueTarp offers collections and customer support that Stinson said will make Capital One a better option for businesses. The company also offers accounts receivable and risk management support, both of which he said made the acquisition appealing. He didn’t disclose the terms of the deal.

Capital One isn’t the only financial institution trying to use new technology to win the loyalty of business clients. In April, Visa partnered with Bento for Business to give Visa debit card holders access to Bento’s services. In May, Mastercard rolled out a variety of new services for small business clients. On Monday, the Royal Bank of Canada debuted real-time wire tracking for businesses.

BlueTarp has significant leadership ties to Capital One. BlueTarp CEO Scott Simpson was the vice president of marketing and analysis at Capital One from 2005 to 2008 and he worked at the bank for almost eight years in total. President and COO Shawn Cunningham was the director of card operations at Capital One for more than two years. The Portland, Maine-based company was founded in 1999 and its clients include Staples, Ace Hardware and Sears.

Alenka Grealish, senior analyst of corporate banking at Celent, noted there is always risk when acquiring a credit company, especially if the economy takes a downturn. She said, however, that Capital One is smart to acquire BlueTarp’s technology to better serve business suppliers. By embedding itself in the business supply chain, Capital One can gain long-term business customers when those customers branch out.

“The relationship is really sticky, and you potentially can cross-sell other products,” Grealish said. “A supplier might start exporting, and you could discern that because there are some non-U.S. addresses in accounts receivable, so you can start offering them cross-border services. This is exemplary of what you can do with current technology.”