By Andres Ricaurte, Senior Vice President and Global Head of Payments, Mphasis
In the past few years, as fintechs have increasingly come into play on the global stage, not only have they shaken up the way in which traditional business is done – but they also shone a light on the need for significant innovation in the payments space.
For banks and other financial services providers, global payments revenues were $1.9 trillion in 2018, of which half were B2B. The sector represents a significant growth opportunity and is attracting major attention from emerging digital players. One thing is clear – banks and technology players are no longer separate entities but two interchangeable sides of the same coin.
As payment digitalisation continues to take place, how can providers ensure that they adopt technological advancements in 2020 to address some of the industry’s most challenging pain points and create unique angles to stay ahead of the curve?
Planting the seeds for success
Looking back over 2019, we saw B2B payments continue to move towards modernisation, particularly as businesses began to look at their end-to-end processes more holistically, utilise data more effectively, and replace their old systems with more nimble digital solutions.
One of the major trends has been the merging of accounts payable and accounts receivable data, feeding into a growing requirement from customers for a higher level of visibility and control to drive better business decisions. As a result, providers must start taking a wider view that encompasses both of these critical processes, to deliver more meaningful insights and help businesses optimise what have typically been two separate sides of the same coin.
Certainly there have been some teething issues to resolve, such as inconsistent tools and processes for businesses to share information with their buyers and suppliers, as well as associated privacy and cyber security issues that arise from the adoption of more open data frameworks.
While some progress has been made, particularly through the creation of ‘closed-loop’ buyer-supplier networks and ecosystems, there is significant room for improvement. Software and financial services providers alike are finding their feet in terms of capitalising on data to create truly intelligent and context-aware B2B payment solutions.
What other key trends will 2020 bring?
In the year ahead, I anticipate that AI and machine learning will play a huge part in shaping the future of B2B payments. As businesses continue to digitalise payments, invoicing and other trade-related processes, richer and larger data sets will increasingly become available. These technologies will pave the way for real-time data analytics and actionable insights. They will also help drive operational efficiencies through cutting down on the cumbersome (and error-prone) manual labour traditionally used to perform functions like cash flow management and forecasting.
Additionally, SaaS adoption will gain even greater momentum, especially in the areas of treasury, accounting, order to cash, and procure to pay, which will change how corporates consume financial services and choose payment providers.
We will also see major disruption in how employees pay for day-to-day expenses thanks to the rapid adoption of B2B mobile capabilities, new payments form factors and innovative configurations for expense accounts. One of the knock-on effects is that traditional cards and expense reports will start becoming obsolete.
Last but in no way least, digital currencies will remain on the worldwide agenda. Leading financial services institutions and governments alike are evaluating and testing the pros and cons of blockchain technologies in re-designing the money supply chain. Consequently, it’s likely that new use cases for payments and settlements will not just appear, but begin to see early stages of market adoption.
Overall, while progress in payment digitalisation will be different across sectors, geographies and segments, embracing a digital-first, data-centric approach across all aspects of B2B trade and commerce is a must-have for businesses looking to future-proof their operations.