B2B Payments

SMBs: The Next Frontier In Travel Tech

The corporate travel and expense management space is a bit of a conundrum.

A surge in FinTech innovation, new industry players and the embrace of cutting-edge technologies – like artificial intelligence and mobile payments – positions the T&E market as an example of how B2B payments can, in fact, be innovative.

On the other hand, this sector continues to be bogged down by paper and manual processes.

Certify’s latest Expense Management Trends: Annual T&E Outlook and Benchmarks report found that 46 percent of survey respondents rely on manual processes – including paper, Excel spreadsheets or homegrown solutions – to manage corporate travel and spend. Only about a third rely on web-based solutions.

The survey also revealed the top pain points corporates endure when it comes to T&E, most of which are linked to those manual processes. For instance, employees losing receipts, and the sheer number of hours it takes for professionals to reconcile, review and approve expense reports, were among the largest challenges.

At the crux of this issue are smaller companies. According to Certify’s research, among the companies that still use manual T&E processes, 64 percent are small businesses. SMBs were also less likely to integrate a web-based corporate travel system compared to larger enterprises, analysts said.

“I think where you really see this happening is around SMB customers,” agreed Annette Cumming, VP of sales at corporate travel technology firm Deem, in an interview with PYMNTS. “They are still doing things manually, they don’t really have anyone ‘watching the store’ when it comes to travel policy – and they may not even have a travel policy. Today, they’re still just trying to get their hands around things.”

According to Cumming, in the corporate T&E space, “everybody is talking about” small businesses. While they struggle to adopt new technologies, the innovations already present in the space are quickly evolving to tap into the SMB segment – which, the executive added, could certainly stand to improve their business travel and expense management processes.

“I see small businesses as the next frontier for travel suppliers and TMCs [travel management companies],” she said. “There are a lot of small businesses out there, and they travel. They’re concerned about their budgets. They want efficiencies. But for so long, the manage [corporate travel] program environment was always catering to large customers.”

That focus led to an explosion in service providers and FinTechs in the last several years. Big tech names like Uber, Lyft, SAP and American Express focused on product development, while new market entrants have emerged to target T&E processes like expense filing, spend analysis, trip booking and policy compliance.

Within this evolution, technologies like AI, machine learning and data analytics have taken hold. In Deem‘s case, that means using AI to predict and recommend travel suppliers and services as a company is booking a trip, or integrating with chatbot technologies on platforms like Facebook to connect with travelers as they move.

Expense management alone is an innovation hotbed as spend analytics, automatic data capture and mobile payments interact to boost employee spend efficiency. According to Cumming, despite all of this innovation, there is a huge hurdle standing in the way for innovators, especially when they target SMBs.

“The biggest point of friction is just getting people to use it,” she said of expense management solutions. “There is a dialogue in our industry that you can just go anywhere, book anything you want, and it will get fed back into a data feed. The challenge with that is just like any other commodity, if you’re not shopping around, you’re not being the most fiscally responsible, and you won’t know what might have been less expensive. The biggest friction is getting business travelers to use a managed program.”

Addressing this hurdle means ensuring that corporate travel technologies are user-friendly, and when it comes to servicing small businesses, that often means making changes to proprietary platforms designed for massive conglomerates.

“We have a maniacal focus on user experience. If they feel like they’re in a customer environment and it’s easy for them to use, there isn’t any friction,” Cumming noted. “Businesses won’t feel like they have to go to a supplier site – they can stay in one program and platform.”

According to the VP, as the corporate T&E industry steps closer to SMB customers, they’re not only exploring tech innovation and user experience, but they’re also embracing collaboration with each other. Deem, for example, offers an expense management solution, Deem Open Expense, but Cumming said the company “also realizes there are a lot of expense providers out there doing cool things.”

The company recently announced a collaboration with Pinnacle Travel Services, another example of industry collaboration, in a deal that sees Pinnacle linking its own clients to Deem business travel management tools.

“I think it’s a very interesting time right now,” said Cumming, referencing the technological innovation and collaboration occurring in the space today. “All of this push-and-pull is really good for our industry. These are great questions and challenges coming into our environment that really force everyone to work at a more heightened level of urgency and create a better product. And things have come a long way in the last 10 to 15 years.”

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