B2B Payments

FinTech Partnerships With FI Marked By Global Scope

Partnerships between traditional FIs and nimble FinTechs have become more global in scope, with an eye on speeding payments throughout the supply chain.  In the Middle East, India, Asia and beyond, new tech has been bringing digital to the domain of the SMB.

Not all that long ago, tech was the province of deep-pocketed firms, usually larger enterprises. The cost of technology has lessened, though, opening the door for SMEs to bring bits and bytes to supply chains – lessening reliance on manual processes and invoices of the paper kind, thus eliminating errors. And the trend is increasingly international in scope.

In India, Marg ERP, which makes inventory and accounting software, is linking with ICICI Bank, the nation’s largest private sector bank by consolidated assets. The partnership will offer integrated payments to micro, small and mid-sized enterprises, using the former’s accounting software. The aim is to boost “connected” banking for digital transactions, the companies said this past week. In addition, corporate clients will be able to apply for working capital loans and make vendor and salary payments.

In reference to the partnership’s advantages, the firms said, is the elimination of manual data entry and accounting. Auto bank reconciliation will also be available to SMEs.

In Africa, the biggest private bank in Kenya, CBA, has cemented a partnership with a FinTech there, Ennovative Capital, a Kenyan firm that licenses software to boost payments speeds. The tech is licensed by a U.S. firm, PrimeRevenue.

This comes as the newswire reports that retailers take as long as five to seven months to pay suppliers, as estimated by the ministry of trade. Financing is done through online and web platforms, with instant access to cash. Reuters noted the facility is backed by the African Guarantee Fund, which promotes the adoption of financing for SMEs.

In the Middle East, RAK Bank has said it will offer Sage accounting software to business banking customers, in an agreement that helps those firms manage value-added tax (VAT) compliance mandates. The software firm, Sage, has had five of its accounting offerings focused on VAT, accredited by the UAE Federal Tax Authority. The agreement comes as a survey of smaller firms – as conducted by Sage last quarter – found that 37 percent of businesses say they are struggling with issues tied to accounting, and are “ill prepared” for complying with VAT issues.

Beyond those individual partnerships, and in a nod to FinTech as helping to mitigate costs stemming from fraud – a finance group based in Asia said this week that new technologies should get a nod from regulators in the battle against money laundering.

The Asia Securities Industry and Financial Markets Association (ASIFMA) advocated enhanced use of new technologies tied to “know your client” or KYC efforts. Using technology would cut costs that come in tandem with anti-fraud efforts.

“FinTech solutions – facial recognition, for example – hold out great hope for the industry, but haven’t been embraced as quickly as some might like by regulators around the world,” said Mark Austen, chief executive of ASIFMA.

Reuters said the number of employees working on those compliance efforts now stands at more than 300, on average per financial institutions. That’s up markedly from 69 in 2016, as estimated by that association. In one set of numbers that gives scope to the issue, HSBC said that it spent $3 billion last year on compliance activities, with a tripling of positions from 2013 to 2017 devoted to compliance alone. That number now stands at 8,600 individuals.

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