As the peaks and valleys of blockchain hype continue to rise and fall, more doubt has surfaced over the future of distributed ledger technology, particularly in the area of B2B payments. Dun & Bradstreet recently released a survey that found only about one-quarter of finance executives believe blockchain will emerge as the dominant B2B payments technology by 2028; instead, professionals believe online payments and eChecks will lead the way.
Analysts point to the challenges associated with adoption and implementation of blockchain-powered B2B payment solutions as a key hurdle for the technology. But while D&B's report emphasized limited expectations for the future of blockchain in this market, its survey also found a surprisingly significant portion of professionals who are already using the technology.
One-fifth of survey respondents said their companies have blockchain deployed for B2B payments, and according to Eric Dowdell, global head of trade credit business at D&B, "we're likely about to see a significant surge in blockchain-enabled b2B payments."
Changes in supplier payment habits, payment terms and contracts, and issues like cybersecurity are sure to guide the direction of B2B payments evolution, Dowdell said. While blockchain doubters have become increasingly vocal in recent months, its believers — including in the B2B payments sphere — remain.
One of them is Nick Chandi, co-founder and CEO of PayPie, who recently spoke with PYMNTS about his vision for blockchain. He remains "bullish," he said, on the technology's ability to streamline vendor payments, as well as to make a bigger impact on the broader corporate finance ecosystem.
"I believe there will be a system of trust in the coming years that's going to connect small and medium-sized businesses as well as accountants, their lenders, their banks, and maybe tax authorities," he said.
Part of his vision, he explained, is for blockchain to connect all members of the B2B value chain — businesses, their vendors, financial service providers, tax authorities, auditors, accountants, and more — enabling them all to see the information they need to operate efficiently.
Among the biggest disruptions that blockchain could bring, he said, is its ability to connect all relevant parties to the same information in real time. This will be critical for corporate finance, for instance as small businesses need solutions to forecast cash flow and gain insight into their own risk profiles. That same information is key to alternative and traditional lenders, which need this data to underwrite their financing. Being able to aggregate financial data across platforms and share it securely with the necessary players will be a big step in the transformation of business finance, said Chandi.
The path to interconnectivity isn't new and, in many ways, is already happening. Open banking initiatives and the development of API ecosystems in the financial services space are largely an effort to streamline the movement and collection of data, regardless of its source.
But Chandi said that APIs aren't enough to achieve the kind of disruption that he envisions for the B2B payments and corporate finance future.
"There are systems that can move data from one accounting system to another — that's not a big deal," he said. "It becomes a big deal when a business has a unique identity."
A blockchain-verifiable business identity can be used by a bank, for example, which can then tap into the financial data stored across that company's systems. Real-time visibility into this information means faster and more secure credit decisions.
"With open APIs, you're connecting to your bank but still involving a lot of intermediaries, and those banks still have to do some external data processing," he continued, adding that blockchain has the potential to go a step further than APIs in interconnecting parties. Not only can businesses share data, they can connect on the same platform, allowing a bank to issue credit on the same platform through which they accessed financial information.
In the case of B2B payments, businesses may no longer have to go through the intermediaries of the inter-banking system to pay vendors. In this case, Chandi said he sees opportunity in stable cryptocurrencies backed by fiat that can allow businesses to transact directly with each other on a blockchain platform.
There are many potential use cases for blockchain in corporate finance. But the bigger point isn't that blockchain will be able to interconnect different systems, it's that the technology could negate the need for separate systems altogether, according to Chandi.
These are all bold predictions that will require major overhauls to the financial services space. Different accounting, auditing and other systems must be built to operate on blockchain, and industry stakeholders will, in many ways, need to change their mindsets about how to conduct business. Currently, PayPie offers a cash flow forecasting and risk assessment solution for SMBs and their banks, but Chandi has bigger visions for PayPie and its Single Ledger initiative, with plans to introduce new partners and functionality.
There are also uncertainties with regards to who will participate, and who will trust blockchain technology. Questions like these are what have led some financial services players to dull down the blockchain hype, but Chandi told PYMNTS that he is certain about the direction of the market and its inclusion of blockchain.
"I know it's still early days, and there are challenges," he said. "But I believe the technology is here. That's where we're headed."