The pandemic has forced a fundamental reckoning for businesses large and small.
To that end, Ken Gavrity, head of enterprise payments at KeyBank, told Karen Webster that companies must re-examine the most basic operations in order to stay afloat and maybe even thrive – or face existential threats as they mull the great digital shift.
And he noted, too, that the “verticalization” of B2B is upon us.
Tech helps, of course, but innovation alone won’t solve corporates’ problems. Deploying the right solutions hearkens back to the “jobs to be done” theory of innovation noted by Webster during an earlier B2B webinar. People don’t buy products – they buy outcomes.
And the most important jobs to be done change entrenched processes that simply don’t work anymore: “There's nobody in the office,” Gavrity said.
That’s translated into a fundamental shift in workflows, spanning everything from procurement to invoice approvals to payments that need to be made. Not rethinking those workflows can be catastrophic, he warned: “If I don’t do this, I’m not going to be in business.”
Looking at Working Capital – and Security
Beyond the examination and revamping of internal flows, Gavrity maintained that companies must acknowledge that working capital management is more important than ever.
The economic picture is certainly less than rosy, where unemployment may be high well into the next few years.
“The revenue and the cost equations for these companies have been shocked in a lot of ways,” he said, across all industries. “Certainly there are some net winners and losers, and how they think about those line items is fundamentally different.”
Many verticals have been able to pivot into the digital age, such as grocers who shifted to delivery models (“it only took them a few weeks to solve daily delivery,” he told Webster) and retailers who offer curbside pickup.
Restaurants and retailers without that digital flexibility have fared less well, of course.
But overall, supply chains and online ordering platforms have been able to integrate payments and other functions into a seamless experience. “A lot of these digital roadmaps are being accelerated forward, and I think there's no longer a view that this is going to be a ‘temporary’ new way of doing business,” he said.
If the way companies interact with end customers – and one another – is changing, so too are the ways departments within firms intersect and interact.
Accounts payable and receivable used to be concrete, separate operations. Now, more than ever, noted Gavrity, workflows are integrating through software solutions.
That’s especially true for smaller firms, where, he told Webster, “CEOs or owner-operators do not have the time to be the CFO or the treasurer.”
Middle-market and larger companies (where the ERP landscape is fragmented) have more complex processes in place and need more data analytics to help them run more efficiently.
“What I'm starting to see now is more momentum around open architecture, whether it's from the banks and our ability to use APIs to integrate our services into those platforms, or the ERPs themselves, or the FinTech starting to provide [services] – you're seeing different providers in the ecosystem, all moving toward each other to try to solve problems.”
When asked how B2B might be transformed as a result of that collaboration, Gavrity stated that volumes may be down (as firms grapple with economic headwinds), but moving forward he expects to see the “verticalization of B2B payments.” Platforms are providing value-added services to corporate users, offering expertise across several industries and moving payments beyond paper checks and ACH.
At the end of the day, he said, every company (regardless of size or focus) should endeavor to know exactly how cash is flowing in and out of accounts, and what liquidity positions are in real time (which, of course, requires real-time data exchanges).
That (internal) examination has carried over to banks (including KeyBank), noted Gavrity, which in turn has led to better reconciliation of data, more payment choices for corporates and more investments in digital solutions.
(All high-tech is not created equal. For example, he noted, blockchain exists as “technology looking for a problem.”)
Keeping an eye on the cash is especially urgent when in the midst of a recession – chiefly because the cyberthieves come out of the woodwork to defraud companies.
“We're in a downturn and we're trying to digitize workflows – and as you digitize, that potentially provides more access points for those bad actors,” said Gavrity. He noted that companies such as KeyBank have been reaching out to educate enterprises on leveraging security solutions and improving defenses against fraudsters.
Looking at the broader payments landscape, Gavrity took stock of a few inexorable trends. The push toward real-time payments may have been moving a bit more slowly than some observers expected, but the “hockey stick effect” is taking shape.
“The benefits are clear for having real-time payment delivery, and information traveling with it. So I expect that gradual increase to exponentially ramp up over time,” he predicted.
Disbursements represent a real opportunity in the space, as people want their money faster – especially when it comes to getting benefits tied to unemployment or stimulus packages.
The third quarter is over, and looking toward the end of the year and beyond, KeyBank’s focus on automation will continue, with particular emphasis on API enablement beyond payment execution. Gavrity said APIs “allow us to meet the [corporate] customer where they are – whether they want to use our portals or the ERP or a new software layer,” in order to support customer servicing of point of sale operations.
“There's so much opportunity for us to understand that customers want choice – and want to be able to deliver it in a much more integrated way,” he said.