At a high level, the same consumers whose day jobs are to manage a company’s payments and financial controls have become accustomed to the seamless and highly personalized commerce opportunities that are available in their daily lives.
The consumerization of B2B payments is taking its cue from contextual commerce.
And as Lisa Shields, founder and CEO of FISPAN, told Karen Webster in a recent PYMNTS TV conversation, embedding banking products and services within enterprise resource planning (ERP) systems can pave the way for chief financial officers and treasurers to do far more than simply track cash balances and pay bills.
They’ve gotten used to what Shields termed “ease of use and delightful user experience” — being able to find and buy what they want using any number of payments options. Along the way, they expect to be presented with relevant promotions and products that match their profile and interests.
Those expectations now increasingly permeate into the corporate realm, she said, driving demand and innovation in the end points and usability that come into play in business banking.
“What I think is really interesting for banks,” said Shields, “is that business banking personalization opportunities can be predicated on intentional sharing of actual data with bounded and enforced usage rights around that data.”
According to Shields, the business banking experience will evolve and shift away from an ad-based platform model that amasses a huge amount of what she termed “side effect information” to offer relevant banking products and services.
“From the CFO’s perspective,” she told Webster about embedded banking, “it’s about a job to be done, and not simply about a bank product to be used.”
From the bank’s perspective, it is about presenting solutions in context and serving as the corporate client’s growth partner, while upselling and cross-selling a wide range of banking services and products.
Every bank can offer ACH and card payments, but application programming interfaces (APIs), gathering data from disparate parts of the financial ecosystem, are helping make the bank account the focal point of the corporate’s universe, embedded into the ERP.
“We’re starting to see the precedents of this,” she told Webster, “and the foundational layers are there, certainly in the case of payments.”
Building A Trusted Data Exchange
Shields says that as contextual banking evolves, the most relevant new businesses won’t be the platforms that simply amass the most data — but will be the ones that facilitate a trusted exchange of data in useful new ways.
That’s if and only if, said Shields, the CFO agrees to share a range of information across receivables, income statements and historical data to the bank on a periodic basis. For the strategic financial institutions (FIs), she said, contextual banking represents both a defensive and offensive opportunity.
Embedding banking services inside the ERP has already shown its value to financial executives through the ability to show real time cash and intraday balances within the ERP — all without having to log into the banks’ treasury portals, Shields said.
Leveraging artificial intelligence (AI) and machine learning can create a “virtuous circle” of contextual banking that can suggest customized financing offers inside that CFO’s cash forecasting app. The more data an enterprise shares with the bank, the better the level of service the bank can provide.
And if banks can’t provide the full range of services desired by its enterprise clients, said Shields, advanced technologies, and the platform model, foster partnerships with FinTechs that help fill in the gaps in at least some FIs’ offerings.
“A bank cannot do everything,” she said. “That’s the beauty of embedded banking’s APIs and developer programs.”
Forging Partnerships With FIs
With greater connectivity and the ability to forge partnerships with FinTechs, traditional FIs can pick and choose among the applications and services that are core to its “brand” and should be managed in-house, while offloading at least some, less critical functions to third parties.
Those partnerships also can open up opportunities for FinTechs, said Shields. Though there may always be a place in the financial services ecosystem for “full stack” FinTechs, she said “the most interesting [FinTech] businesses are going to be pure software businesses that can make these core services of banks more accessible and add utility to them in a variety of ways.”
For the banks, she said, the advantages are considerable: “A stickier relationship and a happier corporate customer.”
Looking ahead, Shields predicts that within just a few years, data sharing will foster a set of new expectations among CFOs and treasurers. Those executives will expect improved risk management services from their banks. They will want to see the predictive analytics of the bank’s AI-driven offers and experience tangible benefits beyond simple operational efficiency.
As for paving the way for contextual corporate banking and intentional, trusted data exchange, she told Webster, companies are ready to embrace the foundation underpinning it all — embedded banking. “Corporates don’t need a sales pitch when they are shown banking inside their ERP or inside their accounting systems,” she noted, adding, “They just want to know, ‘when can I have it?’”