Deep thinkers in the payments sector and their tech counterparts have worked tirelessly to perfect consumer experience, while B2B payments got less attention. Then, like someone who hit “snooze” and bolted awake running behind, B2B is now innovating like mad.
Next-generation B2B payments are embracing consumerization at a faster clip in the post-pandemic phase as supply returns to meet pent-up demand, all calling for faster payments in the process.
During a PYMNTS On the Agenda conversation, Galileo Chief Product Officer Archie Puri said that B2B is on the tail end of the innovation wave that began a decade ago, and now providers in the space see “jobs to be done” to optimize digital B2B payments.
Speed is a big deal. Saying consumer payments speed and efficiency is a success story for the books, Puri said “for the evolution to continue, I think it is going to continue into the B2B side and it’s going to need the same things. It’s going to be digitization and personalization, but that’s not going to be enough.”
“If you think the jobs to be done from a business standpoint, it’s between the ability to grow the business and operate the business, and we’ve given businesses tools for some things, but not for others,” she said. That’s the challenge Galileo and other platforms are taking on.
Recent PYMNTS research found that B2B payments are now growing at twice the rate of consumer payments, which indicates both work getting done, and a new sense of urgency.
Read also: The Embedded Finance Tracker
‘Catalyst Events’ up the Urgency
Separating remaining jobs to be done into “above the glass” and “below the glass” categories, she said, “For us, consumer and business-facing experiences are above the glass, and everything that infrastructure and platform enablers do is below the glass.”
Below the glass innovation is “a lot of infrastructure. You first need the infrastructure to be there, and mobile technology made that happen. Then you need platform enablers. Galileo and others in the space have built technology that different businesses and FinTechs can use.”
Setting it all in motion are what Puri calls “catalyst events” — the accelerated pandemic digital shift being an ideal example. “When you combine this set of things, you unlock the supply side,” she said, which means we’re off COVID-19 time and back to “need it yesterday” business time.
One driver is that the composition of management teams is changing, getting younger, and that’s bringing the payments expectations of digital natives into B2B settings more now. This is translating into a much greater need for speed, and finally besting business friction points in four key areas: digitization, personalization, liquidity and connectedness.
Puri offered a hypothetical.
“I’m a small business, the cost of labor is high, I want to innovate at speed, and if I’m building point solutions I’m dealing with multiple partners. Especially with the rising cost of labor, the complexity is too great for me to survive, which means that I need connectedness.”
That means the ability to transmit payments data to business lenders, demonstrate invoice activity, and do it all via supplier portals that cater to increasingly sophisticated B2B users.
See also: As Millennials, Gen Zs Climb Corporate Ladders, Biz Payments Will Rise With Them
The Value of Connectedness
Shining a light on how this work is viewed internally, Puri shared Galileo’s framework for prioritization. “We call it the ‘CORR Principle’ [in which] C is for converting customers, O for streamlining operations, R for reducing risk, and the next R stands for growing revenue.”
It’s a useful approach now because, she said, “We’ve given them tools to help grow their revenue and convert customers, but we haven’t given them the tools to be able to operate their businesses more efficiently and reduce their risk. That’s why now it’s a game of catch-up. Demand is outpacing supply,” and the pressure’s on for smoothing rough spots in processes.
Calling embedded finance “an important lever,” Puri noted how this is one way that B2B payments can get some of the consumerization magic into those flows.
She said, “on one hand [embedded] helps [businesses] not only take payments, which has been traditionally looked at as a cost center, but actually make it a revenue generator,” adding that “when you switch to embedded payments and embedded finance in B2B interactions, you are now getting access to liquidity and capital far sooner in very creative ways.”
Pointing to research finding that 42% of businesses struggle with invoice reconciliation and over one-third report liquidity issues tied to slow business credit underwriting, she said companies need a better handle on working capital, along with the ability to do high-value and high-volume transactions at low cost, and real-time funds movement.
“With these trends, what we are seeing now is specialization across different FinTechs that are coming onboard, different businesses that are solving these problems, but they are point solutions,” she said.
Increasingly, the industry’s response to this — as is the case with Galileo — is platforming for simplicity, giving businesses access to customized credit solutions faster and in one place.
“For us, it is three different priorities,” she said. “One is a single platform to unlock access to all these products. The second is providing a rich ecosystem of partners, because for any FinTech that is launching in this area, if they have to cater to the demand, they need the right access to expertise … and partners that can match their taste for risk and [pace of] innovation.”
Then there’s the data that speeds decisioning. This returns to Puri’s ideas around connectedness and the need for B2B payments to behave like their cool consumer cousins.
“Unless you have rich data streams and data pipelines that are taking data from all these disparate sources and stitching together in pretty much real time, businesses won’t be able to get the economies of scale because they will still have to do point integrations,” she said.
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