Many financial institutions (FIs) are a bit behind when it comes to providing corporate clients with the same seamless, digital experiences they provide for consumers.
Whether it is delays caused by the onboarding process for new clients or the ability to incorporate payments and invoicing capabilities into the legacy enterprise resource planning (ERP) systems of current partners, FIs are struggling to adopt the technologies needed to keep up with the digital transformations of many of the world’s businesses.
But approximately two-thirds of FIs are “very” or “extremely” willing to adopt new technologies to lessen the friction corporate clients experience, though, according to the “B2B Digital Payments Tracker,” a PYMNTS and American Express collaboration.
Get the report: B2B Digital Payments Tracker
FIs are thus working with their partners to help them accept and process more digital invoicing and payments, streamline accounts payable (AP) and accounts receivable (AR) processes and make planning for the future easier.
Acknowledging the Frictions Faced in B2B Payments
Currently, fewer than a third of FIs see the digital solutions they offer as “very” or “extremely” effective in meeting their B2B clients’ payments needs.
This shortfall comes as the digital payment transition is happening everywhere, with people switching cash for credit cards, debit cards and peer-to-peer (P2P) payments, Luke Gebb, senior vice president of Amex Digital Labs, told PYMNTS in an interview.
FIs acknowledge the many frictions that B2B clients face when it comes to payments processes — as well as the pressing need to streamline them. They say that among the most urgent problems corporate customers encounter when paying suppliers are the inability to provide offer portals, difficulty reconciling invoices, lack of payment integration with ERP systems and an inability to manage processes via mobile channels.
To help ease those burdens, most FIs are offering account validation, digital lockboxes and immediate transaction confirmation to corporate clients. Another digital solution offered by about half of FIs is automatic matching of payments and invoices.
In addition, FIs are currently working on or planning to work on three other digital solutions. About half are doing so with a single view of cash for cash flow management and forecasting, as well as the ability for receivers to choose their method of payment. And about one-third of FIs are doing the same with sharing data between AP and AR to automatically net invoices.
Not Just Banks, but Business Partners
What needs to change to ensure that FIs serve their corporate clients satisfactorily? They can start by shedding the old-school way of providing their services exclusively in person and meet their clients where they do business most — online or in digital channels on electronic devices. They should offer the digital features that consumers have become used to, including instant payments and refunds, as well as embedded finance abilities.
Many of the world’s largest companies are looking to continue transforming their digital payment processes — so they can meet their own clients’ and vendors’ expectations in turn. As a result, they want their FIs to not just help them with cash management but also serve as a business partner that can help them succeed.
By becoming not just a bank but also a business partner, FIs can attract and retain corporate clients by helping them maintain satisfying relationships with their own customers. Traditional FIs need to provide the same seamless digital experiences that consumers expect, or smaller and nimbler FIs will take their place.