Sam Yen, chief innovation officer for Commercial Banking at JPMorgan Chase, said a simple mindset should guide financial intuitions and other providers striving to innovate B2B payments for their business clients.
“What we think is core, banking services, is actually somebody else’s chore,” Yen told PYMNTS’ Karen Webster, recalling a scenario from his early days with the bank. “Working with our commercial real estate clients, I was shocked to discover that the only reason residents kept a checkbook was because that’s all the property owner would accept,” he said.
“We saw an opportunity to go beyond traditional banking and address a real need for both property owners and residents. But we didn’t call it a payment solution, we thought of this as a property management solution where the payments and the banking were actually embedded and wrapped up as a tool to actually run your business better,” he said while noting the breadth of comparable opportunities he expects will present themselves going forward.
Currently, B2B transactions are marked by complexity, by a labyrinth of fund flows across borders that demand new ways of thinking about how money can and should move. There’s ample opportunity to refashion commercial payments and make them more user-friendly.
Commercial banking, he said, is primed to do just that by helping businesses of all sizes scale more easily by deepening their ties to the Connected Economy.
“Technology is not as scary as it once was,” he said, noting that while businesses are more open to new ideas today than in the past, it’s also important for financial institutions and their clients not to get too hung up on the details of payment modalities or the hardware and software aspects.
Despite his deep tech background, Yen said the path forward for building embedded B2B payments is not really about the technology or innovation, calling them just “instruments and tools.”
Instead, he said, what he is trying to achieve in improving business payments practices is to make them seamless and memorable experiences along the lines of what numerous consumer products and service companies already do so well.
“These companies look to simplify the experience of their clients and their customers,” he said. “They’re just looking for one aspect of their [customer’s] lives to make easier and in some cases, more delightful,” noting that the same objective should be applied in commercial relationships.
From Delightful to Delay
Given that most of us have already been able to consolidate many of the formerly physical financial aspects of our personal lives through digital wallets (Apple Pay and Google Pay), P2P payments and buy now, pay later options, Yen said those same experiences could easily transfer to our professional lives.
Not only can those trends spark new ways of thinking about business, he said, but a lag time of a few years in embracing innovation is the norm and to be expected, as is the inevitable B2B catch-up that is happening now.
“You’re often able to look at the innovations that happen in the consumer space,” he said, “and those innovations take a couple of years to filter over to businesses and enterprises.”
With that in mind, Yen said providers are right to seek to “consumerize” financial services with the enterprises’ input. The most successful approach for any B2B solutions provider lies in understanding and interpreting the client’s needs from the beginning. “Co-innovation” helps improve the day-to-day experience of running operations.
To that point, Yen said JPMorgan Chase can and does leverage data that winds its way through information technology systems to examine what’s happened in the past, what happens in real time, and what’s needed (with machine learning in the mix) to make sure small and medium-sized businesses (SMBs) can grow to their optimal and desired state.
In fact, not unlike his old one-check-per-month example, JP Morgan Chase announced this month that it was piloting Story by J.P. Morgan, an integrated suite of digital commercial real estate management solutions to simplify and streamline portfolio management by providing access to a digital rent payment platform, unique data, insights and resources that help clients scale their real estate business.
“There are just so many little things that can be done to transform how small and mid-sized businesses operate and create efficiencies,” he said.
That approach, he said, is not about just banking, “it’s the innovation recipe in general.”