Study Shows Big Perception Reality Gap Between Bank’s Efforts to Reduce Corporate Cross-Border Payments Friction

Financial institutions (FIs) continue to modernize their business-to-business (B2B) payments ecosystem, addressing corporate clients’ need for streamlined payments and cash management while relieving their invoice reconciliation issues and lack of supplier portals. There is no singular perfect solution, however, as data indicates that FIs’ effectiveness in addressing customer needs varies by client size or market served.

Recent PYMNTS research finds that automated account validation and digital lockboxes are the most common digital solutions FIs offer corporate clients to reduce B2B payments frictions. FIs serving cross-border payments customers are most likely to offer account validation at 93%, whereas FIs serving large enterprises are most likely to offer digital lockboxes at 95%. Our data also finds that FIs serving cross-border payments customers and large enterprises tend to provide more digital solutions than those serving middle-market companies and small businesses.

These are just some of the findings that PYMNTS uncovered in “Meeting The Challenge Of Payments Modernization: Understanding Customer Needs,” a collaboration with FIS. The report is based on a survey of 311 executives working as head of treasury services or wholesale banking serving at least one of the following B2B clients: small businesses (less than $20 million in annual revenues), middle-market companies ($20 million to $1 billion in annual revenues), large enterprises (more than $1 billion in annual revenues) or corporate customers that make B2B cross-border payments. We examine how FIs are working to meet their corporate clients’ varied B2B payments needs, address key payment challenges and innovate digital payments and embedded finance solutions.

More key findings from the study include:

• To reduce B2B payments frictions for corporate clients, FIs provide two leading digital solutions: account validation and digital lockboxes. Our data shows a divergence between FIs serving cross-border payments customers and those serving large enterprises. FIs serving cross-border payments customers are most likely to offer account validation, at 93%. FIs serving large enterprises, on the other hand, are the most likely to offer digital lockboxes, as 95% do so.

• Just three out of 10 FIs say their solutions are “very” or “extremely” effective in tackling B2B payments frictions. Yet, 80% of FIs serving cross-border payments customers and 75% serving large enterprises say their digital solutions are “very” or “extremely” effective. Such a stark difference could indicate that enterprise and cross-border payments customers tend to have more experience pursuing payments innovation to address B2B payments frictions.

• Two out of three executives surveyed recognize the importance of B2B digital payments solutions. Additionally, 95% of executives at FIs serving cross-border payments customers and 90% of those serving large enterprises believe the same. Large enterprise and cross-border payments customers tend to face a more pressing need to streamline B2B payments and thus may be more interested in pursuing payment innovation.

To learn more about how FIs serving various types of corporate clients are innovating to streamline B2B payments, download the report.