Driven by changing customer preferences, a growing number of companies are adopting embedded finance solutions in both their business-to-business (B2B) and their consumer-facing payment verticals.
In fact, embedded finance is already becoming the next phase in B2B payments, according to the “Embedded Finance Tracker,” a PYMNTS and Galileo Financial Technologies collaboration.
Get the report: Embedded Finance Tracker
The report cites a survey that found that more than 80% of banks offer clients the ability to use their own enterprise resource planning (ERP) systems to access accounts and make payments to suppliers or vendors — or plan to offer it.
The next generation of this development could see banks using application programming interfaces (APIs) to embed more services into supply-chain finance and other systems.
Adopting Virtual Payments
“The B2B space is still ripe for the digital adoption of virtual payments,” Galileo CEO Derek White told PYMNTS in a July interview.
Read more: Galileo CEO: Embedded Finance Gives Rise to Better B2B ‘Brand Experience’
Checks still account for more than 50% of B2B payments — and it should be noted that the B2B transaction values are significantly higher than B2C, White said.
But the PYMNTS-Galileo report identified several key reasons why this is changing.
For one thing, digital adoption has skyrocketed during the past several years as online payment methods, tools and channels become widely available worldwide. Consumers across all demographics are leaning harder on digital channels to conduct their payments and financial activities.
Also, digital natives are especially comfortable with digital payment experiences, and they’re increasingly joining the ranks of decision makers in the workplace.
‘Consumerizing’ B2B Payment Processes
Another factor driving the adoption of embedded finance is that it provides companies and their customers with access to instant payments that are simple, low-cost and reliable. As such, solutions are quickly gaining ground in the B2B space as a way to “consumerize” B2B payment processes.
Beyond that, API technologies are becoming more widely used by both companies and banks. In fact, a PYMNTS survey found that about two-thirds of banks are eyeing these technologies to aid the “consumerization” of B2B payments.
Meeting Customers’ Expectations
As a growing number of people experience the benefits of embedded finance in their lives as consumers and then look to bring them to the workplace, businesses and banks must keep pace with the newfound interest in embedded finance.
Understanding how consumers use embedded finance and how this could affect what they want as corporate decision-makers is critical as B2B payment offerings evolve.
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