The Consumerization Of B2B Payments

The rise of technology has given rise to online networks, which of course has given rise to individuals sharing all manner of information, from selfies to more serious fodder.  Corporations have been, relatively speaking, glacial to adopt that same technology, which would ideally allow them to share information that can extend across payments, processes and even innovation.

How to foster such collaboration and communication in a milieu where the technology exists but (corporate) users have been loath to use it? In a webinar delving into “How Commercial Banking Will Shape the Future of B2B Payments,” panelists Dan Williams, vice president of Fifth Third Bank, Jess Moran, general manager of cloud payment solutions at Bottomline Technologies, and Joe Schwartz, senior vice president of product development for Digital Banking, also at Bottomline, related to PYMNTS’ Karen Webster why dialogue between the old and new is imperative in bringing B2B beyond the stubborn embrace of dead trees.

What CFOs Really Want From B2B Payments

Fifth Third’s Williams noted that when speaking to CFOs and treasurers “issues that are top of mind” include the ambition that “everyone wants to streamline in some form or another … they find pressure to be more efficient economically” or to be, as he called it “opportunistic” in recognizing the potential of technology and capturing that potential.

As pertains to B2B specifically, Williams noted that there are inefficiencies in the relationships, as that within all segments of B2B, concerns hover over fraud and data breaches, whether tied to PCI, HIPAA or for individual account information, stated the executive.

Williams noted that among CFOs and treasurers, the “top of mind” issues include “streamlining payments in some form of effective, economical” manner and also to address the ever present (and growing) risks of fraud – and all of this must take place against a system that is significantly still based in paper processes, with a growing number of stakeholders in the mix, from the aforementioned executives to the people who work in procurement and those who deal with operational risk, too.

And yet, noted Williams, “there is a tremendous amount of paper, and friction surrounding paper,” he said, in B2B, and that comes against a backdrop where payments professionals are consistently, and increasingly, dealing with people across the organization, including stakeholders that include procurement and other peers that have an interest in reducing the complexity of payments. As he stated, “how you choose to pay, and when, influences the supply chain.”

Consumerization

When asked whether the emergence of networks catering to consumers (and individuals) might send a signal to how commercial banking can take advantage of a similar model, Williams answered that it is an ideal conduit for suppliers and other corporates to exchange information in order to solve problems – and the network model is nothing new, as it is in evidence through older relationships and platforms still extant, from credit cards, to NACHA.

But a few things about the consumer-centric model translate well and easily to the business world, notably the instant, always on conduit between members across a given (tech platform) that moves beyond conversation and to the actual transaction between parties.  In the case of B2B, the idea is not just to foster communication and payments between buyers and sellers, say, across a supply chain, but to also include traditional financial enterprises in the activity, with a common goal of making sure that more data is attached to payments and remittances than might be conveyed with a simple check.  Eventually, though B2B has some ways to go in playing catch up relative to B2C, the consumerization of the B2B relationship becomes intuitive, one that offers a simple “payment functionality” that ensures speed and accuracy – as well as security – with minimal input on either side of the transaction, even across the thousands of invoices that cross the desks (real or virtual) of payments professionals annually.

In fact, for closed networks bringing members of a given corporate community, said Bottomline’s Moran, where she said the “primary goal” is one where “trading partners come together,” and this is better than a do-it-yourself approach to payments … and can help overcome the hurdle of conversion from paper to electronic payments.”

For Bottomline’s Schwartz, focusing on the digital payments side of the equation, information that is sent via the transaction and security of that transaction are of utmost importance, and yet the information that can be shared across a network can be an additional layer of security through what amounts to crowdsourcing to prevent fraud, as participants can share details on malware, or bad actors gaining access and using, for example, a Social Security number.

The Goldilocks B2B Data Dilemma

Everyone knows that data is valuable, and wants as much of it as they can get. But, like Goldilocks with her bowls of porridge, the big question becomes, how much is too much, how much is too little and how much is just right? And when is it needed?

Within the digital community across B2B, said Williams, such data shared most effectively, vis real-time processes, is “underserved.”  The participants have not been great at sharing data alongside payments, said Williams, and in turn liquidity could improve alongside technology and information shared through technology.  The use of technology, added Schwartz, could also allow SMBs to innovate across payments, with partnerships with FI that can aggregate data from other applications like QuickBooks.

There is certainly room for improvement across information flow, said Williams with check – as in the paper kind – still accounting for more than 50 percent of payments across the B2B space. “If people paid that way at the grocery store,” said Williams, “you’d go crazy.”

Go Mobile!

As for mobile, the panelists agreed that payments on the go is not necessarily the catch all that some would suspect.  In fact, they agreed, mobile payments remain more easily adopted by smaller firms than larger ones, and Williams stated that “mobile helps eat into checks, send quick payments and act on it,” but he added that that is not where the checks necessarily come from.

For the adoption of mobile across any enterprise, as a conduit for payments, the fact remains that large firms must consider mobile devices and tablets in their design of business processes and payments, and FIs must understand their user base and how those users want to interact with the FIs themselves and create what he called “an intelligent payment rail.”

Williams offered up an example of a wealth management firm operating in the media and entertainment realm, and which in a royalty payment was to be made, and could not be made through batch payments and in fact had to be done across several recipients at once.  The key, he stated, is a “flexible platform” that can handle functions across payments and messaging.

As for the wary relationship between FinTech and traditional banking, Williams noted that even the most upstart startup “needs access to the payments system” as provided by FIs and the newer firms “ultimately must figure out how to be indispensable with emerging tech,” as banks and FinTech “need each other.”