Why fintech and crypto are transforming business payments
As the world races towards an increasingly cashless world, the business payments space is changing. There are more and more innovative ways to carry out transactions, and companies are increasingly demanding faster, more frictionless solutions.
The user experience is driving a change that has been accelerated by the global pandemic. But is this soaring drive towards progressively cashless solutions sustainable?
Colin Neil, CEO of Adyen in the UK, says the biggest change in the business payments space in the last two years has been motivated by Covid. “The pandemic dramatically accelerated payment trends that were already beginning to develop. Most notably, the move to online shopping and the move away from cash. But something more significant developed as a result.”
Neil points out that consumers have become accustomed to fluid customer journeys. The boundary between physical store and online became indistinct for even those most resistant to technology in the shopping experience, he says. “This mass shift required organizations to create seamless links between their stores, websites and apps, which required a much more sophisticated payment solution.”
Shanker Ramamurthy, Managing Partner, Global Banking & Financial Markets, IBM Consulting, says the most influential change in the business payments space over the past decade has been the dramatic shift in emphasis towards real-time: the immediate movement and settlement of cash and data.
“Real time is a global initiative and has huge implications for liquidity management, cash flow forecasting and cash positioning. Businesses need to ensure that ERP platforms/systems of posting and reporting systems are up-to-date and equipped with sufficient technology to support the technical changes required for all systems to accommodate this new world order, as well as the human resources needed for this new age,” he says.
Fintechs embrace change and embrace innovation
Fintechs have embraced the disruption, to the point where innovations created by newcomers to the market are dramatically changing the global financial market.
Laurent Descout, CEO and co-founder of Spanish digital bank Neo, says that delays caused by outdated processes are costing companies money – and companies are therefore choosing solutions that provide a more immediate transnational process – especially when it comes to cross-border payments.
“When you work with traditional banks, opening an international account is a long, difficult and painful process – and the transactions themselves can add several days. Businesses also lose out on costs. With cross-border payments, many banks not only require the exchange rate and margin, they also inflate the total price.”
Fintechs, however, offer the solution. “They enable companies to create their own international account with an IBAN in multiple currencies in the organization’s name. As a result, they can manage the company’s cash flows and view trade history, market data and statistics, all in one place,” Descout points out. “Virtual wallets then simplify the process to make same-day payments. Businesses can use them to organize funds and store multiple currencies, ready to make payments or a currency exchange.
Fintech competition in the business payments space
But as an increasing number of solutions are presented and technology continues to invent what is most effective, payment service providers are in a constant race to stay ahead of the innovation curve.
Neil explains: “It all comes down to the fact that payments is more than just processing transactions – it’s a strategic driver for the business, both from a customer experience perspective and operationally. There are so many ways a payments partner can help improve an organization – those fintechs who are constantly engaging with merchants and thinking about how they can add value will be ahead of the game.”
He says that Adyen works continuously with its merchants to improve its platform solutions and services, because it is crucial to meet the needs of customers and improve operations so that they are always in line with the forefront of payment innovation. Offering built-in products is a new trend that is also increasingly in demand.
“Ensuring our merchants get all the insight and intelligence they can from their payments is a key priority at the moment.
“We also recently announced our expansion beyond payments to build embedded financial products. These products will enable platforms and marketplaces to create tailored financial experiences for their users, such as small business owners or individual merchants.”
New payment trends for companies after 2022
As increasing the speed and agility of transactions is good for business, more companies than ever before are recognizing the need to shift away from traditional services. Neil says this will be even more important in the current environment where businesses face more competition for consumers’ discretionary spending. “Adyen’s research shows that UK businesses that connect payment systems across the whole organization (operations, marketing, sales, etc.) are outperforming the competition, adding 4% to growth. However, currently only 21% of UK businesses use this approach, he points out.
Mary Ann Francis, Associate Partner Payments, IBM Consulting, says leveraging the digital ecosystem is critical to driving the enterprise payments space forward. “We like to ask the financial institutions and corporate clients that we work with: ‘What do you want to be good at?’ What do you not want to do anymore? Who can we get to help take these activities off your hands? Do you have a plan to make it happen?'”
She continues: “Back-end legacy systems have become commodities that can be replaced with cloud solutions and managed services, freeing up budget and staff to focus on more strategic activities. Real-time Treasury Management, along with API-driven offers, can retrieve incoming and outgoing payments and data, then report results in real-time prior to batch processing.”
