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CEO’s Corner

B2B Payments Facelift: Tracking the Transformational Shift in B2B Payments

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B2B payments present an unprecedented opportunity for FinTechs to tap into. Find out what are the top trends that are disrupting the B2B payments landscape.

The B2B payments ecosystem has been undergoing a silent, but landmark revolution.

While paper-based, manual processes ruled the B2B payments industry for the longest time — we’re now witnessing an evident shift to digital, cloud-based, and automated payment systems.

If you ask me, this change was long overdue.

With talks of a cashless society only gaining momentum, digital payments are being weaved into the very fabric of our daily lives. Think about it, when was the last time you paid in cash at your local grocer?

A lot has changed in the last few years, and much of it has to do with the dramatic effect of the pandemic, as a trend accelerator. Owing to the lockdowns, in-store footfall started to plummet and age-old business processes were rendered obsolete. In a desperate attempt to survive — most businesses pivoted to go online for the very first time. This explains why the march towards leveraging digital payments in the B2B space has now turned into a sprint.

In this study by McKinsey, B2B companies found digital sales interactions to be 2 or 3 times more important to their customers when compared to traditional sales interactions.

If that doesn’t say a lot, Gartner’s Future of Sales research stated that nearly 80% of B2B sales interactions will take place over digital channels by 2025.

One thing is for certain — in the near future, the expectations for invisible B2B payments will only intensify. Future-proofing your payments strategy can no longer be ignored!

What does this mean for digital disruptors?

Digital adoption in the B2B payments sector has proved to be immensely beneficial for businesses both big and small. The digitization of accounts payable and accounts receivable for one, has brought in much-needed workflow automation. On the other hand, manual processes that kill productivity have been replaced, which in turn, has reduced labor costs and human errors, significantly!

That said, the increased adoption of digital payments in the B2B sector not only benefits the businesses but also spells out greater growth opportunities for the players in the financial services industry— the FinTech sector, to be specific.

The volume of B2B payments transactions is expected to grow at a rate of 10.7% CAGR in the next few years and is projected to be worth around US$ 70 billion by 2030. This just goes on to show that the value proposition of digital adoption in the B2B payments sector — is a lucrative opportunity for digital disruptors.

In the U.S., with B2B digital payments picking up, new-age FinTech players are competing to capture the share of one of the largest addressable payments markets.

Source: eMarketer

Businesses, on their part, prefer scaling up their payments stack by leveraging the nimbleness of FinTechs rather than being slowed down by the legacy software platforms of traditional banks. To meet their digitization needs, streamline their payments services, and bring in more liquidity, businesses are looking to work with FinTechs who offer digital solutions like contactless and real-time payments.

Top 5 B2B payment trends to watch out for in 2022

Staying competitive today means adopting a digital-first approach!

It also means businesses need to stay current on the trends that are redefining payments.

The corporate payments ecosystems are being reconstructed for the digital landscape and here are the key trends that are driving this digitization:

  1. Rising demand for flexible payment options: With customers seeking convenient and faster payments — the likes of Buy Now, Pay Later, and virtual cards have become the norm in B2C payments. We now see this trend make its way into the B2B space; causing traditional payment mechanisms like cash, checks, and even cards to take a back seat.
  2. Simplifying Procure-to-Pay (P2P) with system integrations: Siloed, outdated, and fragmented procurement software complicates the P2P process. Businesses are now doing away with their manual processes and are looking at streamlining P2P with system integrations. An integration platform not only helps with P2P automation but also offers a single master data view of suppliers/vendors and speeds up the procurement and payment process overall.
  3. Account-based payment offerings are taking over: Greater personalization is the need of the hour. Much like an account-based marketing strategy to win over customers, businesses are now employing account-based payment offerings in a bid to give the customer the freedom to explore and choose from multiple payment options.
  4. Greater need to automate payments processing: Automation of accounts receivables will help businesses to be in greater control of incoming cash flows. B2B payments have always demanded a high level of manual control but this can’t be the case going forward. The pandemic has accelerated the shift to payment automation. This shift is only gaining momentum with more organizations replacing on-premise systems with cloud-based solutions, in an effort to automate payments.
  5. The cross-border imperative: An increasing number of B2B payments are being made via wire transfers or correspondent banking networks. Seamless and secure cross-border payments present a massive opportunity in the B2B space. This explains why many of the bigger names in the industry are teaming up with FinTechs to provide flexible cross-border solutions — SWIFT’s gpi, Visa’s B2B Connect program, and MasterCard’s B2B Hub are great examples of innovative cross-border payments infrastructure.

A long-term shift or a fleeting trend?

The adoption of digital payments is not just another fleeting trend. This power shift that has been spurred by the pandemic, is here to stay.

Businesses, take note — faster, convenient payments are the way of the future. While digital payments are making their headway in the B2B payments landscape, businesses that are quick to invest in this digital transformation will reap the rewards for years to come!

Follow me on LinkedIn and stay on top of the latest trends in the payments industry.

Taking The Human Route

While investment in office perks is always a good thing, you need to reinvent your employee experience to create a meaningful and lasting connection with your employees. Delivering deeper connections has helped in bringing about a 28% spike in the percentage of employees that are most likely to recommend your organization to others.

Organizations need to look at ways of improving and supporting the employee’s well-being. It starts with putting your employees at the center—think of ways in which you can bring meaning into their work. This might even require you to rethink work itself as well as the culture and space that you provide for people to work in. Let’s be very clear that this is not just your HR department’s problem.

Leaders need to champion this effort by implementing feedback tools and being open to honest dialogues between themselves and the employees. If you ask me, it pays to reward collaboration over the competition on any given day. The hustle culture is not always the solution, make your workplace kinder.

With all that has transpired in recent times, several events like “The Great Resignation” have vaulted employee experience to the top making it a burning priority for most organizations. According to LinkedIn, nearly 96% of talent professionals believe that employee experience has become a critical agenda item for businesses both big and small.

Building a Positive Employee Experience

Creating a good employee experience feeds into your customer experience as well. In a recent Forbes study, 70% of executives revealed that improved employee experience leads to improved customer experience. That’s not all, companies that prioritize building a positive employee and customer experience have witnessed two-fold revenue growth.

When you embark on a journey to focus on employee experience—along with laying the groundwork for valuable relationships you’re also giving your business a competitive edge.

So how do you structure your employee experience strategy?

“Employee experience is about doing with and for your employees, not to them.”

Source: Linkedin

From my experience over the years, here are four ways in which you can create a human-centric employee experience:

  • Promote professional and personal growth: While most organizations rush to provide learning and development programs, you also need to cater to the personal growth needs of your people. This could include anything from leadership initiatives, and career coaching to community services.
  • Build a culture that values inclusion: It’s crucial to build an integrated and inclusive workspace that prioritizes individuality and values the input of all the team members, alike.
  • Take on an empathetic leadership model: As leaders, it’s important to pay heed to the overall well-being of your people. Be empathetic and find unique ways to connect and collaborate with your larger team. This will boost employee morale and lead to a happy and healthy work culture.
  • Create a common purpose and inspire a shared vision: Your employees want to feel invested in the organization’s purpose. To get to the end vision together as an organization, you need to walk your employees through your goals and vision.

Time to humanize the employee experience

Employees today seek a deeper connection with their organization. To craft a winning employee experience, you need to align your purpose, your brand, and your culture. While leading employers are gearing up to position their organizations for the next generation of employee experience, take my word when I say that humanizing the employee experience is not a passing trend!

After all, your people are your biggest assets, and creating a more human workplace will be good for everyone!

Follow me on LinkedIn and always stay in the know about the latest developments in the payment and FinTech space.

Opus Official

Praveen TM is a highly accomplished global payments leader with over 20 years of experience. A veteran in the payments industry, Praveen has immense wealth of insights to share in payments innovations, emerging technologies, FinTech, and financial services.

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