Telecommunications, Media & Technology

How Every Company Will Become a Digital Bank

Value Chain Partners

When the pandemic hit, CFOs, financial executives and controllers who oversee payables and/or receivables could no longer be in the office to manage what is considered to be a fairly manual, paper-based, systems-driven process. When a company is operating with several enterprise resource planning softwares, hundreds of suppliers, several banking relationships and large in-house finance staff, a paper-based workflow is neither sustainable nor efficient. It is ripe with opportunities for fraud, human handling error and financial risks. Organizations’ engineering and IT teams can increase their agility and efficiency by cutting waste, selecting the right technologies like cloud enhancements, automating tracking and visualization of key performance indicators and understanding the costs and benefits of transformation work.

As commerce becomes rapidly digital, any company that has a finance department – which is most companies -- will need to digitize its basic payment, spending and investing capabilities. And in most cases, their counter-parties, or the payee and payer, will come to expect that they get their receipts in time. Aside from convenience, there are clear benefits in obtaining greater agility in the management of financial data. It not only provides a clearer and daily picture of how organizations manage their financial assets, including their liquidities, but also helps to manage and mitigate financial risk.

End Users

In the United States, which has the world’s largest contactless credit card market with 175 million cards, consumer digital payments like credit, debit and contactless payments such as Apple Pay have increased 150 percent since 2019, according to Visa. Much of that growth has been driven by COVID-19, and B2B companies also are not exempt from this growth. In 2020, there was a whopping 40 percent increase year-over-year in business consumer spending, paying, and borrowing digitally. This trend will continue after the pandemic ends, as the global B2B e-commerce is projected to be worth more than $20 trillion by 2027, according to ResearchandMarkets.com. Amazon and Staples are just two examples of companies adopting consumer-based marketing techniques to nudge their business customers for their next order or sending alerts to remind them to make digital payments. Some businesses are doing this by introducing hybrid cloud-based payment gateways or services that authorize credit card or direct payments processing for e-commerce and brick and mortar transactions, and platforms to drive real-time funding and fulfillment.

Mapping a Payments Vision

As more companies with significant payments volume move into adjacent industries and offer embedded solutions, there are huge opportunities to re-examine strategies and create new value from these transactions. Within the next five years, organizations that operate on the B2B side that handle payments of any type will need to embrace payments solutions to maintain their relevancy in the marketplace and compete. Millennials, considered digital natives, represent the largest percentage of the U.S. workforce, for example, and account for 73 percent of people involved in business purchasing decisions, according to Forrester. Salesforce also found nearly 70 percent of business buyers expect an “Amazon-like” buying experience from their vendors. It’s time for businesses to catch up as digital payments, and distributed working environments which digital helps enable, become more popular in the coming years.