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- How Fintechs are leading the digital transformation of payments in the B2B segment
How Fintechs are leading the digital transformation of payments in the B2B segment
Enterprises today have become very savvy especially during the pandemic and are looking at digital ways of optimising their spends. Digitisation of workflows along with digital payments is leading to efficiency, productivity, and an improved bottom line.
Fintechs creating a connected payments ecosystem
Till about a decade back, most of us used to go to the bank to get our basic banking done and banks were habituated to getting the customer in person. With the digitisation wave, most of the banking and payment transactions became online. However, not all banks were able to change themselves.
This resulted in the birth of Fintechs who were quick to bridge the gap, brought in the digital customer experience and changed the outlook to taking the bank to the customer, which has resulted in unbelievable growth in the digital payment ecosystem. In general, enterprises whether big or small, have multiple stakeholders and obligations to cater to from a financial standpoint. These include:
Apart from salaries, companies need to dole out payments in the form of reimbursements and other expenses. Most companies have different ERP and HRMS processes that operate in silos, with little or no connectivity and communication with each other. Fintech companies are enabling enterprises to bridge this gap by making the expense and reimbursement process automated, saving precious time and resources for the company.
Today if you ask SME owners where they spend the maximum time, the answer will be -managing the cash flows. If the same question is asked to a large enterprise owner, they are more likely to say that they spend a lot of time in regular activities and they are unable to upload vendor details quickly enough or make payments fast enough.
The real problem is that paying a vendor a sum of Rs 1 lakh takes the same time as it would take to process Rs 1 crore, and hence the need to get a convenient system to make smaller payments fast enough. Credit card is a much more convenient and safer way to transact. Such cards can be customized, automated, and loaded as per requirement/schedule, making them a very flexible means of payment.
With employee gifting and Rewards and Recognition (RnR) programs becoming a major part of employee engagement, HR departments must spend time to choose vouchers or brands every time they need to reward employees.
Some of the Fintech companies provide all-in-one corporate gifting solutions that combine the card and the platform with the brand already onboarded. This makes gifting a one-click process for the HR teams while the employees benefit from a seamless cashless experience.
Using data to determine creditworthiness
Unlike payment methods like UPI, credit cards have not seen phenomenal growth in India. The reason being that credit cards are not only a payment product, but also a lending product. There is an obvious risk associated and therefore incumbents – the credit card issuers – have been operating in this market with significant amount of caution.
However, if one looks at the data over the last two years post pandemic, the market has exploded. In fact, an exponential growth has happened in the credit card numbers in circulation today. One important reason for credit cards to grow at a much faster pace now is that the credit card issuance is based on credible data and with the advent of AA framework the ability to underwrite is much faster. Earlier, issuance depended on whatever financial information banks could get from the customers or the kind of banking relationship a customer had with the bank.
Today, there is data available which helps in assessing the customer’s creditworthiness. Add things like UPI to it and it gets better. If banks are just looking at financial transactions of a customer and trying to issue credit cards, there is a limit to data, but as soon as data from instruments like UPI gets embedded, it helps to build scorecard models and find customers who are new to credit but are worthy of getting the credit card products. Such digital data is being used to issue credit cards in the market today.
This means that Fintechs can use data (if you are a FIU) and machine learning algorithms to transform the world of payments as we know it. As digital solution partners to businesses, Fintechs are leveraging technology to combine expense management, accounts payable and credit cards powered by powerful SaaS tools, to help small, medium, and large enterprises streamline their payment systems and get faster access to business credit.
The road ahead
There is no element of doubt that Fintechs are using their expertise to help businesses of all sizes navigate industry disruption and equip them for future challenges. Whether it is credit cards, lending transactions or simply making payments, Fintechs are making sure they guide their customers to see digital transformation through fruition, maximize value with minimal disruption to existing infrastructure and help customers achieve their financial transformation goals.