Why B2B Fintech firms transform the world?
In recent times, consumer fintech has gained traction. Why? These fintech companies for consumers have significantly improved customer experience on a range of financial services. For example, Intuit, the company behind QuickBooks and TurboTax has purchased Credit Karma for $7.1 billion in 2020. PayPal bought Honey the coupon code-finder application in the year 2022.
It doesn’t stop there 6percent of U.S. adults with a checking account are making use of an alternative Bank such as Chime or Current as their primary bank, instead of using industry giant financial institutions such as Wells Fargo and JPMorgan Chase. It’s easier than ever before to open bank accounts that accept debit cards without having to go the traditional route of checking accounts or using credit unions.
The spotlight up until recently was on the consumer fintech industry, but the business-to-business (B2B) fintech sector is beginning to take the spotlight.
B2B fintech, as we know it today was actually developed around 20 years ago, and was dominated by businesses that were focused on two main areas such as banking as a service and payment. One of the most well-known consignees that emerged from the initial waves was PayPal.
The company was created in the early days of the internet based on the B2B2C model that encapsulates the point-of-sale point with merchants and permits companies to conduct transactions with these merchants easily without divulging their credit card numbers. The company currently has a market capitalization in excess of $230 billion. Although it didn’t eliminate the necessity to use traditional banking institutions, it helped some to simplify payments and create better payment options.
In the decade 2022, the term fintech 2.0 came into existence with the definition of fintech expanding. In the fintech core, we witnessed banking as a service as well as payments have continued to increase through companies like Afterpay and square. It continued to expand to the growth of fintech firms that focus on lending, such as Lending Club and e-commerce infrastructure such as Shopify.
Scope of fintech 3.0
In the next few years, we’ll witness fintech 3.0 increase in scope to include significant players in the risk, fraud and identity fields Many of these are in development. It’s also anticipated that we’ll be seeing growth and major winners in many of the fintech-related areas, including security, privacy and compliance.
The current B2B Fintech companies are commonplace in the lending sector and banking as a service – similar to software as a service or Saas, but with banking. Companies have made it easier for customers to manage their cash flow.
By offering businesses working capital loans, as well as the possibility of receiving money in exchange for services that consumers return in four instalments The lenders are making use of financial technology to transform the entire system without requiring companies or consumers to use traditional credit. The ability to let consumers pay for purchases is particularly beneficial during times of epidemic where there is a lot of fight. That’s a big reason why these businesses are able to continue to perform so well.
Let’s take a closer look at the primary technologies influencing B2B fintech.
Big Data and Machine Learning
Based on SAS, “big data” is information that is massive, speedy or complex that is hard or unattainable to handle using conventional methods. The idea of storing and retrieving huge quantities of data for analytics has been in use for quite some time, but the idea of Big Data only started to take off in the early 2000s, when an industry analyst began to formulate the general definition of the term using three V’s of volume, speed and diversity.
Businesses collect data from various sources, including smart devices, social media and equipment, business transactions and even videos, among others. In the past, keeping it was a challenge but the cost of storage options on cloud platforms has made it much easier.
The Internet of Things (IoT) expands the amount of data that is generated by two businesses at an unimaginable rate and needs to be dealt with efficiently. Smart meters, RFID tags and sensors create the necessity of handling this massive amount of data in near-real-time.
Data can be found in many formats, from numeric and structured information in database databases as well to unstructured data in emails, videos audio files, financial transactions and many more.
If the velocity and the variety of data weren’t enough data flow can be unstable because it is constantly changing and can vary significantly. Businesses must know which topics are trending on social media, and also how to handle seasonal and event-triggered peak data load.
Veracity is a term used to describe the quality of data. Since data is sourced from diverse sources, it’s hard to link, match and convert the data of one source into another. Companies must be in a position to establish and maintain relationships and hierarchies using many data links, or else the data can get out of control and is inaccessible.
Data is everywhere today and businesses that are of any size are overwhelmed by massive quantities of it. In the past businesses depended on data analysts and scientists to harness the data and transform it into data analytics and poor decision-making. They played a significant role in the field of business intelligence. Nowadays large data and machine-learning technology, commonly called predictive analytics can be used to assist. Today’s security tools assist to safeguard financial information.
Research has shown that a third of the respondents are aware of the importance of big data and machine learning within the fintech B2B sector and their adoption is growing. According to IDC the global revenue for Big Data and Business Analytics is predicted to exceed $203 billion by the year 2022.
Because of this technology, we’re able to examine historical data to detect trends and then make predictions. It is beneficial in a myriad of applications and industries. Particularly, in B2B finance, fintech could be used to identify the risk of market risks, cut down on the risk of fraud, participate in a fraudulent transaction until a person is able to make a decision, anticipate the financial landscape, and much more. It is also able to provide actionable insight from advanced reports on data analytics. In the end, it provides an in-depth view so that C-suite executives within the company are able to easily view strategic insight.
Artificial Intelligence (AI)
IBM according to IBM, the term “artificial intelligence” is “any human-like ability that is displayed by a computer, robot, or any other machine.” It refers to computers or machines’ ability to replicate the capabilities of the human brain – through learning by example as well as experience, recognizing as well as responding to the spoken word, making choices, recognizing objects and so on. and combining them with other capabilities to perform the same tasks like humans do, like driving a car or greeting a client.
The data shows that the public is most knowledgeable about AI as new technology. About half of those who were surveyed know about its application in fintech solutions such as AP automation such as the one offered by Planarly.
Respondents are probably familiar with AI because of the significant changes it has brought about across various industries. In fintech, AI allows for deep personalization, which creates relationships with consumers in real-time.
Research shows that numerous B2B businesses use AI to enhance their operations, including the financial service. 83% of companies that were surveyed consider it an essential element of their strategy. Utilizing AI can increase productivity by as much as 40% due to the fact that it automates routine tasks that take up precious time. With automation, businesses can cut costs for hiring while freeing employees to focus on more strategic and productive tasks.
About 25% of customer encounter officers (CXOs) believe that AI is going to have the most significant impact on their company in the next five years. 84% of companies say that AI will help them to maintain or gain an edge in their market and 75% think that AI technology will help companies to grow into new industries.
Based on Built-In, blockchain technology is described as a “decentralized ledger that keeps track of the history of a digital currency”. Through inheritance, it is impossible to alter the data stored that is stored on blockchains are not able to be changed, making it an effective disruptor in the payment industry, cybersecurity and healthcare.
The blockchain is a decentralized network that is able to record transactions and payments rapidly, in a transparent secure, permanent, and reliable manner. It uses cryptocurrencies such as Bitcoin to exchange funds. For B2B tech users there’s a lack of information about the capabilities of blockchain. There are many applications, however, compared to AI and AI, blockchain is less well-known in the world of fintech. About 25% of the respondents are aware of the ways it is employed in fintech.
Despite the advancements in technology, U.S. businesses are being owed more than three trillion dollars of accounts open at any given time. Small businesses often get caught in a maze that is filled with payment processors and merchants are able to choose from a myriad of payment platforms that are hard to differentiate from each other. Small businesses often don’t get paid on time and have to deal with the risk of fraud. Small and independent software providers and businesses prefer tools that are simple to use and choose efficiency over speed and profits.
While the B2B FinTech sector grows and expands, it will become easy for even the smallest companies to adopt automated workflows and procurement-to pay processes that larger corporations currently employ. The result will allow it to be much easier for small businesses to be competitive with larger companies and will assist in levelling all playing fields.
A deeper analysis of the market uncovers a variety of specialist providers that provide quality across the entire payment process using the latest technologies like artificial intelligence and machine learning.
The Future of B2B Fintech
The future of B2B Fintech will depend on the ability of merchants to profit from this lucrative area of B2C fintech. Similar to how Brisk Logic witnessed Amazon facilitate customers to profit from the vast market of consumer goods and services, the next B2B fintech wave will focus on making it simple for merchants to benefit from the huge market potential in financial service.