This shift is occurring because consumers need instant and on-demand access to everything. As incumbent banks have inconsistently delivered in the first instance, fintech firms have entered the market with an intent to disrupt.

According to Deloitte, fintech companies now account for around 36% of personal loans originated in the US by dollar volume. Finextra spoke with Nadav Sharir, VP engineering at Behalf, about the company’s recent report ‘Cutting Edge B2B Payment Trends in 2020’ and how the cloud is driving and accelerating transformation of the payments industry.

The transformation trend

As customers have become accustomed to faster retail payments, there is a demand for parallel convenience in transaction banking and B2B payments. When traditional lenders fail to fulfil client needs, Sharir highlights that cloud technology can support payments digitisation and in turn, improve the payments cycle.

“I believe that the ability to have a speedy cycle to experiment with new channels and capabilities and the ability to quickly measure and expand accordingly are what makes financial institutions that are cloud-based to have a competitive advantage versus companies that are unable to experiment and react so quickly,” he states.

Businesses are under continuous pressure to maintain this “speedy cycle to experiment,” but also simultaneously face challenges with older payment systems.

Fast demand, faster processing

On the retail side, contactless in-store payments are expected to total $2 trillion globally by 2020 according to Juniper Research, and efforts to modernise faster, particularly real-time payments, are increasing. Behalf’s report details how “US payment providers, both large and small, are amplifying the need to balance convenience and speed with security.”

Further to this, fintech companies are using the cloud to remodel products and establish partnerships with third parties to enhance security while also innovating, increasing agility, and experimenting quickly and frequently to evolve their payment offerings.

“B2B companies have the option to integrate financing into their own payment systems, which has drastically influenced B2B buyers to work solely with businesses offering this technology,” the report reads.

Sharir believes that the cloud is an enabler for this demand. “The ability to experiment and to react quickly is key these days. If you can't have this close control and visibility into your services and the ability to quickly measure the success of these experiments, you will be left behind. Everything is about speed.

The ecommerce model

Deloitte research reveals that the B2B ecommerce payments industry is growing faster (10.4% CAGR) than the overall B2B payments market (5.8% CAGR).

E-marketplaces are also appealing to the merchant market for new growth and are a solution for those who cannot build their own e-commerce models. Despite this, cheques are still widely used in the US and research from Deloitte reveals that 17% of deposited cheques are image deposits, 93% of image deposits are by businesses and 71% of businesses can make electronic payments.

“Ecommerce is basically about having the ability to sell at scale with minimum human intervention in the process. This makes a great opportunity for financial services to join this end to end flow and provide their services at scale as well.

“One of the benefits of having a few major platforms of ecommerce is that financial services can easily offer their services to many merchants with minimum effort from the merchant side,” Sharir says.

Planning for success in 2020

The payment trends discussed here are an indication of the removal of traditional hurdles in the space. Today, B2B companies have the option to integrate payment systems in order to serve the customer with a competitive and convenient service.

Behalf advises taking these three steps:

1. Understand the cost and time saving benefits of moving payments to the cloud
2. Evaluate the value of data
3. Prioritise ease of integration

“I believe that having the ability to quickly react to the customer's needs by closely monitoring and measuring their behaviour is the key to success.

“There should also be a great awareness around the architecture and the technology that is being used, as it must be ready for scale. If the experiment will be successful, it will quickly grow to a demand that the technology must be able to handle with no errors and no degradation of the experience.

“There should also be awareness around the methodologies and the culture as the ability to work in such an environment requires a different culture than we used to have before the cloud,” Sharir concludes.