The somewhat inquisitive nature of the title in this piece belies what is essentially a rhetorical question, to which the answer should be ‘yes’. Fintech is a broad category and if narrowly applied to only recent startups, then the answer to the question might actually be ‘no’, since most of the startup activity (until recently) has been dominated by non-B2B investments. Applied to the broader category, fintech drives the industry and contributes to the digital wave. The transformation has not occurred but certainly well underway, albeit at a different pace on the corporate side given the relatively complex nature of just about anything when compared to consumer transactions.
Compared with widespread innovation in consumer payments largely stimulated by the digital economy, commercial banking solutions – previously a one-size-fits-all landmass that splintered into separate islands of innovation to address specific needs – have left finance and treasury teams with a cumbersome patchwork of payment services and isolated pools of transaction data.
The article goes on to point out how corporates are paying more attention to fintech, and cites one of the reasons in Europe as PSD2, which in one section mandates the sharing of bank data as of 2018 for purposes of supercharging fintech innovation across the Eurozone. Mercator has covered this extensively with reference to both consumer and corporate paradigms. There is no such equivalent carrot or stick in the US market, which has traditionally been more reliant upon market forces to guide innovation. But the point about corporates trying to understand who they are dealing with (or may be dealing with soon) is valid since regardless of whether they think their bank(s) sit atop the innovation summit, by-and-large they do trust them to securely get things done.
Highlighted is the renewed vigor surrounding the massive corporate payables market, involving $100 trillion or so of business settlements annually across the globe. Whether new versions of older models (virtual cards) or new rails (especially welcome in cross-border payments), we are in the process of enormous change. Banks are doing their part to compete and collaborate, and corporates will be learning much more about it soon.
He says: “Lots of big corporates are now on a mission to find out more about what’s going on in fintech – and this is born from necessity as they face both regulatory and capital management challenges.”It is a market on the verge of disruption and fragmentation as the digital economy drives cross-border commerce and electronic payment integration
Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group
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