The event drew 195 attendees across the spectrum of industry leaders. Having been to many of the Commercial Payments International (CPI) NYC global summits, what continues to be distinctive about these events is the clear focus on commercial payments, most specifically commercial cards. Since the events are scaled to this more specific audience, they create both digestible and directly relevant content, with more intimate networking opportunities. To better understand the value of this approach, one only has to think about the overwhelming nature of other payments-related conferences, where many thousands of folks scramble around for several days in mega-venues, attempting to find connections and value across dozens of tracks and a multiplicity of overlapping subject matter.
The Commercial Payments International event had nine sessions on day one, including a roundtable opportunity with five possible areas of discussion, then five more sessions on day two. Ample time was allowed for networking, and due to the venue structure, all activities close by. The sessions themselves were mostly panel discussions, allowing for multiple points of view, moderated by industry savvy veterans. Audience members had access to both a phone app and microphone for Q&A. My impressions on key conference insights follows:
Key Event Takeaways
- Global capabilities are certainly important, but there are nuances across markets. Many of the panel members represented both the major networks as well as large issuers, and although the general consensus is that global solutions have to incorporate regional necessities, as well as individual market realties. In some cases, global clients are not aware of individual market requirements (potential onshoring of data, as an example). There is a continuing trend to move beyond ‘cards’ per se, and into the broader corporate payables flows.
- Regulatory headwinds will vary, but generally speaking the commercial card pricing model and overall value proposition will be different outside of the U.S. Regulators in the U.S. maintain more of a ‘hands-off’ positioning, and this is not anticipated to change any time soon. The mid and longer term expectations for many regions and markets, particularly the EU and Asia Pacific, is for continued pressure on interchange rates. However, the pricing model in the U.S. still creates acceptance friction and should be reconsidered for market share reasons. This leads to a discussion about innovation and product positioning, where new approaches through fintech/bank collaboration is a growing presence.
- Payables and receivables flows contain a great deal of opportunity by understanding both buyer and supplier impacts, then creating value through automation and data. Straight-through processing via cards payments remains an elusive goal, even more so than in other B2B payments types, due to nature of acceptance and lack of deep investment by acquirers. There is an increasing amount of innovation taking place in payables integration and digitization, both in terms of software and through a ‘hub’ approach (both infrastructure and API-based investments). The EU market is a leader in integrated payables innovation, most directly due to the need for finding better front end technology options as a result of the regulatory market. Although no one can predict whether there is an “Uber of payments’ lurking about, most would agree that this type of disruption would emanate from outside the industry.
- Working capital is a much more frequently discussed topic, particularly as rates start to rise and you move down the spectrum from large market to small businesses. Alternative lending solutions have now been around for almost a decade, helping to fill the C&I liquidity gap for small businesses .Now the increase of short-term cash cycle lending solutions is creating opportunity for traditional FI lenders as well as card issuers to serve the SME market cash needs through partnership with fintechs. The consensus is that there will be little growth in loan origination fintechs, and a certain amount of general consolidation over the new 5-10 years. The collaboration factor allows for FIs to offer flexible, next gen tech, while giving fintechs access to broader distribution.
- Investor interest in fintech remains strong, and regtech is gaining adoption in the EU as well. In addition to the private equity investment firms, most of the large FIs also now have venture capital and investment business arms as well. Although the motivations may be somewhat different for attracting funds from these entities, after a longer ramp up versus consumer propositions, clearly the fintech industry has been moving more in the B2B direction. The underlying commitment for funding is obviously rooted in financial return potential, but assessments can be varied, based on things like ‘differentiator in the market’, “there must be sector headwinds with a pathway to best in breed”, “visible value proposition’, to we are interested in payments themes’. Revenue multiples are now in the 5.1-6.1x range, and negative cash flow is more acceptable than in the past, of course based a strong revenue foundation.
Having been a frequent attendee at past Commercial Payments International events in New York, it is clear that the nature of the agenda is being adapted for the rapidly changing global B2B payments environment, while maintaining a core focus on the commercial cards business. It is a unique event, being both relevant and enlightening for attendees, while also retaining a comfortable and accessible atmosphere.