This brief article is posted in Forbes and written by the CEO and co-founder of Extend, a New York-based fintech that provides a digital commercial card platform that is compatible with networks and issuer bases and designed to modernize payments management. The author discusses the growth of embedded payments in peoples’ personal lives through apps and e-commerce sites (this has a much deeper adoption rate in markets across APAC) and that a similar trend is developing in B2B payments, where banks could and should be playing a more prominent role.
‘There’s been an influx in financial technology solutions geared toward businesses of all sizes: neobanks offering modern finance solutions, expense management platforms focusing on seamless integrations and financial institutions racing to compete with fintechs focused on solving niche industry challenges…
However, when it comes to further streamlining internal, back-end payment processes, why shouldn’t a finance manager have the same level of efficiency in their business tools that they do in their consumer lives? Now, that might be a bit of an exaggeration considering the complexity of managing corporate finances compared to your personal spending—but there’s certainly room for improvement.’
We cover these sorts of trends, such as embedded payments, in ongoing member research and agree that such experiences are ripe for transformation. In the U.S., the open banking adoption trend is growing as non-regulatory, market-driven demands increase for easier experiences, and that includes not only employee travel, but across CFO, treasury, and FP&A. So, the general lagging bank infrastructure capabilities for modern payment experiences need to be augmented by collaboration with more flexible and agile fintech development cycles, and that comes with embracing further cloud delivery options and API integration. Readers will see increasing examples of BaaS and PaaS models on a weekly basis, which continues to pick up steam as a necessary evolution in corporate banking.
‘For banks, the opportunity isn’t to partner with every fintech, but rather to build an ecosystem conducive to collaboration. Creating flexible APIs for clients and third parties to easily access as many of your services as possible means banks don’t have to build and market every new solution or user experience, but anyone looking to build a custom payment solution can do so with the institution. Exposing APIs might sound the compliance alarms, but this is where those strategic fintech partnerships can come into play. Look for a partner to serve as an aggregator or gateway to your services and that can mitigate your onboarding efforts and associated risk concerns…
The embedded payments industry is growing at a rapid pace, with revenues expected to grow from $43 billion in 2021 to $138 billion in 2026. As financial institutions are rethinking legacy systems and focusing on digital transformation, we’re seeing a broader range of embedded payment technologies becoming available to organizations of all sizes, opening the door for banks to offer new digital products to the small- and mid-market, as well as the enterprise.’
Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group