Fintech in B2B
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Fintech has had an explosive growth trajectory in the past few years that has disrupted the existing financial system and deeply influenced the business world. While consumer fintech has stolen the limelight owing to a large number of participants, business-to-business (B2B) fintech is also robustly catching pace with numerous B2B fintech operators and providers emerging globally.
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With challenger banks, e-payment platforms, cross-border remittance gateways, etc., becoming the new normal among the masses, there’s little space left for doubts about the scope and control fintech has on the world. As more organizations are spiraling towards fintech, more business opportunities are opening up.
B2B fintech is one such stream of this new-age digitalized world, where fintech firms are creating products and offering services to supplement and cater to business organizations. Although the pace of digitalization has only been invigorated recently, fintech has been a part of the world for quite a few years now, and so has B2B fintech.
Fintech has gained popularity and reaches in phases, just like the internet, where Web 1.0 – the read-only format, was introduced to us in the ’80s. Today, people are relentlessly working on shaping the third phase of the internet, Web 3.0, as the future.
B2C and B2B fintech have followed a similar path of evolution and intent. From 2020 till now, B2B fintech has evolved remarkably and is already treading towards owning a substantial market share. So, the question remains, what is B2B Fintech
B2B Fintech
Over the past 20 years, there has been immense growth in the B2B sector in several industries. Fintech, in particular, has witnessed outstanding developments with companies like Paypal, Square, Afterpay, and many more, emerging as global leaders providing business-focused services and products to help facilitate business operations.
Paypal is one of the oldest and most successful fintech firms in the world that has brought tremendous relief to consumers and businesses alike with its strategic B2B2C structure. By providing embedded point-of-sale payment options and enabling customers to make seamless transactions directly with merchants, Paypal initiated the financial disruption where all kinds of payments were either conducted through cash or the banking system. Paypal provides a platform for companies and merchants to set up accounts that allow them to receive payments from domestic and international customers without any hassles. With a market valuation of over $230 billion, Paypal has become one of the biggest names in the world of fintech.
B2B fintech started with laying focus on two pillars: banking-as-a-service (BaaS) and payments. After the emergence of many companies developing services and products surrounding these two branches, B2B fintech got churned into an opportunity-laden bucket that redirected its focus on more sectors, like lending, insurance, commercial infrastructure for companies, and software-as-a-service, etc.
Today, numerous B2B services exist in the fintech industry that aims to facilitate easier business operations like RegTech, compliance, cyber security, fraud detection, and many more.
Fintech Services in B2B
Out of the uncountable new developments that have proven to be very rewarding in the B2B fintech spectrum, the following have been the most popular:
Cross-border Remittances
Because of the massive reach of the internet, global connections have improved extensively, giving way to more business opportunities. Cross-border remittances and international e-payments have become the way of life for countless individuals because fintech bridges the gap between international boundaries. Businesses, both small and large, can operate internationally and can cater to a much larger audience compared to earlier. Companies providing international e-payment and remittance services and capabilities enable individuals and businesses to operate seamlessly, where they can make payments for their staff internationally, collect payments from overseas customers, and people working outside their home countries can quickly transfer money to their families using such platforms.
Fraud and Risk Evasion
B2B fintech has also redirected its focus on risk management, evaluation, and fraud detection. By providing eKYC platforms, businesses help their associates like banks and financial institutions in verifying and authenticating new on-boarders, which, in turn, has proven to be an essential prerequisite for financial service providers.
Lower Operational Costs
B2B fintech also encompasses the provision of digital infrastructure, which significantly lowers operational costs, as businesses and organizations can choose to hire third parties for managing or enhancing services, instead of investing time and resources themselves.
Application Programming Interface (API)
Technologies like API help transfer technology from one organization to another, which aids banking and financial institutions in attaining digitalized positions. Banks and financial institutions can offer online banking, lending, insurance, and other services, which would have been next to impossible without the involvement of third parties.
Final Thoughts
B2B fintech has tremendous potential across the world, owing to the multitude of readily-available technologies, like artificial intelligence and machine learning, that makes space for a massive magnitude of developments. With the onset of fintech, people have become habitual of better control and easier access to complex services, which was otherwise not possible.
As more and more people adopt fintech into their everyday lives, the scope of services offered under the fintech umbrella increases. The growth of B2B fintech is directly related to the adoption rate of technology worldwide, which is massive, resulting in a promising future for this sector.
