B2B fintech: The $216 trillion opportunity

Published on the 28/03/2018 | Written by Jonathan Cotton


Boom times B2B payment industry

In the latest from our ‘whoa-that’s-a-big-number’ dept, Juniper predicts boom times in burgeoning B2B payment industry...

According to the research company, cross-border B2B transactions are on track to exceed a staggering US$218 trillion by 2022, up from an already sizable US$150 trillion this year. That’s a big number, so for comparison, think on this: Global GDP was around US$77 trillion last year.

It’s disruption, baby. The research, entitled B2B Money Transfer: Cross-border Market Opportunities 2018-2022, finds that the acceleration of fintech capabilities is having a growing effect on traditional cross-border B2B transactions.

‘Whilst traditional banks still facilitate the vast bulk of B2B cross-border transactions, new technologies, such as virtual accounts, eInvoicing, and blockchain technology will aid in driving businesses to solutions which provide savings in time, efficiencies, and transparency,’ says research author Lauren Foye.

Much of that growth is thanks to the myriad fintech start-ups and disruptive tech emerging. As more businesses utilise new, uniquely efficient and transparent methods (in an industry certainly not known for such things)  cross-border B2B transfers are expected to rise in kind, increasing the global growth rate of last year’s 7.5 percent (around to US$10.4 trillion), to reach 13.3 percent (US$29 trillion by 2022).

There is, of course, much room for improvement in the B2B transfer space – and financial technology in general. Persistent issues around transaction speed, cost, the complexity of processes and regulatory issues make the industry one well overdue for better ways of doing business.

“Issues around transaction speed, cost, complexity and regulation make the industry well overdue for better ways of doing business.”

“The B2B money transfer space is ripe for disruption,” says the report, “with traditional banks and facilitators faced with the need to modernise; yet likely to have reduced revenues, or have innovative new fintech companies outmanoeuvre them, offering businesses more agile and efficient services.”

But while it would be easy to characterise all this future B2B fintech action as the result of plucky startups sticking it to the legacy players, that’s not exactly the case. Both new entrants and legacy institutions seem to realise that the fintech future is very much one of collaboration. Juniper points to Visa and Mastercard as good examples of this: Visa has partnered with fintech start-up Billtrust to provide virtual cards for B2B transactions (as well as offering its own ‘Visa B2B Connect’ service) and Mastercard is working with its long-term partner Optal to offer ‘virtual accounts’ to businesses.

So far so good, but if we are, indeed, so ripe and ready for disruption in the B2B fintech space, where is it?

Juniper offers some theories as to why we’re still at the thin end of the wedge: “Firstly, traditional processes are well established and, whilst these are time consuming, these tasks are already established and widely available, meeting the stringent regulations in place.”

Likewise, fear of the unknown is likely holding back new adopters: “Businesses are in the mind-set of trusting a known practice, possibly afraid to switch to a newer innovator that is relatively unknown, untested and unproven. Also, it should be noted that many businesses fear integrating new processes and systems, due to perceived disruption and upheaval.”

In addition, much of the focus around newer technologies has been on the consumer end of business, with this disrupted first. Therein lies the opportunity, says Juniper, and the speculative dollars.

“Many of the benefits that B2C innovation has created are improvements that the B2B industry would greatly welcome.”

“Juniper believes therefore, that B2C disruptors could seek to diversify into the B2B space, taking with them considerable levels of investment.”

Click here to download B2B Money Transfer: Cross-border Market Opportunities 2018-2022.

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