As businesses race to provide fully digital payment experiences in the business-to-business (B2B) space, and their banks work to support such solutions, many are adopting a “white-label” model.
In this model, a digital platform uses application programming interfaces (APIs) to seamlessly weave bank-provided financial services into eCommerce providers’ customer experience, as reported in the “Embedded Finance Tracker,” a PYMNTS and Galileo Financial Technologies collaboration.
Get the report: Embedded Finance Tracker
“Just as it does in the [business-to-consumer] space, embedded finance offers a great opportunity for traditional banks to overcome some of the core tech-based challenges they face in addressing modern B2B needs,” Galileo Chief Product Officer Archie Puri told PYMNTS when interviewed for the report.
Meeting Demands for New B2B Payments Choices
Businesses increasingly care about offering online payment methods, tools and channels in the B2B space that embedded finance can easily enable.
They have seen millennials and Generation Z show strong preferences for payment solutions such as contactless payments and digital wallets — and those expectations are filtering into the B2B payments ecosystem. Because many millennials now hold decision-making roles at their organizations, they are involved in their companies’ buying decisions and are seeking more consumer-like B2B payment experiences.
Providing an Important Lever to ‘Consumerize’ B2B Ecosystems
As a consequence, merchants are feeling the pressure to “consumerize” their B2B ecosystems away from traditional payment processes — shaping greater opportunities for embedded finance in the B2B payments space.
In a May interview with PYMNTS, Puri said embedded finance is an “important lever” and noted how it is one way that B2B payments can get some of the consumerization magic.
Read more: B2B Payments Gaining Attention Alongside Quest for Speed, Liquidity, Simplicity
She said, “on the one hand [embedded] helps [businesses] not only take payments, which has traditionally been looked at as a cost center, but actually make it a revenue generator,” adding that “when you switch to embedded payments and embedded finance in B2B interactions, you are now getting access to liquidity and capital far sooner in very creative ways.”
Embedded finance is already becoming the next phase in B2B payments. A recent report noted that more than 80% of banks either offer, or plan to offer, their clients the ability to use their own enterprise resource planning (ERP) systems to access accounts and make payments to suppliers or vendors.
The next generation of this development could see banks using APIs to embed more services into their clients’ systems, such as supply-chain finance. While just 6% to 13% of banks currently offer such services, 32% to 46% say they plan to do so in the next three years.
Keeping pace with this newfound interest in embedded finance must, therefore, be top-of-mind for today’s businesses and banks. Understanding how millennials and Gen Z consumers use embedded finance and how this could affect what they want as corporate decision-makers is critical as B2B payments offerings evolve.
Embedded finance, often offered through a white-label model, will likely be key to meeting these expectations and fostering greater digital payment innovation.
We’re always on the lookout for opportunities to partner with innovators and disruptors.
Learn More