As we hurtle forward into a new decade, we are surrounded by a seemingly limitless range of new technologies. All we have to do is reach across the sofa to our smartphones, think of anything we want or need, and we can be sure, ‘there’s an app for that’.
A plethora of platforms, scant standardisation
Technology proliferation is also becoming increasingly common in the B2B world. It seems the ‘-tech’ suffix is getting attached to almost every industry, splintering off into new sub-sectors and entering our collective vocabulary as if they were always there. These new X-tech sectors such as PropTech, LegalTech and the like are all made up of groups of enthusiastic entrepreneurs, proposing new answers to old problems and disrupting the status quo in evermore creative ways. Nowhere is this phenomenon more prevalent than in financial services and can be seen by just looking at the ecosystem graphics mapping out just how many FinTechs are now operating in the marketplace. Independent consultant Jay Palter has compiled a list of these maps which perfectly demonstrates the extent to which FinTech has reached country by country. Its quite staggering.
This innovation boom should only be welcomed, or we would never evolve. However, things just aren’t as simple in the land of B2B tech compared to its consumer counterparts. As consumers, we have the choice of a handful of operating systems to spark up our new technology in just two or three taps on a single smartphone or tablet, a stark contrast to the corporate payments landscape for example. On one side you have a whole gamut of back office systems – enterprise resource planning, treasury management systems, customer relationship management, accounting and payroll platforms and on the other side, you have the banks, all expecting the right information to reach them in their specified format. Caught in the middle, risky, inefficient and complex manual processes attempt to sort through the mire as best they can. Hardly the kind of slick automated experience you’d envisage for 2020.
In a recent panel conversation Kevin Cook, CEO and Co-Founder of Treasury Spring commented: “In the corporate world there is little to no standardisation. So, it’s a real challenge for those on the other side of the table trying to work out what they are supposed to be doing and what they are supposed to adopt. Beyond Excel there is no universal standard of what people use and I am not sure Excel is the best standard!”
And the future forecast has the potential to be even more complex. Enterprise-to-bank processes will only become more convoluted and the lack of standardisation will increase as digital transformation projects take place and more FinTech is added to the mix. Fortunately, most of these technologies are SaaS-based and don’t bring the same implementation and maintenance issues as their on-premise predecessors, but they still add additional process and data streams that need to be aligned to achieve streamlined bank connectivity.
The alternative of course is to stay put and rely on the mostly manual systems already in place and leave new FinTech investment at bay. But is it really even an option? With worldwide spending on digital transformation reaching an estimated $2.3 trillion by 2023, the thought of watching peers leapfrog over you, gaining new market share and benefitting from all that competitive advantage is hardly ideal.
Convergence on the horizon
So, is it really a case of adding complexity in a bid to stay in the game or staying static and hoping for the best? In a recent panel conversation on the transformation of treasury, Carmel Mesquita, Director B2B Partnerships at MasterCard expressed more optimism: “Over the last 20 years or so we have seen the convergence of services in various industries and sectors. In communications you can have TV, broadband and mobile telephony from one provider. Now think about insurance. You can also get car, life and home insurance all from the same provider. The convergence of payment services is starting, in fact, for many it already has.”
We think Carmel is on to something.
FinTech or TechFin?
Enter ‘TechFin’. A term first coined by tech giant Alibaba’s founder Jack Ma in 2016 used to describe the technology companies who provide financial services with a more customer and technology-centric approach. Ma was using TechFin to describe AliPay and since then the term has been adopted by other BigTech players such as Amazon, Facebook and Google etc. There are many of us however who would argue that Ma’s definition actually describes a sector of the market that has existed for years – those of us who don’t want to sell financial products (as the FinTechs do), but specialist technology providers who want to help the flow of payments, banking and financial data (aka TechFins).
TechFin will be where the convergence of payments systems and human-first technology will truly take flight. Firms can devote more time working out which banks should make their payments, where best to invest deposits, who to borrow from, where they can get the best FX rates, how to forecast cashflow, all without worrying if they have the right roads, bridges and tunnels underneath to support them.
In order to improve the visibility of funds, proactively manage risk and optimise operational efficiencies, treasurers undoubtedly need to invest in innovative new tools. However, if ever more complex operating models are piled on top of existing embedded systems, treasury transformation and growth will always be inhibited. True transformation will only be achieved if data among the FinTech, bank and treasury ecosystem is exchanged in a streamlined fashion and TechFins with the experience, skills and wherewithal are in pole position to make this a reality.
Anish Kapoor is the CEO of AccessPay