When marketing a product or service, it is crucial to have a clear understanding of the difference between business-to-business (B2B) and business-to-customer (B2C) products and services. Explore the key elements that differentiate these two segments in this illuminating video based on a compilation of various MBA course sources. https://www.youtube.com/watch?v=OqcTwveJmRU
Karen Mills, former director at Small Business Administration, discusses the influence of smaller financial technology companies on big banks in this insightful video. https://www.youtube.com/watch?v=pcy2ikaTYDw
FinTechs are leading the charge in using advancements in technology to fundamentally change the landscapes of e-commerce, payment networks, online lending, money transfers, business-to-business (B2B) payments, personal finance and banking. Gain some insight into what is likely to drive a FinTech toward success and make is a smart investment choice. https://www.youtube.com/watch?v=cxNo_cGv5fQ
Explore an interesting case study of a financial services firm that produces software for other businesses as they incorporated a new reference model and enhanced functionality to meet new government and consumer requirements. https://www.youtube.com/watch?v=VFKPdlVk14Q
Falk Rieker, global head for IBU banking at SAP, discusses how the B2B payment space is growing in comparison to the retail side and how the infrastructure could be simplified. https://www.youtube.com/watch?v=nDDR79fPHDM
Visa’s first distributed ledger-based payment solution has been announced and will allow businesses more opportunities to thrive on a global level. https://www.youtube.com/watch?v=vRhwYxZwsto
Russia has seen a boom in the number of smaller businesses in the last few years. Unfortunately for them, traditional lenders are, by and large, still focused on providing services to medium- and large-sized businesses. While some smaller businesses are able to find financing through traditional lenders thanks to special concessional lending programs, others seek out other options such as taking out an individual loan for their business. Even classic microfinance institutions (MFIs) are not yet systematically important in the country. This has opened the door for FinTechs to step in and fill the void, and there are three types of FinTech sources smaller businesses are looking at:
A new online platform (ISMET.kz) represents the next step for what a marketplace can offer businesses in Kazakhstan. Created by Kazakhtelecom JSC, it is the first B2B site in the country and enables small- and medium-sized businesses to access various online tools to help grow their business quickly and easily. Specifically, the platform helps businesses connect with consumers while also simplifying sales/payment processes. Moreover, it allows businesses to select which services of the platform is useful for them and only pay for those services (as opposed to a blanket payment that includes services a business may never use). Going forward, the platform is expected to extend its outreach to more small businesses and help Kazakhstan’s small business sector become a thriving part of the economy.
As is the case around the world, business-to-business (B2B) payment solutions in Russia are lagging behind business-to-consumer (B2C) solutions. In fact, B2B transfers are still a relatively painful process in Russia that can take up to 3 days, often resulting in downtime and lost revenue. The slow pace at which B2B payment solutions have evolved is somewhat surprising given that the B2B payments industry in Russia is much larger than the B2C one. This situation, however, is beginning to change. In 2018, Yandex.Checkout and Sberbank introduced online B2B payments to the Russian market. The two companies developed a platform allowing a legal entity to pay online for goods and services via invoicing, speeding up the payment confirmation process from 3 days to just one to three minutes. This solution has every chance to revolutionize the Russian B2B payment market and make it similar to the B2C one, or perhaps even better. In the end, the new platform could serve as the impetus to transform the B2B payments market at its core and help B2B e-commerce grow significantly in the country.
Sberbank has announced a new service for corporate clients that will guarantee the fulfillment of a supplier’s obligations or give a full refund. The service also works in the other direction, guaranteeing suppliers a full payment for delivered products/services. The so-called ‘Safe Transaction’ service is integrated with Sberbank Business Online Internet Bank and is essentially an escrow transaction service for corporate internet banking. If there is a disagreement between the parties regarding the fulfillment of agreed upon products/services, Sberbank’s service team initiates an arbitration review and makes a decision in favor of one party of the other.
A pilot project on digital signatures has just been launched in Kyrgyzstan. Starting this month, reports from those engaged in foreign economic relations (i.e. importers and exporters) will only be accepted electronically with the use of a digital signature. Despite the adoption of this innovative measure, there are 3 main concerns that could complicate things for importer/exporter entrepreneurs:
Tinkoff has launched a free financial accounting service for entrepreneurs to analyze and monitor the state of their business. The service allows users to:
Kairat Mazhibaev, Chairman of the Board for RESMI Group, has announced the creation of the Respublika Financial Systems Group. This new Group is planned to be an umbrella brand for approximately a dozen financial services that meets demands for digital versions of traditional financial services. The main goal of the Group is to make financial services simple and more affordable for a greater number of consumers. In the end, Mr. Mazhibaev hopes that the services provided through the Group will make consumer financial services simple, reliable, profitable and mobile. Eventually, he sees the development of an entire ecosystem built around connecting consumers, business and financing.
Participants at the Visa Everywhere Initiative competition presented their innovative solutions designed to help solve local market challenges and create new products and services in the field of financial technologies. At the finals of the competition, Uzbek startup MARTA won a special award. MARTA is a mobile app that allows small businesses to accept payments from UnionPay, Visa and MasterCard. MARTA began development more than 6 months ago and has already passed its initial testing stage. MARTA’s developers are now awaiting investors to help it become certified with Visa and other financial institutions. MARTA’s developers also plan to eventually launch a call center to assist consumers in using the app. The idea was launched to support small entrepreneurs in growing their businesses via an ability to accept a wider variety of payments.
E-Commerce and FinTech Hackathon 2019, organized by KG Labs and financially-supported by GIZ’s Trade Facilitation in Central Asia project and Interbank Processing Center, was held June 14-16, 2019 in Bishkek, Kyrgyzstan. We asked its mentors how they assess the state of the FinTech and e-commerce market in Kyrgyzstan. Here's what they said. Azhar Mambetova, Head of Innovation Department in Kompanion Bank The Kyrgyz fintech industry is just starting to develop. The main thing is everyone understands the need for digital transformation, change of processes and approach to business. This is even fixed in the strategies of banks. But we do not yet have an appropriate ecosystem. It is difficult for big players to transform, and we have a few small fintechs. The main driver for the fintech development in Kyrgyzstan should be human potential. We need to unite and learn new things. Imagine a bank that bought new systems, equipment, and more. If employees think the old way, it will not help. In this sense, a good example is DBS Bank in Singapore, which has invested $ 20 million in staff training. Consumers need simple products. For example, there are still difficulties with the transfer of funds and payment for services, especially in Kyrgyz regions. As for business, everything is also ambiguous. Most companies prefer to cash out, although it is obvious that this is not always convenient. Something is needed in this direction. Now the National Bank of the Kyrgyz Republic (NBKR) is considering the regulation on the regulatory sandbox. It should simplify the development of new products: it will be possible to test them on a small number of users on the basis of a temporary NBKR resolution. I think this is a step forward. Aikanysh Saparalieva, president of E-commerce Association of Kyrgyzstan We do not have statistics on the use of e-commerce services. But it is obvious that these are very modest numbers. For example, in Kazakhstan, such services account for only 1.8% of the total retail turnover. The situation is even worse in other countries in the Central Asia. New e-commerce products should be adapted adapt to the population. So far, many of us are skeptical of online shopping or simply do not have the skills to do so. At the same time, foreign marketplaces are actively used in Kyrgyzstan, the number of parcels from abroad is increasing every year. The development of the market requires an ecosystem, ubiquitous Internet access, urbanization, streamlined logistics and more flexible payment systems. In addition, a law on e-commerce is being developed in Kyrgyzstan. The goal is to create favorable conditions for entrepreneurs, and I hope that it will be achieved. Because it’s impossible to expect this industry to develop in case if you strongly regulate it. Alexander Sobolev, developer at Mad Devs First of all, Kyrgyz market needs solutions which could simplify or automate something. This also applies both e-commerce and fintech. The main thing for regulatory authorities is to create conditions for companies that can develop something like this while remaining within the regulatory framework. Daniel Vartanov, CTO at veeqo.com Average Kyrgyz citizen has a little access to financial services. Therefore, Fintech is in its infancy. Perhaps the reason is the excessive regulation of the sphere and the absence of an appropriate consumption culture. If a person has no idea of banking services, he is unlikely to be interested in such things. It's hard to say something about the e-commerce market too. We order a lot from eBay or Amazon, but it's not about local platforms. Edil Ajibaev, CEO and founder at picvpic.com E-commerce in Kyrgyzstan is just beginning to develop, it happens slowly. This is due to the small market volume and consumer habits. After all, the advantage of online stores should be that buying is easier and cheaper than in regular stores. But we have a large part of potential buyers in Bishkek, who this it’s easier to come to a regular store. Another problem is that we are not used to paying online via banking cards. E-commerce market development is possible only in a case when people must see benefits in e-commerce services. Market size is the main problem for local startups. High-quality solutions require investment, while there are few of them. In addition, new services need to be tested, and it means costs not everybody could manage. Therefore, you should pay attention to profitable areas. These are lending, purchase and sale of tickets, construction, sale of cars, agriculture. Where possible, it makes sense to compete with global players. For example, you can create a service for booking hotels in remote regions, if we are talking about eco-tourism. In general, during the last 5 years we have seen some progress. For example, High Technology Park of the Kyrgyz Republic and E-commerce Association of Kyrgyzstan were established. But there is no legislative basis, and this must be corrected Peter Fabian, advisor at Business & Finance Consulting There is a small market in Kyrgyzstan, and people have problems with access to financial services. However, in recent years the situation was improving. For example, we could consider the National payment system "Elkart" as a completely modern solution. In Central Asian countries, consumers are skeptical of banks because of unclear tariffs and conditions. The simpler and clearer the product, the more it will be used. It can be quite obvious solutions like paying utility bills and home Internet from a smartphone. In my opinion, everyone will benefit from the availability of such services. For example, there will be no need to install a bunch of terminals - they are not so cheap, it's easier to develop a good application once. The development of fintech in Kyrgyzstan is impossible without the interaction of banks and regulatory authorities. It is advisable to simplify it as much as possible.
B2B FinTech companies don’t often get the recognition of their B2C cousins; however, they play a key role in the future of financial services and deserve some acknowledgment. That being said, our friends over at Tearsheet have created a list of the top B2B FinTech companies, broken down into 9 categories: Lending
Q-Lana, a U.S.-based FinTech company, was founded to develop the concept of knowledge-based lending as a way to help financial institutions overcome the challenges associated with broader MSME lending and, thereby, spur economic development. Q-Lana is an integrated platform that offers fully-digitized operations and allows other providers to connect to it. Moreover, it’s implementation is paired with consulting services in order to facilitate important steps along the digitization path. Q-Lana’s founders hope that Q-Lana will become a powerful tool to help emerging economies continue their development. Q-Lana has already been launched in select locations in Africa, the Caribbean and Europe and is expected to come to markets in Central and Southeast Europe in the near future.
New data from Juniper Research suggests that B2B transactions processed by pureplay digital operators are likely to reach USD 14 trillion by 2023, up from USD 6.7 trillion in 2018. This expectation results from banks’ purchase departments struggling to quantify returns on investments from the implementation of digital technologies that would replace or augment existing mechanisms. As a result, they rely heavily on manual processes and traditional suppliers. This has allowed new entrants (e.g. Modulr and Soldo) to gain a foothold in the space, taking advantage of their lack of legacy systems and the use of updated and real-time payment technology that integrates with companies’ accounting software.
Amadeus (a Madrid-based travel reservations provider) is teaming with Mastercard and Elavon (the payments unit of U.S. Bancorp) to launch a B2B payments plan with Thai Airways and Sweden’s Select Travel. The new plan could save as much as 70% off the cost of normal transaction costs through a combination of reduced interchange fees and greater efficiencies in fraud, cash flow and chargeback processes. If successful, Amadeus plans on expanding the use of the B2B payments plan to include other airlines.
Italian banking group UniCredit has teamed with Italian FinTech company FinDynamic to enhance its working capital offering for corporate clients. The partnership will allow bank clients to offer suppliers early payment of invoices in exchange for a discount that changes dynamically in relation to the number of days discounted from the original invoice’s due date. FinDynamic’s solution allows both buyers and suppliers to automatically view invoices through a web-based or mobile platform and select approved invoices for early payment, which could help free up needed working capital earlier than ever before.
FinTech startup SmartPay has launched a financial inclusion wallet in Vietnam, targeting 25 million unbanked/underbanked consumers and 6 million small- and medium-sized merchants. SmartPay ensures a better payment and finance management experience for retail customers by offering them digital payments, loans, savings, loyalty programs, bill payments, money transfers and data-driven services – all from a mobile device. The unbanked/underbanked especially benefit from easier access to financial services. For merchants, the wallet enables the acceptance of QR-code payments without additional investments in POS infrastructure.
Open, an online-only banking startup that offers business banking solutions for startups and SMEs, has announced its plans to expand into the Middle Eastern market. The Indian company is the fastest growing online-only SME bank globally. Currently, it powers payments for over 30,000 businesses, and the expansion in the Middle East will extend its service offering to 17 million more SMEs. Open will be able to offer these businesses a payment platform as well as APIs to integrate banking into business workflows. Open also has plans to introduce its own card in the near future.
The platform-based business model has taken hold in the digital economy, and the concept is quickly spreading to banking and financial services. This has resulted in companies springing up to offer extensive ecosystems and business-to-business (B2B) solutions. Here are five of the most popular in Southeast Asia:
Small businesses form the base of many economies around the world; however, profitably serving them has been a challenge for many financial institutions. A new ecosystem approach may be the key to financial institutions untapping this vast market. Here are three strategic roles financial institutions could assume in moving toward an ecosystem approach:
FinTech has slowly but surely changed the banking industry over the last few years, giving more options when it comes to enhancing or maintaining finances. This is especially true for small business owners, who are benefitting from the easier and faster solutions FinTechs offer. With the world of open banking becoming a reality throughout the world, FinTechs are now poised to have even greater success in efforts to reach small businesses. In fact, many believe that the balance of power in servicing small businesses is shifting away from traditional financial institutions and toward FinTech companies. There is certainly evidence to suggest this as many small business owners believe alternative sources of financing (that came about as a result of FinTech solutions) are their only real avenues for attracting financing (i.e. they wouldn’t be able to get the same level of financing from a traditional financial institution). While this all seems positive for FinTechs and their relationship with small businesses, it is important to remember that FinTech is still in its developmental stage and traditional financial institutions are starting to fight back for small business customers, combining their knowledge and resources in partnerships with FinTechs as part of an effort to maintain their small business customer base. It remains to be seen how this battle for small businesses will end, but what is certain is that creative new innovations are the key to winning this battle. And small businesses are the real winners.
Once overlooked, customer experience is now a pillar of the business-to-business (B2B) world. A recent survey found that 90% of B2B leaders say customer experience is crucial to their companies’ strategic priorities. Here are 10 of the best B2B companies that are finding innovative ways to give customers what they want by focusing on customer-first cultures and strong relationships:
FinTech startups are creating a wide range of solutions for small businesses by targeting the pain points small businesses face in the world of finance, resulting in a direct competition with traditional financial institutions. Now, traditional financial institutions are starting to understand that they need to modernize if they are to keep up. To accomplish this, many traditional financial institutions are choosing to develop partnerships with FinTechs rather than try to compete directly with them. Such partnerships not only help traditional financial institutions become more relevant in a digital world, they are also providing legitimacy and further funding opportunities for FinTechs. In these partnerships, FinTechs provide technical expertise and business experience while the financial institutions offer deeper capital channels and credibility. This natural partnership aligns the previous competitors to provide the best possible services to underfinanced small businesses across the globe.
Financing for small businesses is lacking throughout the world, even when ample funding is available and ready to be used. To close this USD 2 trillion funding gap, FinTech disruptors have set themselves up to play a key role by stepping in where traditional financial institutions and other investors won’t. This is an important gap to fill as small businesses account for more than half of the world’s GDP and two-thirds of all employment.
Innovative FinTech companies are set to change payment processing for B2B transactions, especially as an increasing number of financial services are moved to cloud-based models that facilitate easier access to simplified business solutions. Moreover, cloud-based platforms facilitate the easy integration of multiple applications to deliver greater functionality. Moving forward, it is expected that the combination of cloud-based possibilities and increased access to APIs will take payment solutions into the next great era.For this to happen, however, FinTech innovations need to become more user-friendly, and a greater push toward educating end users needs to be made, especially among the small businesses that are the backbone of economies throughout the world. The move toward digital is well-underway and irreversible at this point. It remains to be seen to what extent the B2B payment services market will take advantage of this and exactly what it will look like in the future. In all likelihood, however, the future of B2B payments is bright, simple and easy-to-use.
As commercial financial institutions strive to keep pace with consumer demands, many are looking to FinTech partners to help deliver improved service and value. In fact, a majority already use some kind of third-party FinTech solution, and many plan to (or are willing to) increase investments in such partnerships. This is a major step forward for the role of FinTechs in the eyes of commercial financial institutions, which once saw FinTechs as an adversary instead of as a partner. In the end, most commercial financial institutions have come to understand that embracing new FinTech ideas is vital to improving consumer satisfaction and reducing cost margins as well as to survival. This is especially true in creating modern and valuable business-to-business (B2B) solutions that meet and exceed consumer expectations. The real question is how will commercial financial institutions create these FinTech solutions: will they build them themselves or will they look for FinTech partners with the knowledge and experience to implement the solutions consumer expect?
Despite convenience, speed and a better general experience, alternative payment methods (APMs) are relatively uncommon in the world of business-to-business (B2B) transactions due to B2B transactions having more complex workflows that often involve multiple parties. But the reality is that APMs can offer businesses savings in time, money and effort by helping them move away from manual payments processes and tap into a plethora of new features, including simplified cross-border payments. Perhaps most importantly, APMs help increase financial visibility for both buyers and suppliers and also facilitate the rapid on-boarding of new suppliers. In the end, this can help open the market up for everyone by giving each party access to a broader range of potential partner firms. Following the great growth seen in consumer payment solutions, B2B supply chain payments will soon catch up, and the payment platform providers that have the vision to provide early stage APM support without the need for invasive system updates will be in the best position for long-term success.