Financial institutions’ (FIs’) efforts to upgrade their products, services and experience is largely attributed to massive shifts in what end-customers demand from their banks. That’s true in many ways for corporate customers as well, which increasingly demand digital-first solutions with easy interfaces that are always on.
But what happens when a business client doesn’t know what they need? That’s often the case when it comes to digital B2B payment solutions, according to Customers Bank Vice Chairman and Chief Operating Officer Sam Sidhu, who told PYMNTS that B2B payments modernization efforts are not actually in response to customer demand.
A collaboration earlier this month between the bank and Tassat saw the FI integrating the TassatPay Network, which can support instant B2B payments via blockchain, as well as facilitate transactions across legacy rails.
“If you talk to the folks that manage the majority of our commercial relationships, they will tell you, ‘My clients aren’t asking for this and don’t need this,’” said Sidhu.
As Sidhu and Managing Director and Head of Digital Banking Chris Smalley explained, just because a company doesn’t directly ask for something doesn’t mean it can’t benefit from it, or that it won’t eventually need it in the future. Sometimes, they said, it’s up to the bank to anticipate a company’s needs even before the customer is aware of them.
According to Sidhu, the decision to collaborate with Tassat was part of the FI’s efforts to anticipate corporates’ B2B payments needs, and to take that effort one step further.
“The job of a bank, especially in today’s day and age, is to not only develop technology that can anticipate what a client may need in the future, but also think about where the puck is going,” he said.
It’s an interesting take on who bears the weight of B2B payments modernization. After all, corporates remain notorious for being slow to adapt new technologies and embrace electronic payments. Perhaps some of that hesitancy, however, is due to the fact that their banking partners aren’t encouraging the use of more innovative tools.
While businesses are largely familiar with legacy rails like ACH as they migrate from checks, newer technologies like blockchain and real-time payments networks remain low on the priority list for many firms. Yet these technologies can address some of the most prominent pain points for firms today, most notably in their ability to offer an always-on payment service that can marry data with the movement of funds.
“This could be really helpful technology for [accounts payable (AP)] and [accounts receivable (AR)] to reconcile their books and automate processes on their back end as well,” said Smalley of the opportunities in blockchain. “Imagine a hospital system that is buying a substantial amount of medical devices and equipment from a manufacturer, buying in 26 different locations, they’ve got 12 different products, and each of these is a seven-figure purchase.”
No Need To Know How It Works
Addressing modern-day pain points is a valuable incentive for a business to adopt new products and services its bank may offer. But when it comes to blockchain, adoption in the B2B payments space could be hampered by a lack of understanding about the technology.
As Smalley acknowledged, the tool is often associated with cryptocurrency and its reputation for volatility — not exactly an attractive connotation.
Yet in addition to banks being able to anticipate corporates’ needs before even the business clients themselves do, Sidhu and Smalley also noted the importance of helping firms understand why a solution is valuable even if those clients don’t understand the intricacies of how the solution works.
It’s a frequent topic of conversation for Smalley, who said he has sometimes explained with a Salesforce analogy.
“You couldn’t reverse-engineer Salesforce, but you know that it works,” he said. “That’s where we’re headed with blockchain.”
Indeed, Sidhu highlighted the ability for blockchain to settle funds 24-7-365 in an always-on economy, while Smalley looked further ahead toward features like smart contracts that can add even greater value to blockchain-based B2B payment services. The business may not understand how it works, and it may not have even realized the problem it addresses needed solving.
But consumers did not demand the iPhone before Apple released its first, nor did they identify key pain points like the need to make payments with said iPhone when physical cards, cash and checks remained commonplace.
Forecasting the direction that the puck slides will be essential to easing corporate payment pains and connecting firms to the tools that can solve their biggest problems of today and tomorrow.
“What we spend a lot of time thinking about is how you design a bank of the future,” said Sidhu. “The bank of the past, decades ago, involved having relationship managers that helped and understood your business… That’s what we need to mirror in the future, to provide those products and services in anticipation of what the customer may need.”