Sibos 2024: Embedded finance is driving the future of B2B commerce
As enterprises of various sizes across different sectors seek better ways to manage payments and working capital, embedded finance is becoming a revolutionary force in business-to-business (B2B) commerce.
Embedded finance is becoming a revolutionary force in B2B commerce
Digital experiences, similar to those found in consumer e-commerce, will facilitate the shift of traditional B2B interactions into the digital age. While embedded finance has been prevalent in consumer markets, its application in B2B is now on the rise. However, a rapid adoption curve may not be immediately visible.
Larger corporations are expected to implement embedded finance first, with smaller businesses following. Concurrently, the adoption of back-office technologies, such as treasury workstations and enterprise resource planning (ERP) systems, will provide treasurers with the necessary data to identify additional working capital benefits through innovative practices.
The significance of scalability
Scalability is crucial for the widespread adoption of embedded finance across the financial supply chain. The primary challenge lies in creating scalable solutions that can address the unique needs of different stakeholders.
The market is filled with non-scalable solutions that were not designed with the end customer in mind. Scalable embedded finance solutions must adapt to the specific requirements of businesses, especially in the B2B sector. This approach ensures that financial products can seamlessly integrate into existing workflows, reducing friction and enhancing user experience.
One notable innovation is the reassembly of financial products through strategic partnerships, such as integrating payments technologies into various enterprise resource planning (ERP) offerings and business applications.
The importance of scalability is also evident in the broader context of working capital management. Effective working capital solutions can enhance the financial efficiency of businesses, particularly in an economic climate characterized by rising interest rates and shifting market dynamics.
Framework for working capital management
At the heart of innovations in embedded finance is working capital management. The recent increase in interest rates has shifted the focus back to accounts receivable processes, following a decade of developments centred on accounts payable and buyer-led solutions.
The aim remains to streamline transactions for both buyers and sellers, regardless of their size or market influence. Visa seeks to facilitate connections between financial institutions and various elements of the financial value chain on a global scale. This enables Visa to adapt solutions from one market to another, sharing insights and making innovations more widely applicable.
Industry specialisation is essential in developing effective embedded finance solutions. Industry experts, particularly in sectors such as aerospace and fleet, will play a crucial role in building trust and creating customised solutions.
As younger generations, particularly Generation Z, become more prevalent in the workforce, the transformation of various industries has reached a critical point. Younger professionals entering the business world question why their work experiences don’t match the digital experiences they are accustomed to in their personal lives.
Overcoming technological and organisational challenges
The push for embedded finance in B2B is not without its challenges. Although the technological aspect can be complex, it is often the easiest part of the equation. The more significant challenge lies in changing established processes and overcoming organisational inertia.
To address these challenges, solutions must be “ready-to-use” for corporate customers.
Looking ahead, 2025 is expected to be a transformative year for embedded finance in B2B commerce. With many technological components now in place and an increasing demand for more efficient processes, the time for action is now.
As we approach next year, it’s time to focus on execution. Listening to customers while building and adapting solutions is crucial, ensuring they are easy to implement and effectively meet business needs.
Sponsored by Visa
