Financial services, b2b transactions, digital transformation

B2B Transactions: a New Eden for Financial Services

March 14, 2018

Article by Roy Halstead, Business Consultant at Osudio.

As B2B platforms edge closer to the experiences provided by B2C platforms, businesses are increasingly looking into new financial solutions. They want to enhance their operating capital and provide easy credit solutions for both distributors and customers. With a whopping $27.28 billion merchandise value, Alibaba is leading the pack when it comes to B2B e-commerce. The Chinese giant is currently paving the way in redesigning financial offering with Alipay, its online payment gateway solution.

China has never been new to setting the standard for disruptive technologies. Platforms such as WeChat have been under scrutiny for quite some time. WeChat presents a unified and interconnected ecosystem of services all accessible through one app.

It is no mystery that Alipay rapidly became the most popular means of payment on the Chinese marketplace Taobao, back in 2014. It was more attuned to the Chinese way of transacting. Since then, it has become an interesting piece of reverse engineering by catching the eye of western businesses seeking to set foot in the Chinese markets.

UniCredit, Italy’s major financial institution, like others in Europe, has already started to enable Alipay on most of its merchant F-Pos. This allows Chinese tourists to have the same payment experience as when purchasing online back home.

Source technode.com (www.technode.com)

https://www.reuters.com/article/us-europe-alipay/alipay-expands-partnerships-to-tap-chinese-travelers-to-europe-idUSKBN13V163

Redefining payment platforms as vehicles to penetrate into large markets such as China, is just one example of the strategies adopted to build traction. The real meat will lie in the capacity of financial institutions and companies alike to provide direct loans. Instantly and conveniently, during the transaction phase. Again, Alibaba has proven to be ahead of the game by setting up Ant Financial, offering personalized consumer and business loans. While only a drop in the ocean of business loans, it can prove to be a disruptive force as technologies are in place to enable such transactions.

Gearing up to deliver seamless B2B shopping experiences

With B2B sales mirroring the experience offered by B2C platforms, the line between consumers and professional buyers is blurring.

An increasing number of professional buyer demand the same level of service and convenience with placing professional purchases as when doing personal shopping. This implies that B2C channels like web stores, are becoming not only viable but also expected in B2B environments.

With lines blurring, businesses tend to find it easier to embrace direct to consumer sales. Especially if they have consumer-oriented sales channels such as webs stores already in place. It is essential that professional B2B sales gear up. They must deliver an exceptional experience for customers that are more accustomed to cutting edge shopping experiences in their private life.

Revised look and feel, enhanced shopping experience and an eye on operating capital

The B2B market will be worth $6.7 Trillion by 2020 (Twice bigger than B2C - $3.2 trillion). The share volume of daily business transactions just between the EU and China, will grow exponentially. These growth trends will echo globally as more professional goods will become available for online purchase. Throughout the purchasing journey, the customer experience will need to be aligned to create additional value.

Source Frost & Sullivan (www.frost.com)

https://www.forbes.com/sites/sarwantsingh/2014/11/06/b2b-ecommerce-market-worth-6-7-trillion-by-2020/#11d18070212e

Furthermore, with funds moving quicker across the virtual landscape, businesses will also need to set the groundwork for financial institutions. They’ll need to develop tailor made products to respond rapidly to the changing landscape. Financial tools designed to improve cash flows and enhance rapid and seamless transactions within the B2B E-Com platforms, will be the norm in the next 5 years as they pick on an untapped market.

We’ve seen Alibaba setting the stage on what’s to come. There is no reason for companies owning a B2B platform to replicate, albeit in a lower scale. Ant Financial provides loans directly, but also allows third party financial intermediaries to offer their products on Alibaba. Often with hefty interest rates.

https://www.ft.com/content/778d9338-d0d4-11e7-b781-794ce08b24dc

With large volumes in place, there is no reason for businesses offering B2B not to seek partnerships with financial institutions. This will bridge operating capital on high volumes and enables them to get a piece of the action. It is another step towards building meaningful online relationships with corporate customers by offering them financial services and enabling greater operational flexibility.

An example of these gaps into the market that are currently underserved, can be identified with EU companies purchasing Chinese goods. There is an absence of a solution which caters to this particular situation. Which implies that companies purchasing in China, often need to pay fully upfront. That puts a strain on operating capital. Financial players that will enable draw down facilities in partnership with B2B vendors (Business Wallets). If they provide fair exchange rates as well, they will be riding the next big wave as transaction volumes are set to increase.

At Osudio over the past years we have focused in delivering seamless e-commerce experiences with a strong focus on B2B e-commerce. With a proven track record with clients such as Carlsberg and Miele, we are set to further enhance our offering in the coming years. The growing demand for more advanced B2B solutions, will trigger the interest for new financial components. We look forward to sparring with FinTechs in the field or companies seeking to learn more about the possible solutions in this domain. Contact us here. 

Keywords: B2B, ECommerce, Fintech, P2P Loans

https://www.forbes.com/sites/sarwantsingh/2014/11/06/b2b-ecommerce-market-worth-6-7-trillion-by-2020/#3dab79a1212


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