On behalf of Matt Weir, Chief Business Development Officer at EedenBull, a global fintech payments company

Whilst banks had been developing and delivering a ‘digital first’ approach and customer proposition for years before the pandemic hit, no one could have foreseen the extent to which this philosophy would be supercharged so exponentially when consumers and businesses were forced to operate and live online.

The reality is that regardless of our roles as consumers, employees, managers and business owners, we now exist within a largely digital environment. As a result, innovation and the digital delivery of products and experiences continues to improve daily on a global scale. In many ways, the digital customer has never had it so good: as consumers, our abundance of choice across products and services has increased massively, amplified by enhancements in technology, UI and UX.

However, businesses, especially SMEs, have been largely overlooked in this accelerated digital evolution in payments and technology. In the commercial payments space, often the focus from the banks has predominantly been on the large corporate market, with portfolios traditionally and heavily weighted in the Travel & Expenses (T&E) sector. As a result, SMEs have often been treated more as consumer customers of the bank in terms of the products and services offered to them.

In other words, the commercial products and services offered by the banks have been largely tailored to large business customers. But from a commercial payments perspective, issuing banks have been placed under great pressure due to a severely damaging drop in spend volumes across the T&E sector, as all business and leisure travel came to an abrupt halt in early 2020 because of the global pandemic. For those banks whose focus has traditionally been on corporate travel products, this has led to spend volume declines of up to 80% across their commercial card portfolios (as reported by CPI, Visa, Mastercard and Amex, who have seen overall declines in commercial payments volumes by 4, 7 and 21% respectively). There is now however, a growing realisation across the commercial payments industry, of a pressing requirement to better serve the very critical global SME community, which often accounts for the bedrock of economies around the world.

Widespread outsourcing of commercial payments services

The rapid and extensive pivot (driven by necessity) by businesses to online B2B spend has of course helped to bridge the gap in lost volumes somewhat for the banks. The question now though for the banks is, do they have the necessary levels of investment, innovation and service propositions across their commercial payment offerings to deliver truly digital, data-rich experiences to their business customers? Business customers of course, are now even more focused on running an efficient ‘tight ship’ as they cautiously take their first steps out of Covid.

This pressure on banks is of course being exacerbated by increased competition from ‘direct to market’ FinTechs, eagerly searching for new business. So increased pressure on the balance sheet, often coupled with minimal investment on the commercial product side of the bank, is continuing to lead to swift and widespread outsourcing of commercial payments services.

Banks have the opportunity to partner with trusted specialists in this space, outsourcing components of their commercial payments offerings in order to increase speed to market with agile implementations, while maintaining their all-important brand presence and customer relationships.

The emergence of Commercial Payments as a Service

The question clearly arises about the most pragmatic way of doing that. There’s no doubt that for many banks, outsourcing partnerships are the way forward. Our banking partners globally are increasingly relying upon our Commercial Payments as a Service (CPaaS) model, enabling them to be more competitive and enhance their digital offerings to their business customers. We’re now working with many banks in terms of helping them adopt technology in a modularised, highly flexible format that includes a full suite of relevant payment products and services, from front-end customer spend management platforms, card management services, to full back-end processing. Offerings that can support business customers of all sizes from SME to multinational corporate.

CPaaS has proven itself an effective and efficient way for banks of all sizes to offer a complete digital solution across the whole commercial payments value chain as an outsourced service. Whatever the type or size of bank, CPaaS is emerging as a positive route for any bank that is looking to address its commercial digital payments infrastructure.

And as we carefully step out of the pandemic, there are real opportunities for banks to transform this space and to deliver digital, real time, customer focused solutions to their business clients. With cloud technology and a clear focus on data access and provision, business customers can finally begin to enjoy enhanced service offerings in the commercial payments space.

Increased regulation, ever changing technology development, growing business demand and now the unexpected impact of the pandemic has led us all to this point. Now is the time for banks to be providing new, innovative, feature based, data-rich innovation to their business customers before they look elsewhere.