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Featured Article:

Author:  Shireen Ali, Senior Vice President – Analytics, Citi

The B2B payments sector is estimated to be a $120 trillion* business. Yet, despite recent technological advancements,  B2B payments still falls behind its counterpart, B2C,  in terms of both customer experience and efficiency. If you have to go out to a café and buy a coffee, you tap the machine and  receive  the coffee. Imagine, if instead you said, “thanks for my coffee, please send my invoice and I will pay you in 60 days.” That’s exactly how B2B payments work.

The B2B payments landscape often involves analog processes and outdated systems,  massive volumes of transactions, involvement of multiple intermediaries and counterparties and regulatory oversight, especially in regards to cross-border payments. This has all contributed to a much slower pace of innovation in the B2B payments space. This is now changing with the proliferation of digital alternatives including ACH, electronic fund transfers and instant payments. Fintechs are also finding new ways to bring efficiency to B2B payments, with AI technology leading the way. From streamlining the payments process to improving customer experience, AI has great potential to shift the B2B payments landscape in the digital era:

  1. Streamlining accounts payable: Until recently, businesses have only been able to automate the payment process partially. Many businesses still rely on paper checks and invoices. And while there are countless ways to automate payment processing, there is still a number of manual steps necessary for businesses to file, reconcile, and report payments properly. Automation allows businesses to eliminate many unnecessary steps, drastically reducing the cost and time associated with making and processing payments. Streamlining the payments process with automated tools also helps to reduce the risk of manual errors and handle payments at scale. AI can play a key role in enabling automation through ML driven reconciliation techniques and reporting.

In addition to this, with emergence of new business models in the sharing economy and corporates intent on driving revenue through connected customer interactions and platforms, a reliable, scalable, flexible and invisible payments system is essential. AI and machine learning can play a key role in improving customer experience through reacting to payments exceptions , enabling intelligent reporting as well as personalized and advise driven notifications on balances and payment statuses over multiple channels.

In addition to above the emergence of blockchain and distributed ledger technologies (DLT) has huge potential to enable AI to drive transformation in B2B payments. With a decentralized approach, Blockchain strips cross border payments of its inefficiencies and can significantly improve payments speed which also reducing cost. AI can be further leveraged with blockchain to further reduce the need for human input – e.g. image recognition for financial documents. Given the data transparency and data traceability that blockchain ensures, it can further enable validation of client transactions against fraud and AI based behavior analytics to enable real time response.

The future of B2B payments will be powered by Real-time payments, extensive data, advanced analytics, and hyper-customized client insights. The qualities that drive success in the commercial payments business will change in the future, due to rapid advances in data capture and technology.  As the B2B payments space awaits it’s own UPI moment , AI will play a huge role in accelerating the pace towards the same.


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