The upside of the crisis — immense progress in digitisation

Online businesses all around the world see an immense increase in sales due to the current corona crisis. For example, Polish CCC Group has intensively increased sales in their e-commerce channels, which has amounted to almost 45% in March 2020.

When the Chinese cosmetics retailer Lin Qingxuan had to close 40% of its physical stores, they changed their strategy and asked their employees to work from home instead, where they all got the task of promoting the company’s products on social media. This new approach has resulted in the company’s sales reaching 200% compared to last year. In the USA, Amazon is already planning to hire an additional 100,000 logistics employees and will increase the pay with $2 per hour for all employees. All of this is a result of the high increase in their online sales.

How can the banks use the opportunity to upgrade their B2B market flows?

COVID-19 is now driving the financial institutions to help their business clients to embrace and accelerate their digitisation agenda. B2B merchants are resolving to digital solutions instead of physical and banks must adapt quickly to keep up with changing B2B customer expectations. This digital change comes with the expectation of new solutions that enhance customer experiences. Adding value and convenience to the customer’s workday is an essential way to stay competitive in the age of e-commerce and digital banking. And there is a huge potential for banks that pursue the opportunities associated with online B2B marketplaces.

B2B e-commerce includes two groups: the merchants (sellers) and corporate buyers. They have different needs when it comes to transactions. The merchant wants to receive the payment fast and securely, and the buyer wants to pay with invoice because it saves time and money.

Consequently, the invoicing payment involves the management of financial risk, which is the merchant’s responsibility. But most merchants are largely unequipped to take on this responsibility, which makes invoicing — the preferred payment method in B2B commerce — potentially risky for merchants. Meanwhile, the banks, who possess strong capabilities within financial risk assessment and carrying out due diligence, are missing out on additional revenue streams, because they are not involved in the process.

B2B follows B2C regarding digitisation. Here’s how…

COVID-19 is revolutionising B2C commerce patterns as commerce moves online in a degree never seen before. But how can the banks use this momentum, and at the same time apply their specialised resources to help their B2B merchant customers accelerate their digitisation and also catch up with B2C’s 10-year experience advantage?

There is a natural business for banks to enter. By developing a product that accounts for the financier risk, banks can generate additional revenue streams through transactional revenues and fees on financing payments.

Banks can start from scratch and build the product themselves — but that would require time and money. Alternatively, they can cooperate with someone who is vastly experienced within this niche field and has already built a proven product. This option represents a lower initial investment with a much shorter time to market.

Enterpay delivers a white-labelled solution that provides a decision engine that enables banks to increase their role as facilitators in the e-commerce payments market by improving data identification, customer authentication, and comprehensive credit assessment. By combining Enterpay’s decision engine with banks’ existing invoicing and factoring services, a new B2B payment product is created. Hereby, Enterpay helps corporates buy like consumers by digitising the onboarding and risk management processes and improves the user experience.

VR Payment, a German payment subsidiary of Volksbanken Raiffeisenbanken, has already embraced Enterpay’s solution, which has enabled them to extend and complement its B2B e-commerce services by offering a secure online invoicing payment method and managing the financier risk on behalf of its B2B merchant customers.

What will happen when the crisis is over?

The B2C market will look even more favourably on e-commerce, when the pandemic is over. And even though the B2B market is still far behind the B2C market, we will see a steady increase in the digitisation here as well. Physical meetings, transactions, deliveries etc. are being digitised during the pandemic due to the risk of infections, which will soon manifest itself as a decrease in outgoing costs. Younger employees are also influencing the workplace, and they are used to the benefits of e-commerce.