In 2023, finance innovation is becoming a top priority for businesses. Companies are turning to fintech to increase their chances of success in the face of increasing anxiety over the future economy. According to a PYMNTS and Corcentric survey of 500 CFOs across industries, over 90% of those surveyed expect a global recession within the next year, which is triggering investments in their digital payments infrastructure and speeding up changes in the finance landscape. In this article, we will explore some innovations emerging as the key frontrunners for 2023: AI, Embedded Finance, and Buy-Now-Pay-Later (BNPL) for businesses.
AI is currently the technology seizing everyone's attention. AI-powered chatbots, such as Generative AI Chatbot ChatGPT, have played a significant role in transforming the landscape. The focus on AI is usually on the potential impact on the job force, but data from payment service provider PayU indicates that almost 70% of fintechs will be impacted by the technology in the next ten years. Use cases include helping lenders make loan decisions, aiding businesses to better detect and avoid fraud, and improving back-office operations and customer service.
AI is also transforming trade finance. AI GPT models can help automate many of the processes involved in trade finance, such as document verification and compliance checks, which will ultimately lead to financing that is delivered faster at a cost that is appropriate for the risk. AI GPT models in trade finance can also help reduce the time and cost involved in document verification by quickly verifying a document's authenticity and flagging any discrepancies. AI can also help improve compliance and underwriting by checking for compliance with regulatory agencies, analyzing data from various sources to help underwriters make more informed decisions, and detecting fraud more effectively. By embracing AI technologies, businesses in the financial industry can enhance efficiency, reduce costs, and develop innovative business models that are designed for the future.
Embedded finance is a rapidly growing trend that is expected to double in size to $51 billion by 2026. The B2B payments market is anticipated to be the biggest potential market, estimated to reach $33.3 trillion in size by 2026. Companies that want to capitalize on this opportunity should consider incorporating software into their commercial processes to enhance the customer experience and stay competitive. In 2026, the transaction value of embedded finance is expected to surge from $2.6 trillion to $7 trillion.
Embedded finance promises to improve customer experiences and financial access, and provide cost and risk benefits to companies, which is why the demand for it is expected to continue to grow. This new ecosystem requires four main participants: the end customer, platforms that own the customer relationship, software enablers that help meet complex regulatory and technological requirements, and a regulatory services or license provider. While payments and lending currently dominate the embedded finance landscape, insurance, tax, and accounting are also expected to contribute to growth in the future. Despite the rapid growth of embedded financial services, there hasn't been as much quantitative exploration of the industry's dynamics, and different sectors and services are developing at different rates.
The Buy-Now-Pay-Later (BNPL) or Pay-it-Later (PIL) model for businesses is gaining popularity, with B2B PIL looking especially promising. B2B BNPL offers many benefits that can help small and medium-sized businesses (SMBs) overcome economic challenges and grow their businesses. Companies can benefit from reduced interest payments and a much simpler method of making purchases. Moreover, B2B PIL allows third-party credit and risk-management tools that speed up credit approval and reduce repayment risk, leading to simplified cash flow management for businesses. According to the PYMNTS report released in 2023, B2B payments are critical to the modern economy, with a global volume of $120 trillion per year and the industry valued at $103 billion as of 2022.
In a Forbes survey on the status quo of small businesses in 2023, it was found that inventory was one of the highest expenses for small businesses, representing an average of 17 to 25% of their spending. While inventory is crucial for generating revenue in the long term, the upfront cost of purchasing inventory can be a significant burden for small businesses with limited working capital, especially during peak seasons when stock needs to be high. SMBs can use BNPL to offset rising supply costs, pay suppliers in installments, and acquire more inventory, simply by getting more time to pay. By easing the burden on payment terms and their accounting teams, BNPL can help companies cut costs and improve cash flow, making it a powerful tool for improving the quality of life for small businesses worldwide. Furthermore, by simplifying the payment process, BNPL can help businesses avoid payment delays, cash management challenges, and other issues that may hinder their competitive standing in the marketplace. Overall, B2B BNPL is an ideal solution for companies looking to modernize their payment systems, reduce costs, and improve their competitive advantage.
This is where BlueX steps in to help businesses grow. BlueX Pay-it-Later offers pay-later options for your cargo and all your logistics invoices, whether it’s air freight, ocean freight, trucking, or warehousing. BlueX provides financing options with up to 100% of net invoice value and up to 1 million in funds available in 48 hours. BlueX will pay your vendor on time, and you can choose between net 30/60-day terms every time you submit an application. Moreover, BlueX supports different payment methods, including offline remittance, same-day ACH, and SWIFT. Besides having more time to pay for various types of invoices, BlueX makes payments to your vendor on time so you can get your goods more quickly.
In conclusion, the future of finance in the B2B landscape in 2023 looks promising with the emergence of innovative technologies. AI is transforming trade finance by automating processes and improving compliance, while embedded finance is a rapidly growing trend that promises to enhance customer experience and provide cost and risk benefits to companies. The Buy-Now-Pay-Later (BNPL) model for businesses is also gaining popularity, particularly in the B2B sector. Solutions such as BlueX Pay-it-Later are providing SMBs with a powerful tool for enhancing their cash flow and competitive advantage. This can be especially helpful during times of economic volatility.
As businesses continue to embrace these innovations, they can expect to see enhanced efficiency, reduced costs, and improved customer experiences. The future of finance is undoubtedly exciting, and companies that stay ahead of the curve by incorporating these innovations into their operations can expect to reap significant rewards. Overall, AI, embedded finance, and BNPL are top innovations that will continue to drive growth in the B2B landscape in 2023 and beyond.