A study by Capgemini Research Institute titled as ‘World Payments Report 22’, finds that new payment methods are expected to increase from around 17 percent of total non-cash transaction in 2021 to around 24 percent by 2026. While B2C payments have flourished, the B2B value chain has too often been neglected.
It added, “The payments industry has remained resilient through recent unprecedented market volatility, accelerated by the adoption of innovative new digital payment methods for consumers. However, many banks are failing to provide the same support for small to medium businesses.”
According to the report, despite promising post-pandemic recovery levels, SMBs are continuing to struggle with cash flow issues and conversion cycles, stunting the next phase of growth for many. This has led to rising demands for payment service providers to step up, realign their priorities and assemble the right tools to help SMBs to explore new market opportunities, the report further said.
“Small and medium businesses are the backbone of global economic growth, contributing to half of global GDP and global employment. And yet, they are some of the most affected by the recent market volatility,” said Jeroen Hölscher, Global Head of the Payments and Cards segment at Capgemini. “Banks and payment service providers must realign their priorities to capture this untapped value through innovative and experiential payment services.”
While the SMB market segment is now worth upwards of USD850 billion worldwide, cites the report, SMBs are still often overlooked in favor of larger corporate accounts and the bigger retail market by the legacy banking industry.
To win back SMB loyalty, banks will have to amplify platform value which can only be unlocked through tackling restrictive legacy systems currently stifling growth, it added.
The report found that more than a quarter of banks struggle with monolithic and inflexible infrastructures, with 75% of the executives prioritizing costs towards keeping current systems running over innovating new value propositions – a clear barrier to needed investments in innovation and flexibility that SMBs crave.
Instead, payment firms should embrace composability which lets them select and assemble building blocks in various combinations to satisfy customer requirements. In doing so, firms can configure their offerings to best align with SME needs, powered by harmonized data, to deliver a unified value proposition by enabling payment firms to build B2B marketplaces for SMBs, the report said.