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Fintech Focus on B2B Payments Innovation

By Mike Faden

Investment in financial-technology (fintech) startups is increasingly focusing on innovations designed to solve the complex challenges faced by small to medium sized businesses (SMEs) — a sector that has been somewhat neglected until now, according to some experts. Targeted areas include B2B payments, invoice financing, online e-commerce and procurement, and small business loans.

A KPMG report, The Pulse of Fintech Q4 2017, noted that B2B fintech has remained a priority for investors within overall 2017 global fintech investment of $8.7 billion.1 Another analysis noted that in Europe, B2B fintechs are snapping up an increasing proportion of fintech investment, attracting $948 million during the first nine months of 2017 — 28 percent more than the total for the entire previous year.2


Several fintechs, including those focused on B2B payments innovation, are taking advantage of blockchain and artificial intelligence (AI) as they seek to reduce cost and streamline processes for businesses.3 According to the KPMG report, "AI has become a major driver of innovation in the Americas, particularly in the US and Canada where investors have recognized the massive opportunities presented by AI to automate processes, such as regulatory compliance and reporting."


B2B Payments and Invoice Financing


One reason that investment is being funneled into B2B startups is that B2B payments are typically tied in to complex business processes. Those processes often still require manual effort, in part because SMEs generally can’t afford expensive enterprise resource planning (ERP) software to automate the complexity, experts say.4,5 Accordingly, startups see considerable opportunity in accelerating and reducing the cost of B2B payment processes for SMEs through automation. They’re focusing on areas such as cross-border and domestic B2B payments, automating accounts payable and receivable functions, and invoice financing – also known as factoring.6


Several U.S.-based and overseas startups received funding over the past year for their B2B payment technology, including a number of companies using blockchain.7,8,9 They include several firms that are targeting treasury management with cloud-based platforms designed to automate B2B payments, manage cash flow and handle foreign exchange currency transactions.10,11


A number of companies are developing invoice financing systems designed to help reduce late payments, which have become a growing problem for SMEs in the U.S. and other countries. For example, one U.K. startup is using AI to analyze B2B invoices and accelerate payments to SMEs. Its technology analyzes the invoices received by corporate buyers, and scores each based on the likelihood that it will be paid. The score is provided to financial institutions, which pay high-scoring invoices instantly in return for a small cut. The company aims to reduce transaction costs for buyers, improve working capital for suppliers and provide a safe asset for financial-services firms.12,13


Other companies are also working to reduce the cost of invoice finance to make it more attractive to SMEs. Approaches include the use of blockchain and smart contracts to create an automated global marketplace in which companies can buy and sell invoices.14


Big financial institutions are also investing in or acquiring B2B payments startups as they take a "buy versus build" approach to building out their B2B service offerings, according to KPMG. In Q4 2017 alone, such acquisitions by major U.S. banks and other established financial-services firms reportedly totaled well over $1 billion.15


Online B2B Procurement of Goods and Services


Several companies are aiming to simplify and cut the cost of acquiring goods and services by building global or regional online marketplaces. These cloud-based platforms connect buyers and sellers, allowing buyers to publish their requirements and receive bids from suppliers. They include a Dubai-based company offering a regional platform focused on office supplies. Another company focuses on consulting, legal and marketing services, aiming to match buyers and sellers using AI; the company aims not only to support the bidding and procurement process but also to provide tools for project management and collaboration with winning suppliers.16,17


SME Lending


Investment is also flowing into fintechs that aim to address the lending needs of SMEs in different regions of the world. Some companies are focused on making the process faster and easier, by allowing SMEs to submit applications via mobile devices and by using analytics to quickly assess creditworthiness by examining a wide range of data sources, from an applicant’s current cash flow and bill payment records to external sources such as social media.18


AI and Blockchain


AI and blockchain feature prominently in the plans of many startups targeting B2B payments and other business applications. One small-business accounting platform, for example, uses machine learning to progressively automate the processing of financial data and help companies improve forecasting.19,20 AI is also being used to streamline areas of the B2B payments process, such as vendor authentication and onboarding, and for fraud detection.21


Experts say that the ability to use AI to analyze huge volumes of B2B payments transactions and other data is compelling; for example, the technology can be used to correlate information distributed across multiple data sources to spot fraud or other suspicious activity.22 Still, an article in American Banker suggested that some venture capitalists have become bearish on AI investment, despite the huge opportunities, due in part to the level of hype and the large number of competing companies.23


Blockchain VC investment reached a record high of $512 million across 92 deals in 2017, according to KPMG, with companies targeting many different uses such as consumer and B2B payments, insurance, and streamlining know-your-customer (KYC) processes. Many blockchain technology startups are also using the technology itself as a new way to raise money through initial coin offerings (ICOs), in which the company creates blockchain tokens (cryptocurrencies) and sells them to the public. Such sales reportedly raised more than $1.6 billion for startups within the first two months of 2018.24



Investment is pouring into B2B fintech innovation as companies target areas such as B2B payments, invoice financing, accounting processes, and lending. That trend is expected to continue, according to KPMG, which also says that established financial-services firms are likely to continue to leverage fintech to broaden their services.25

Mike Faden - The Author

The Author

Mike Faden

Mike Faden has covered business and technology issues for more than 30 years as a writer, consultant and analyst for media brands, market-research firms, startups and established corporations. Mike also is a principal at Content Marketing Partners


1. The Pulse of Fintech Q4 2017, KPMG;
2. “B2B startups are taking over European fintech,” Business Insider;
3. “B2B FinTechs Diversify Investment Sources Into 2018,”;
4. “Where fintech dollars will go in 2018,” American Banker;
5. “B2B Fintech Investment On The Rise,” Forbes;
6. Ibid.
7. “Big-Name Backers Pump $324 Million Into B2B FinTech,”;
8. “B2B Fintech Investment On The Rise,” Forbes;
9. “These are some of the hottest blockchain startups to watch in 2018,” TechStartups;
10. “Asia’s Alternative SMB Finance Lands Investment Boom,”;
11. “Big-Name Backers Pump $324 Million Into B2B FinTech,”;
12. “Previse secures £2 million seed funding for AI-based instant B2B payments service for SMEs,” Finextra;
13. “About us,” Previse;
14. “Fintech startup brings blockchain and cryptocurrencies to invoice finance,” Global Trade Review;
15. The Pulse of Fintech Q4 2017, KPMG;
16. “Asia’s Alternative SMB Finance Lands Investment Boom,”;
17. “B2B FinTechs Diversify Investment Sources Into 2018,”;
18. “Asia’s Alternative SMB Finance Lands Investment Boom,”;
19. “ScaleFactor Secures $2.5M in Seed Funding to Modernize Accounting for Small Businesses,” ScaleFactor;
20. “Asia’s Alternative SMB Finance Lands Investment Boom,”;
21. B2B API Tracker February 2018,;
22. “Where fintech dollars will go in 2018,” American Banker;
23. Ibid.
24. “What Bitcoin Rout? Sales of New Digital Tokens Are Still Soaring,” The Wall Street Journal;
25. The Pulse of Fintech Q4 2017, KPMG;

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