Change is coming to the back office—at long last—and the way companies make payments is an important part of it. That was the key takeaway from Nvoicepay Nsights, our inaugural conference held September 9-10 at the Harvest Inn in St. Helena. The conference opened a dialogue on back office transformation between practitioners and thought leaders.
An intimate group of finance and AP professionals, venture capitalists, industry analysts, and technology innovators talked payments, finance and technology on two glorious Indian summer days in the Napa Valley. The event was highlighted by a winery tour at Staglin Vineyards and a candle-lit poolside dinner, hosted by NVP Chairman of the Board Garen Staglin and his wife Shari at their spectacular hillside home overlooking the vineyards.
Carol Coye Benson, a payments expert and managing partner at Glenbrook Partners, kicked off the conference with an overview of the payments landscape, which she said is “splintering at a rapid rate.”
She called out three key trends to watch:
Tokenization, a security technology whereby dummy numbers are used to mask real account numbers; Embedded payments, an Uber-like payment experience where payment is baked into the transaction, and faster payments.
While most technology innovation in payments is happening on the consumer side right now, some is starting to percolate up to the B2B space. This so-called ‘consumerization of IT,’ where a technology gains widespread adoption in the consumer space and creates demand for change in the business arena, is a pattern we’ve seen in other industries.
In the short term, the payments trend we’ve got our eyes for B2B is faster payments, particularly for international payments.
While faster ACH payments will start in 2016, will it be enough for banks to retain their hold on B2B payments? Banks, Benson said, are hoping that regular payments will continue to be slow and they can offer real-time payments as a premium service. Once we get over the hump though, it will be only a matter of time until real-time payments become the norm, she said.
One new technology that could speed that change: The blockchain, the technology underlying Bitcoin. Many banks are now experimenting with it, and Marwan Forzley, CEO of Align Commerce, a company using the blockchain for international remittances, was on hand to explain how it works and to illustrate the possibilities.
Forzley clarified that while Bitcoin is a currency, blockchain is a technology that integrates payment, data and record of ownership. Use of this technology is in its infancy, he said, but will disrupt multiple financial processes over the next two to five years because it not only speeds transactional processing, it cuts the middlemen—and the cost—out of transactions.
Panelist Reetika Grewal, who works with startup companies at Silicon Valley Bank advised CFOs, treasury and IT teams to start learning and testing to find blockchain use cases for their business.
Payments innovation is part of a larger trend called Fintech, and it is on pace to attract $10 to 13 billion in venture capital investment for 2015. Jacob Moseley from Silicon Valley Bank was on hand to give an overview.
Moseley cited massive untapped markets of unbanked consumers, incumbent banks and financial institutions that are struggling to be agile in the face of changing consumer behavior and expectations, and the opportunities presented by big data as key factors driving fintech innovation.
Steep declines is the cost of data storage combined with advances in computing are powering a new generation of technology that is “unbundling” banks as tech challengers step in to provide better services at lower cost.
However, fintech for B2B is not experiencing same pace of disruption—yet. As in the consumer space, banks’ failure to innovate and their attachment to a margin target makes disruption likely, said Nvoicepay CEO Karla Friede. “Banks’ margin focus is our margin playground,” she said.
This sneak peek at the road ahead was balanced with back office transformation stories from Nvoicepay customers Sam Rotter of Multifamily Management Services, a property management company that is making their whole back office paperless, and Justin Sprague of CDK, a provider of back-end systems for the automotive industry whose integration of Nvoicepay was part of an AP transformation for auto dealerships across the country.
The talk of the event was the solutions provider panel led by Scott Pezza of Beck Anderson. Panelists Gabe Perez from Coupa and Rob DeVincent from Corcentric, (both are NVP partners for procurement, e-invoicing and AP automation) joined Karla Friede to discuss trends they’re seeing in the marketplace.
Panelists shared the frustration expressed by Perez that “we’re still talking about moving money off of paper, and scanning things,” but also noted that more organizations are starting to move, and there’s a second wave of transformation taking place.
This second wave, driven by consumerization, centers on mass adoption and self-service, and making processes easier for suppliers to transact electronically. What gets companies going, said Friede, is when they find out with today’s multi-tenant cloud and SaaS solutions, the barriers to automating are much lower than they thought.
Of course, the hardest part of any technology transformation is getting people to change behaviors and to that end, we had two inspiring fireside chats with business leaders who have seen plenty of change. Dana Evan, who served as CFO of Verisign as it grew from a startup to a multibillion dollar global enterprise, talked about leadership during times of growth and change, and John Hinshaw, Chief Customer Officer and Executive Vice President of technology and operations at HP spoke on how technology is enhancing the finance function.
Evan, now a professional board member and venture capitalist, remarked on how fast technology is changing. That is putting pressure finance and AP, and we hope the conference helped get people thinking about how to help their organizations evolve. One of the great things about having an annual event is that it becomes an opportunity to look back at how businesses grow and change over time. We look forward to checking in with you all next year.