Transforming the way B2B trade and payments are done around the world today is an arduous task, but there are plenty of strategies FinTechs and innovators can deploy to nudge the needle forward.
For small and medium-sized businesses (SMBs) across Southeast Asia, the persistence of a mix between legacy tools and cash, with the rise of mobile wallets and FinTech disruptors, can make the market particularly challenging. On one hand, service providers are hoping to leapfrog over outdated trade and payment methods and fast-track the region’s adoption of cutting-edge solutions. On the other hand, it takes patience to overcome the habits of user behavior.
Finding the balance can be the most effective way to combat friction, according to Ajay Gopal, CEO and founder of Singapore-based B2B trading platform Tinvio. In a recent conversation with PYMNTS, he explored the value of using familiar tactics with a modern spin to drive efficiencies and modernization of B2B payments and commerce.
Understanding The Ecosystem
Gopal acknowledged that there is more than one way to drive digitization of B2B trade and transacting. New ecosystems are emerging as adoption of B2B eMarketplaces grows, enabling third parties to operate as matchmakers or even direct distributors.
But in Southeast Asia, the traditional modes of communication between small and medium-sized buyers and suppliers aren’t these marketplaces.
“Today, the way this process typically happens is I pick up my phone and make a call to my supplier,” said Gopal. “It’s a mixture of phone calls, emails and, very commonly in Southeast Asia, WhatsApp.”
Text messaging platforms and emails make sense to connect buyers and suppliers. As ubiquitous technologies, business owners with little time find these tools easy, familiar and convenient. The downside, of course, is a complete lack of integration and standardization in how businesses manage orders, invoices and payments. This fragmentation creates a high burden of manual workload, explained Gopal: Suppliers have to take that order they received via a customer in WhatsApp and manually sort that information into their back-end systems to generate an invoice.
B2B payments can be similarly disjointed. Gopal noted that cash on delivery is the most common strategy for SMB trade in the region, with checks and manually initiated bank transfers also popular. It’s often a reconciliation nightmare that can create extra costs in the form of manual data entry, collection and security services, and accounting expertise.
“If you’re a supplier and you’re receiving payments, you’re getting a bunch of money, but there is no way to see if the money belongs to which invoice, belongs to which order,” Gopal noted.
A Familiar User Experience
Between fragmented purchase order data in text message exchanges and manual handling of cash or checks, there are plenty of friction points to address to streamline B2B trade and payments.
While online marketplaces can address many of those challenges, Gopal noted that it can be more effective to offer a solution with a familiar user experience to small business merchants. Such is the motivation behind Tinvio’s chat-based tool, which connects SMBs to a mobile app that looks and feels similar to WhatsApp and other text messaging platforms.
Merchants can converse with their suppliers to ask questions and make inquiries but then wield a standardized tool to place orders directly within the platform. This creates “a user experience that is very familiar and native” to users, Gopal said.
On the supplier-side, the app’s embedded ordering function then sends a notification to the vendor via email or WhatsApp, allowing that company to alter or accept the order, generate an invoice and receive electronic payment, without having to join the Tinvio app themselves.
It’s an open ecosystem that Gopal said can digitize and create efficiency without forcing dramatic changes in behavior.
Driving B2B Payment Behavior Change
Identifying chat-based communication as a path of least resistance to structure B2B orders is only one stop toward improving B2B collaborations. When it comes to B2B payments, cash on delivery, checks and manual disassociated bank transfers might offer a familiar workflow for SMBs, but to promote security and automation, these tactics just won’t cut it.
Southeast Asia is a “complex” market, Gopal said, that is in the midst of a dramatic revolution in business-to-consumer (B2C) payments. Its B2B payments landscape is on the cusp of a similar shift, but today, payment technologies like commercial cards remain a rarity.
“I think the very first thing that needs to be tested and proven is that you can really change user behavior,” said Gopal. “Can you give an Indonesian business owner a card and expect them to use it the way Americans, or Europeans, or Singaporeans do? That’s one behavioral change risk that we need to mitigate by creating that affinity for credit and debit cards.”
By presenting a familiar platform and user experience that is set up to support integrated card payments, Tinvio hopes to ease behavior change to drive B2B payments digitization. Gopal pointed to one of its investors, MUFG Innovation Partners, as a strategic collaborator that can help the FinTech support its goals in B2B payments and, moving forward, embedded financial services such as credit and card issuing. (The firm recently secured its Series A funding to the tune of $12 million.)
Driving change is never easy, especially when it comes to the B2B payments and commerce ecosystem. But striking a balance between wielding the solutions SMBs already use and easing them into newer technologies can be an effective method.
When coupled with an ecosystem ripe for innovation, change is possible.
“We’re at this pivotal moment inside of Asia where B2B payments is about to take off,” Gopal said.