Businesses have a long way to go when it comes to ensuring more agile payments processes; while business leaders focus on improving this, fintechs have to explore more ways to create a seamless journey at the intersection of payments and financial technology. Jay Dearborn, President at WEX Corporate Payments shares more in this chat:
Jay, we’d love to hear about your journey through the years in fintech and a little about your role at WEX corporate payments…?
I started out at American Express where I was responsible for elements of the merchant marketing organization and corporate strategic planning. After my time at Amex, I went to McKinsey where I was a principal and focused on helping private and public organizations set their strategic direction, including technology deployment and process redesign to support long-term growth. I joined WEX in 2016 as head of strategy and I now lead the corporate payments line of business. I am responsible for our virtual cards and other payments solutions within the FI and fintech B2B payments space.
How have you observed technological advancements redefine virtual card and payment solutions over the years and what are some of your biggest predictions for 2021 and beyond?
2020 in particular has been a game-changer for payments digitization. In many ways, the unforeseen events of 2020 accelerated technological advancements in our industry. We saw more outdated, manual processes evolve for companies around the world. For the payments industry specifically, the pandemic catalyzed transformation that was slowly building up over the years, but is now viewed as critical to economic recovery—we’ve reached the digital tipping point. As we head into 2021, there are three key trends to consider when thinking through opportunities within the payments sector:
- Payments digitization will maintain momentum: We expect organizations to continue to invest in their need for modernizing payments processes across the board. With economic recovery at top of mind, businesses will adapt at record speed and modernize wherever they need to in order to cut expenses, improve productivity, and maintain revenue streams.
- Acquisitions may continue, but collaboration will thrive: Today’s global companies are placing high value on the partners that can help them improve the procurement of goods and services through modern technology. For some entities, partnership is just the beginning, and the end result is a high-profile acquisition. Corporations are attempting to scale these novel solution providers via M&A, but this has propelled the fintech industry towards exceedingly high multiples and pursuing growth even with negative returns. Instead of consolidation, a long-term solution that should be considered is white labeling via partnership.
- AR and AP will see the value in building a data bridge: The AR/AP world will experience a long-overdue shift and data will sit at the center of this shift. Current AR and AP programs speak different system languages and they need a translator. The profound changes in workplace and business models resulting from the pandemic, however, have made this challenging to accomplish internally. We’ll see more corporations turn to their trusted bank and technology relationships for support and guidance. They’ll lean on them even more in 2021 to figure out the integration, administration and compliance around payments.
Amid the global pandemic in 2020, how have you seen businesses and financial institutions break away from legacy systems; what are some bigger challenges that you’ve seen traditional teams faced with during this time when digital transformative processes are taking center stage?
One of the biggest challenges we’ve seen banks face is pace. They’re looking to do major overhauls and do them fast – they need a nimble partner who can help them make this shift, while also keeping their payments secure and seamless. However, for many, with spend volume suppressed, 2020 proved to be a year to finally make the effort to move away from legacy systems and optimize payments.
What are some core processes that you feel business should offer / adapt to when it comes to streamlined payment options and solutions?
There is one core area they should focus on – payments agility. The pandemic has shown us that payments agility is becoming a competitive imperative rather than an optional strategy – and digital payments are quickly becoming the new normal. To keep payments moving in a timely, secure manner, a supplier has to be flexible in how they accept payments and a buyer needs options for moving their money around. Businesses don’t have to settle for the expediency of one-size-fits-all solutions that may save upfront time and cost but reduce efficiencies and agility and drive costs up in the long run. More nuanced, tailored solutions exist that can meet the needs of businesses and their employees still adapting to profound shifts in their workplace and business models.
Despite the rapid evolutions in fintech and banking services, including payments today – what are some key areas that you feel still need a lot more focus and development to enable better financial services and processes?
One that still remains disappointing is that check is still the primary form of payment – 59% of all B2B payments are still made via check. I’ve been looking at this space since I was 22 years old and B2B payments are still primarily on check or wire. What has changed in the past 20 years – which you see with the rise of fintechs – is that innovation is happening; not just shifting the spend over but by providing value to the ecosystem by offering a rationale for moving over to a virtual card. Giving them a value proposition that’s resonating in the AP space in the US is working. We’re also seeing more legacy FIs interested in this space.
In what ways have you seen emerging technologies influence the roadmap of financial services over the last few years; how do you see this trend shape up in the next decade?
Financial service providers are learning a lot from the Amazons and Venmos of the world. The concept of a personalized, seamless and fast user interface to process payments and purchases is something we’re expecting to see the world of B2B payments adopt on the FI front. As for the past year, recent research tells us that 72 percent of fintech decision-makers we surveyed said their processes have become more digital throughout the pandemic. We are at a tipping point for B2B payments where it’s almost impossible to ignore the AP or AR digitization question, and from our research, many decision makers are already heading that way.
We’d love to hear about some of WEX’s upcoming plans/innovations?
In 2021, we will continue to focus on creating new possibilities at the intersection of payments, data and technology. We will also continue to expand into new markets within our existing business lines and further deepen our existing relationships with longtime partners.
Before we wrap up, a few biggest learnings / tips you’d like to share with fintech innovators and leaders?
- Focus on the customer, not the technology. I see too often that some fintechs get so enamored with a technology that they forget that they are in business to serve the customer. Technology is wonderful, particularly wonderful when we remember its role is to create value for the customer.
- Have a steady rudder. Markets and the businesses that function within them are volatile – this we can be sure. If you have a vision and are confident in the value it creates, keep a steady rudder through the volatility and you will be rewarded with calmer (and more fruitful) waters.
- People are the most important investment area. We compete in an industry going through rapid evolution. People – their wisdom, know-how, and creativity – are what enable your company to lead. At WEX, we have built and continue to build a team of the best people in payments which allow us to see around corners and create more value for our customers both today and tomorrow.
Powered by the belief that complex payment systems can be made simple, WEX, is a leading financial technology service provider across a wide spectrum of sectors, including fleet, travel and healthcare. WEX operates in more than 10 countries and in 20 currencies through approximately 5,000 associates around the world. WEX fleet cards offer 15 million vehicles exceptional payment security and control; purchase volume in travel and corporate solutions grew to approximately $40 billion in 2019; and the WEX Health financial technology platform helps 390,000 employers and more than 32 million consumers better manage healthcare expenses.
Jay is the President at WEX Corporate Payments
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