The business-to-business (B2B) marketplace will witness an “explosion” in 2023 according to UK multinational bank Standard Chartered. Last month, it signed a memorandum of understanding (MOU) with European venture-builder KI Group to develop support for B2B marketplaces among corporate clients.
The May announcement followed publication of a Commercetools white paper on pivotal B2B commerce trends, which revealed that although 67% of buyers shop digitally, two-thirds of these buyers are dissatisfied with their online shopping experience.
Karin Flinspach, Standard Chartered regional head of transaction banking, was not surprised by the findings, which she says echo client feedback that payment options – ranging from card payments to alternative payment methods and instant payments – need to be “revisited”.
Outlining examples of improvement, Ms Flinspach says the best user experience mimics personalised sales experiences, for example through the use of 3D imagery, more pictures, more explanations and/or more technical details.
One key cause of customer dissatisfaction among the majority of online shoppers is their lack of “immersive experience”, she says. “The move from in-person calling to online sales is not the same in terms of cataloguing and buyer experience,” she explains.
Another source of dissatisfaction, she says, is the hindrance of a convoluted buyer sign-up process prior to transacting on marketplaces. Integrated check-out with payment options were among factors that would help a fulfilled user experience, she adds.
Standard Chartered is now working with KI Group on B2B marketplace pilots in multiple regions, spanning online travel, contract manufacturing and commercial vehicles. Although the MOU was signed in May, there is no fixed end date for the collaboration, according to Ms Flinspach. The announcement is based on collaborative benefits discovered during a previous client engagement on which the two organisations have worked together, she says.
Many statistics already show that the new generation of buyers prefer to do things online
“We are at the early stages of determining specifics. At a high level, the goal is to offer clients an end-to-end offering for B2B e-commerce solutions and leverage each other’s capabilities,” she adds.
Among the knock-on benefits to banks from clients’ B2B solutions will be alternative methods of trading seamlessly, Ms Flinspach says, moving away from traditional instruments such as letters of credit and more towards digitised methods such as digital escrow and real-time financing for shoppers wanting online ‘immediate’ financing for buy-now-pay-later schemes, she says, adding: “It will also result in new business models besides an improvement in existing product capabilities such as banking as a service, stitching up instant payment rails with FX to support currency sales.”
Standard Chartered’s focus is predominantly on the UK, Europe and the Americas, while KI Group is regionally more focused on the Middle East and Africa. According to Ms Flinspach, Europe accounts for less than 10% of the overall global B2B flows, which are led by Asia and the Americas.
“While several European clients will build and develop the B2B marketplace solutions within Europe, sales will happen not only in Europe but for some more so in Africa, the Middle East and Asia. In fact several clients have the bulk of their sales in these regions,” she says. “Once you add Africa, the Middle East and Asia into the mix, then we can add availability of currencies in local markets, challenges with KYC/KYB, managing and navigating local country regulations and ways of doing business that add to the complexities.”
The chief benefit to clients of the creation of the B2B marketplace is that traditional business models “tend to reshuffle, extend and deepen clients existing commercial models”, says Ms Flinspach. For example, a fast-moving consumer goods company may set up a marketplace for secondary sales between distributor and retailer combined with an incentive programme. “Traditionally, the client would not have direct visibility to this leg of the sales,” she explains.
Other benefits include what she describes as better product and price discovery for buyers, as well as aspects such as single creditor invoicing, which she says amplifies the benefits when it comes to vendor administration.
“For sellers, it’s an added sales channel, the opportunity to increase sales by combining offering with third-party products/services and possibly unlock new revenue model from commissions and so forth,” she says.
Read more about the B2B space
“Many statistics in most articles already show that the new generation of buyers prefer to do things online, and hence this is a space that will grow in the near future.”
The MOU with KI Group follows Standard Chartered’s global launch in March this year of its working capital and lending capability, S2B Loans, on its business online banking platform to manage transaction banking functions.
At the time the bank announced that instead of completing a paper-based loan application and then routing that internally for authorisation, the process now occurs digitally on the bank’s Straight2Bank platform.
According to Standard Chartered, S2B Loans brought about efficiency, especially in a hybrid or remote work arrangement, while allowing for a secured workflow to authorise for short-term drawdown or repayments.
