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New legislation has been rolled out across Europe with the aim of increasing competition in the financial services market – and America is taking note.

‘Open Banking’ legislation forces the big financial institutions who dominated the market place to share data belonging to businesses and individuals with their competitors. This happens only when the customer has requested it – and is designed to help the customer to get a better deal when managing their money.

Using these Open Banking provisions, third-party financial institutions can access things such as balances, transaction information, spending details, borrowing and overdraft use. It means those institutions can then analyze the data and use it to offer linked services and offers. Only specific data that is required to enable a particular service is shared and only when the customer has consented. That consent can be withdrawn at any time.

Across Europe, legislation – in the form of the Second Payment Services Directive (PSD2) – is now in place to require banks to engage with Open Banking and enable customers to consent to the sharing of their data in this way and sign up for services that require it.

Though the concept of financial firms sharing customer data to enable products has been around for a while in Europe and the US, the European Union’s PSD2 legislation has arguably been a driver in making the way it is done more secure and raising the profile of the opportunities it creates across the globe.

Open Banking is certainly allowing individuals and businesses to access a wider variety of financial services.

Mastercard firm Finicity, with corporate headquarters in Utah, is an established Open Banking provider and recently announced a data access agreement with Brex, a finance management system for businesses.

Finicity CEO and co-founder Steve Smith said: “Finicity has been collaborating in earnest with financial institutions in signing data access agreements with banks and other traditional financial institutions.

“With our agreement with Brex, we are now extending our approach to fintechs. We look forward to working with Brex in pioneering the way financial data is utilized to help businesses grow and achieve their goals.”

The growth of Open Banking is undeniable.

In the UK alone, more than two million customers were said to be accessing Open Banking services by September 2020, according to the Open Banking Implementation Entity (OBIE).

Apps and services using Open Banking have made a wide variety of business banking services easier or more affordable.

Open Banking makes it feasible for a service provider to create an app that links directly to a business account to assess how much tax is payable and to move those funds into a tax account, for example.

In one of its simplest forms, Open Banking allows accountants, financial personnel, and business managers to set up and access a dashboard where accounts held across a multitude of different institutions can be viewed and managed in one place.

Disrupter services are also forcing intensified competition on things like fees and charges for overseas spending and transaction costs.

One aspect of Open Banking allows merchants to tap into new streamlined options for accepting payments and making refunds directly between customer accounts without the need for credit or debit cards.

Kieran Hines, Senior Banking Analyst at financial services technology research, advisory and consulting firm Celent, said: “Open Banking on the face of it is a quite alien concept. If you say to people ‘there is this great new concept where third parties can access your bank account information’, people are naturally quite hesitant and tend to reject the concept.

“What we will see happening, and to some extent is already happening, is that people will engage with Open Banking services because they provide value. Customers will be less and less aware of the realities of what happens to power these services and more interested in taking advantage of what they can offer.

“In the same way that people don’t need to know how an ATM works in order to use it. What we need to know with Open Banking is ‘if I provide consent to this mobile app to see my data, they can give me something better than I have now’.

“Over time, Open Banking will become something that is just part of the experience customers have and they’ll be aware of how that can be used to improve the services they receive.”

Customer service isn’t what it used to be—in a good way. The financial world has witnessed rapid technological advancements over the last century, but customer service remains a steadfast priority through it all.

Ensuring a good experience for buyers not only gives companies an edge over their competition, but it has practically become a requirement for company growth. With the increasing popularity of information-sharing websites and apps like Facebook or Yelp, reputations can expand or shatter within moments.

Fintechs are in a unique position as the liaison between customers and their suppliers. However, they tend to limit services offered to suppliers in favor of a more customer-oriented focus. As such, supplier support remains a well of untapped potential. How is this important, and why should fintechs care about suppliers?

Redefining “end-to-end”

“End-to-end,” from a B2B payment perspective, defines the customer’s processes from the time they receive an invoice to final reconciliation. Fintechs that prioritize customer-focused solutions risk their reputations by not providing decent supplier support. In reality, suppliers are customers too. Though they may not be required to pay for the back-end services that fintechs offer, they are just as capable of leaving reviews of their poor experiences on social media.

Nvoicepay recognized this long ago and redefined what “support” meant in the B2B payments space by dedicating teams for both customer and supplier assistance. Our daily interactions with suppliers act as a valuable means for us to determine the most beneficial improvements to our solution. It has paid off so far: The services we provide to suppliers who seek payment assistance have earned our support teams a consistent satisfaction rating of 98%. Clearly, the need for AR services within AP solutions is out there.

Suppliers: The new customers

Fintechs often completely disregard supplier support. In some ways, this approach makes sense: customers pay for the service. This often means that suppliers are reduced to a “commodity” status. Tales of suppliers being strong-armed into accepting certain payment types are rampant. To no one’s surprise, this method for supporting customers does not encourage stable, long-term business relationships.

To improve our own services, Nvoicepay has explored ways to make suppliers feel like more than just a cog in their customer’s AP process.

Nvoicepay’s vendor enablement services offer a medley of benefits that ease the burden from both AP and AR teams. When a supplier joins our robust network, they become immediately payable by all current and future customers. When the supplier needs to update their information, a single call or email to Nvoicepay covers all bases, thus limiting touchpoints and mispayment risks. Customers aren’t required to maintain extensive payment details for their suppliers—it’s all done in-house by Nvoicepay’s supplier support team.

Making payments is also a breeze. Suppliers who are used to being pressured into specific payment types are pleasantly surprised to be offered alternatives. Credit card—commonly preferred by customers looking to limit their payment file count—can be a hardship for some suppliers. Nvoicepay’s holistic approach enables customers to submit a single payment file for all payment types, letting suppliers choose from credit card, ACH, or check options without extra work on the AP side. This symbiotic process maintains healthy business relationships and improves workflows for all parties involved.

A new industry standard

By choosing a SaaS that treats your suppliers well, you’re getting the whole AP support package. Without supplier services, any payment follow-ups wind up in the laps of your AP team—not exactly the groundbreaking automation you were promised.

While it’s likely not the first thing on your mind when you browse for AP solutions, choosing one that also benefits your suppliers gives you an overlooked advantage, and will leave you with both a happier AP team and satisfied suppliers. Ultimately, a solution without a holistic approach to the “end-to-end” process is no solution at all.

Alyssa Callahan is a Technical Marketing Writer at Nvoicepay. She has four years of experience in the B2B payment industry, specializing in cross-border B2B payment processes.

The European Legislation That’s Giving Businesses a Better Deal with Banks

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