The Year….Summary and onto 2021
My Top 5 Viewed B2B Payments Stories from 2020 and 2 Least Viewed
Rather than write about what happened in 2020, like you don’t know a dumpster fire when you see one. No, “can you hear me” Zoom stories, no retelling of how I got rich buying Zoom stock, because I didn’t. Here are my top 5 viewed stories from my Blog B2B Buzz.
First up and by 5 times as many views any other story was my write up on Goldman Sachs:
1. B2B Payments — Goldman Sachs Enters the Arena
June 23, 2020
My favorite point of the story is the ignorance around banks spending on R&D. Too many folks don’t realize that R&D is an investment not a cost. Amazon, Microsoft, Apple and the Big Tech folks get it.
Yet, GS spent money to build a new platform and then someone that should know better at the Motley Fool suggested that GS should close down Marcus. Why this key point about Marcus in a blog about B2B? Simply, GS is using the same Marcus playbook to do B2B. (and since this Blog they added Wealth Management)
“Closing down Marcus would result in taking the $1.3 billion already shelled out as a loss, but that might stem the hemorrhage before it takes a larger toll on the company’s coffers and let Goldman Sachs wipe the slate clean and go back to what it does best.” The Motley Fool by Jennifer Saibil on December 9, 2019
This is the equivalent of arguing in 1999 that Amazon should stick to what it does best, just selling books. GS went into Marcus because 2008 showed the bank that being the High End I-Bank was not a sustainable business. B2B is the next move in this brilliant shift for Goldman Sachs.
Goldman Sachs is going to be a powerhouse in B2B payments and is one of the few banks actually spending on technology in the right way.
2. Stripe is a Treasury Company
August 3, 2020
“At its core, Stripe is a treasury company.” is a line from a help wanted ad for Stripe as it is hiring Treasury Management folks.
Remember I wrote this in August well before Stripe announced Stripe Treasury in December to much fanfare.
The key point of this story was really, that Treasury departments and CFOs are getting tools that are Data Centric and will no longer rely on Excel so heavily. A key to understand why this is so important is to look at the CFI.org’s definition of Treasury:
Their job is to create value by managing capital in a way that earns higher than expected risk-adjusted returns.’
I close this blog out with the key point for anyone in Treasury, “update your resume, Treasury is fun now.”
3. B2B Payments — Card Players
June 22, 2020
Oddly this was my most viewed blog without a Big Player’s name in the title. The story focused on two players many in the industry know but most folks don’t know, WEX and Fleetcor. Oddly these two companies look so similar in profile I have trouble telling them apart. Seriously their value proposition is nearly identical.
A great sub-story on this is one that I had to update:
“WEX paid $1.28 billion in cash and 2 million shares of WEX stock paying 11 times trailing revenue.” December 2019.
<insert COVID>
“WEX has advised eNett and Optal that it is not required to close the acquisition of eNett and Optal because of this (COVID) material adverse effect.” Source: Businesswire
It has to be noted that eNett and Optal were billed as Travel focused Virtual Card Technology.
“The combination of WEX’s travel business with eNett and Optal further strengthens our leadership in the global travel marketplace,” This original announcement in January of 2020 could not have been worse timed as global travel fell through the floor.
This might be the first time I have seen an actual occurrence of “Force Majeure” aka legal boilerplate to cover “An act of God.”
The Transaction got finalized 12 months later for $577.5 million in December of 2020.
So you think you got screwed by 2020 and the global Pandemic. The folks at eNett and Optal lost over Half a Billion Dollars in their companies value.
4. Marqeta + JPMC = Commercial Card $
July 28, 2020
“Marqeta’s modern card issuing platform to deliver commercial card tokenization for J.P. Morgan” — Omri Dahan CRO of Marqeta
Why does this matter? Two key points are Tokenization and the growth of Commercial Card Volume.
Commercial Cards is the under-rated rising star in B2B payments. Why? Because the volume is so far below Consumer spend many ignore commercial cards, see the chart ← for an idea about the scale of each. But then consider that the trend for consumer spending, it is going down, while Commercial is going up.
Tokenization is when you substitute an important data element with a non-sensitive data element that has no value or meaning.
As I point out in the Blog post, if you had to guess that COVID would cause an upswing or downward trend on Virtual Cards for Commercial Transactions, of course it is an increase. Accenture looked at the commercial card market in late 2018 and they predicted a CAGR for Virtual Cards of 21%. That number is likely to increase based on the changes that occurred in 2020.
5. Treasury APIs
July 19, 2020
I obviously love the Treasury space, so how could I not write about 3 different companies with the word Treasury in their name. Standard Treasury (now part of SVB), Modern Treasury and Treasury Prime. Weird side note is that two of these involve Dan Kimerling and all 3 came out of Y-Combinator.
I have talked to all of them and have much love for them, but really wish one or even two did not use the word Treasury in their name.
Treasury Prime has a line on their website that I absolutely love: “Our powerful rules engine automates the exceptions and edge cases that account for most of the manual effort in operational processes.”
As someone that started his career as a controller, it is the exceptions that cause you to miss the month end closing. I am sure this is a feature that will warm the heart of any CFO or Controller.
Modern Treasury has a blog of its own where they seek to educate folks about money movement. My favorite entry on this is “What Happens When You ACH a Dead Person?” The answer is that NACHA has not one but two return codes for an ACH to a dead person.
I consider both Modern Treasury and Treasury Prime to be great and could recommend either based on my non-technical view of them. So my conclusion stands as:
If you need a B2B Payments API provider, you should really have your CTO look at both Modern and Prime.
Under-Viewed Blogs
These are the blogs that I was surprised and disappointed didn’t get more views:
Bank Priorities are COVID Proof
August 10, 2020
I use the excellent research from The Financial Brand to show that year after year a bank’s priorities remain unchanged and that COVID should accelerate them.
Here are 2017’s priorities according to The Financial Brand:
- Redesign/enhance the Digital Experience — 71%
- Enhance Data Capabilities to Identify Customer Needs — 50%
- Cost Management — 47%
As compared to 2020's:
- Digital Banking Transformation — 75%
- Improving Customer Experience — 51%
- Find Ways to Reduce Operating Costs — 41%
Semantics aside, they are identical. And the fact is, banks have not done nearly enough to address any of these key points. My conclusion is that the budget remains too high up in the organization and removed from the actual day to day of folks that could address the shortcomings.
Ant Financial’s X-Border Trade Gambit
September 26, 2020
My disappointment in this blog not getting more traction is that Ant Financial was all over the news when I wrote this and it covers a bit of a long time passion of mine, Trade Finance and Blockchain.
I retrace my steps to ValiCert in 1998 when I did a Go to Market for Trade Finance based on PKI (Public Key Infrastructure):
“ValiCert is transforming the import-export business by helping to replace antiquated paper-based business processes with trusted electronic transaction and document management solutions.” 1998 ValiCert Trade Finance brochure
Compare that to 2020’s Ant Financial’s Trusple announcement which is a Blockchain based Trade Finance “solution.”
“… with the launch of AntChain-powered Trusple, we look forward to making cross-border trading safer, more reliable, and more efficient for buyers and sellers, as well as for the financial institutions that serve them.”
I am confident that AntChain will be a success for Ant Financial and that there will be actual changes in Trade Finance and efficiency will finally come to this key multi billion cross border market. I am a little bummed that it has taken so long.
Conclusion
I really enjoy writing B2B Buzz as much for me as the actual readership, it feels great to document my observations and thoughts around the under-represented B2B Payments space. I look forward to continuing this in 2021 with more insights and less dumpster fire.
