Augmented Reality Transforms Broadcast Industry

Bill Dow, SVP and General Manager of Business Solutions, The Weather Company, an IBM Business

Historically, entrepreneurs have given more attention to consumer fintechthan to B2B fintech. This is no surprise as consumer spend is more top of mind and easier to relate to – as consumers, we benefit directly from spending on platforms such as Amazon, Lazada, Shopee etc.

B2C to B2B shift

In recent years, the focus of entrepreneurs appears to be moving from B2C to B2B for various reasons, notably:

• The B2C fintech space is becoming overcrowded and commoditised with many models getting replicated
• B2C fintechs are prone to high customer acquisition costs as a result of over competitiveness where only the strongest and most well-funded companies survive
• The B2B model offers more predictability, visibility and stickiness of cash flows
• Incumbent institutions are actively seeking fintech partnerships to counter the wave of disruption and tap into new businesses
• Perhaps most importantly, the B2B fintech market is many times larger and underpenetrated compared to the B2C market, presenting a greenfield opportunity for entrepreneurs to capture significant value

B2B fintech evolution

1.0: The evolution of B2B fintech waves started with tackling a core area of fintech – payments. Paypal in the early 2000s was the most notable fintech to emerge from the 1.0 era and offered merchants the ability to transact with customers.

2.0: Emerged in the 2010s with use cases expanding past payments to areas such as infrastructure (Stripe, Plaid), commerce (Square, Shopify), lending (Afterpay, Affirm, HR (Zenefits, Rippling) and finance operations (Bill.com, Blackline).

3.0: 3.0 is evolving in the 2020s as a function of the rapid pace of advancement in technologies. We’re seeing a mesh of fintech themes with broad technology trends such as blockchain, AI/ML and big data that will broaden the universe of use cases even further.

B2B fintech segmentation

B2B fintech can broadly be segmented into two main camps; Enterprises and SMEs.

"The next few years will be an incredibly exciting time to be building and investing in B2B fintechsin Southeast Asia."

Enterprises: Sales cycles, customisation and service features are key hurdles when it comes to enterprise clients. Differentiation is keyand focusing on a particular vertical or core business service is important. Priority is placed on GTM motion and demonstrating clear value of streamlining workflows and processes at a fraction of current incumbent costs.

SMEs: Moststruggle with small budgets and the increased complexity imposed on them with changing technologies. Most also do not have the resources or knowledge to process many aspects of the financial tech stack in-houseand are looking for best in class solutions. Priority is placed on building a low/no codeplatform that scales as clients move upmarket.

Rise of B2B fintech in Southeast Asia

At AFG, we’ve invested in B2B fintechsglobally and have witnessed the shift towards B2B unfold in the US and Europe over the last several years with startups such as SpendDesk, Melio, Tipalti,Payhawk and Qontocontributing to recent B2B fintechfunding highs across both continents.

All signs point to similar trends happening in Southeast Asia supported by tailwinds including:

• Businesses (and consumers) in the region still lacking access to basic financial services
• Slowing growth, thinning margins and increasing competition from fintechs continue pushing the Return on Equity of financial institutions (FIs) downward
• FIs are actively seeking fintech partnerships to counter the wave of disruption and tapping into new businesses and customers
• Institutions and enterprises big and small urgently need to redouble their efforts to boost productivity, optimize capital, and pursue strategic growth

Notable homegrown B2B fintechsinclude: Nium (payments infrastructure), Brankas (open finance), Payfazz (payments infrastructure), Osome (corporate admin), Aspire (SME neobank), Privy (digital ID) and Spenmo (spend management).

The next generation of Southeast Asian fintechs will be led by enterprise / B2B fintechs that will partner with institutions and enterprises of all sizes who want to secure their place in a world where tech and finance are merging. The next few years will be an incredibly exciting time to be building and investing in B2B fintechsin Southeast Asia.