Financial technology, or FinTech, has been opening new avenues for electronic payments in business-to-business companies for years. Many companies have moved away from financially (and environmentally) costly paper checks to inexpensive and time-efficient payment automation, saving money in the process. Heavily depended on by investors, consultants, multinationals, startups, and entrepreneurs, FinTech exists to help solve these problems.
The technological revolution, dubbed The Fourth Industrial Revolution, has gained traffic in the corporate world by fundamentally changing the way many businesses interact with consumers. With the rise of digital currency and a surplus of investment options in payment automation technology, is the next Industrial Revolution really upon us?
The First Industrial Revolution used water and steam power to increase manufacturing and production exponentially. This revolution brought new factories and inventions into the world at a rate that dwarfed any previous age. With the invention of trains and the expansion of paved roads, the improved ease of transportation changed the landscape of the world.
The Second Industrial Revolution witnessed the expansion of electricity, petroleum, and steel. These advancements in technology greatly improved upon existing methods of production and transportation. It was during this revolution that the electric light bulb, combustible engines, cars, and airplanes came into the world. This is also the revolution that gave us the ability to wage "World Wars" - arguably the most influential events in history for our society as a whole.
Almost a century later, The Third Industrial Revolution appeared with the emergence of a new type of energy whose potential surpassed its predecessors: nuclear energy. This revolution witnessed the rise of electronics. Inventions like the transistor and microprocessor led to the birth of computers and advancements in telecommunications; opening the door for biotechnology and space exploration. In industry, this revolution introduced a key component to not only FinTech but to every business vertical: automation.
So, are we in The Fourth Industrial Revolution? And, if we are, what does it mean for the future of finance and technology?
In the last 20 years, everything about the world has changed. In the last 10 years, everything about the way we interact with the world has changed. All information that currently exists can be accessed anytime, anywhere, within seconds. In an article posted in 2016, Klaus Schwab, Founder and Executive Chairman of the World Economic Forum, said this:
"There are three reasons why today’s transformations represent not merely a prolongation of the Third Industrial Revolution but rather the arrival of a Fourth and distinct one: velocity, scope, and systems impact. The speed of current breakthroughs has no historical precedent. When compared with previous industrial revolutions, the Fourth is evolving at an exponential rather than a linear pace. Moreover, it is disrupting almost every industry in every country. And the breadth and depth of these changes herald the transformation of entire systems of production, management, and governance."
In an article posted earlier this year, CNBC illustrated the expedient nature of our technological growth very well with the following statement: "It took 75 years for 100 million people to get access to the telephone; the gaming app “Pokemon Go” hooked that many users in less than one month in 2016."
At a minimum, it means that there is an excellent breeding ground for innovation...
In the last 10 years, businesses using paper checks primarily for payment processing have dropped by over half, from 82% to 41%. Nevertheless, there's still a lot of paper being wasted on outdated payment processing methods and at a high cost to the companies purchasing supplies, paying high transaction fees, and wasting employee resources on manual processes - all at great cost to the environment. It's Q4, 2019. We have far too many excellent payment alternatives to continue relying on paper checks. Especially when you consider that checks accounted for 74% of the total fraud attempts in 2019, and the fraud industry is expected to rise to 25 Billion in 2020.
In a study conducted by Virtual Card and automated payment technology firm, Conferma, roughly $33 billion is wasted every year when companies fail to digitize and automate their expense management processes. Of that, $1 million in losses are from corporations with over 500 employees. “It is costing U.S. businesses time and money to navigate this landscape and should be subject to much more rigorous control and oversight,” warns Simon Barker, chief executive officer of Conferma.
When will electronic payments dominate business-to-business payments?
Although banks are aware of the positive impact that payment automation has on payment technology, they worry that these changes will jeopardize profits. According to analysts, banks do offer electronic payment processing solutions, but their value and system integration are not as advanced as those used and needed by business-to-business companies.
There is a bright future for financial technology. FinTech is changing the way we do business around the world. Companies like ours offer payment automation services that help create a more diversified banking relationship. By reinventing the way payments are processed and lowering the cost of supply chain procure-to-pay procedures, a more cost-efficient and less labor-intensive procedure for generating seamless payments are created.
Welcome to The Fourth Industrial Revolution. Each revolution has drastically changed the world. We're eliminating paper checks from businesses on a global scale. We're inviting you to change the world with us.
Ben Frank is a creative Digital Marketing guru with a passion for getting relevant information into the hands of the people who need it the most. When he isn't researching innovative tech in the world of Finance and Accounts Payable/ Accounts Receivable, he's usually scouring the internet for the latest cat video (he knows it's out there).
In today's digital world, no one really uses checks regularly for their personal transactions. Ask anyone outside of the finance industry the last...
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Listed by CFO Tech as one of the Top 10 Accounts Payable Solution Providers 2018 and 2019 and by CIO Review as part of the 20 Most Promising Corporate Finance Tech companies for 2017, OnPay Solutions streamlines processes for accounts payable by automating invoice processing and payments.