Data-Driven Insights Will Improve B2B Payments and Embedded Finance

In a recent interview with PYMNTS, Hicham Oudghiri, the CEO of Enigma Technologies, highlighted the pivotal role that embedded finance and real-time data-driven insights are playing in the transformation of B2B payments and risk management. He emphasized that companies are currently under pressure to innovate and have the necessary technologies at their disposal to drive innovation effectively.

Oudghiri stressed that, in today’s digitally-driven landscape, certain expectations have become essential for B2B interactions, with embedded finance topping the list. He stated, «You cannot be a large, vertical B2B SaaS without bringing in payments,» highlighting the significance of integrating payment solutions seamlessly into business operations. The ultimate goal for service providers is to simplify complexity for their merchant and enterprise clients, establishing trust and long-term partnerships.

For vertical Software-as-a-Service firms, Oudghiri suggested that their growth path involves expanding their product sets while maintaining a holistic approach to their solutions. On the other hand, horizontal business models entering new markets are focusing on efficiency and restructuring their technology stacks to optimize operations, especially in an environment characterized by higher interest rates.

Oudghiri pointed out that the B2B space presents ample opportunities for innovation, as some prominent players in financial services have exited strategic payments business lines due to shifting regulatory frameworks and compliance mandates. Forward-thinking firms are considering consolidation as a strategy to enhance their product offerings and features for businesses, as exemplified by Squarespace’s acquisition of Google Domains.

Real-time payments are also at the forefront of discussions about the future of B2B commerce. Oudghiri emphasized that while real-time payments may appear to be a game changer in the United States, they are primarily driven by consumer demands. This trend has already taken root in various economies globally, requiring merchants to adapt and meet the increasing demand for real-time payments. However, Oudghiri cautioned that real-time payments also bring a heightened risk of fraud.

To mitigate these risks, he stressed the importance of harnessing data, stating, «In the payments industry, we’ve had a very data-rich environment, but we’ve operated in an insight-poor environment.» Real-time transactions leave minimal room for adjudication, necessitating the use of artificial intelligence and machine learning to enhance risk controls and back-end operations, ranging from loan servicing to customer support.

Looking ahead to 2024 and beyond, Oudghiri predicted that digital innovations and AI will continue to streamline and integrate finance into new business models and use cases. Enigma Technologies, for instance, has leveraged data across its network to provide comprehensive insights about businesses beyond what traditional credit bureaus offer. Advanced databases and data flows provide detailed insights into businesses’ risk and compliance standings worldwide, with Enigma managing signals derived from transactions and collaborating with top issuers to gain real-time risk insights.

Oudghiri concluded by emphasizing the transformative potential of the internet’s distribution power in scaling infrastructure for payments and risk management, making it an exciting time for the industry’s evolution.