Payment Tech Uptake Post-Covid-19 ‘Surprising’ says Deutsche Bank Survey

A new survey by Deutsche Bank of over 200 European treasurers and CFOs highlights the renewed vigour with which new payments technology is being adopted in the wake of the pandemic. TMI asks report author, Marion Laboure, Research Analyst, Deutsche Bank, for a quick guide to the findings.

When Deutsche Bank set about producing its study, ‘Post Covid-19: What executives are thinking and doing’, co-author Marion Laboure, Research Analyst, Deutsche Bank, had no pre-conceived ideas of what its respondents might reveal.

However, with more than 10,000 data points collated from more than two hundred CFOs and treasurers from across Europe, although the identifiable trends were not in themselves unexpected, she admits to being “surprised” by some of the numbers emerging.

As an example, although Laboure is well aware of the  trend for the centralisation of cash management, she was astonished by the extent to which this is now happening. Around half of all treasurers see virtual accounts as a game-changer for payments and are planning to implement such a structure in 2021, she says. More than two-thirds of executives polled believe a virtual account environment will enable better integration of payments into their core financial systems.

The research, published in February 2021, focuses on European B2B companies and their relationships with topics such as cash management, digitalisation, mobile payments, cryptocurrencies, and blockchain.

It highlights the disruption to business caused by Covid-19, and how the priorities of its respondents have been forced to change. Indeed, as business-as-usual remains on hold, if it wasn’t on the agenda before, transforming business models certainly is now.

This helps explain the push for centralisation and the rise of virtual accounts. But the survey tackles other key issues being tackled by the treasury community. In addition to the urgent need for cash visibility, it covers the maintenance of access to liquidity and credit, how best to implement back-up procedures, and the pressure to assess current exposures and determine cash requirements in the short and medium term.

Technology acceleration

Throughout, there is a clear technology agenda, with respondents seemingly being led by issues of fraud, process error, KYC pain, and data access difficulties. In the case of fraud and cyberattacks, the revelation of the past few years that even the largest international organisations are not immune, has meant “budgeting for cyber security is no longer an option”, notes Laboure. However, she believes companies are also taking a view of technology as a positive force, seeing it not just as “something to get them out of trouble”, but also “as a means of progress”.

Indeed, her research shows that the rapid dematerialisation of payments during the pandemic has hastened the decline of cheques and cash by about four or five years. “It’s reported several times in the survey that the end of cash and cheques, which are a nightmare for corporates, is being accelerated by the pandemic.”

Within the study there are four clear discernible trends in the transformation of business models, says Laboure. The first is traditional B2B enterprises entering the realms of B2C. With e-commerce having risen by 50% in Europe since March, she expects growth levels to be sustained throughout 2021 and 2022. “This will likely trigger the need for cutting edge solutions.”

The second trend is the move towards real-time treasury, with instant payments, the adoption of APIs, and the roll-out open banking having the most impact on B2B in the next two years, says Laboure. The usage of cash application technology is the third major trend, where automated accounting and reconciliations systems, and e-invoicing technologies will be the prevalent tools. The final trend she notes is the centralisation of cash management, with the aforementioned virtual account structure being of particular interest here.

While the ‘Big Picture’ view of the payments sector remains largely unchanged, Laboure urges treasurers to be aware that there is “clearly an acceleration of all the trends that we were seeing in the market, and that these will be the focus for the next 12 to 18 months”.