B2B Marketplaces Offer FIs Game-Changing Opportunity to Drive Payments Innovation

Historically, the process of buying and maintaining a vehicle has rarely been a one-stop-shop experience. It often involved engaging with a car dealer, a provider for auto parts and accessories like tires and wheels, and another for after-sale services, among others.

Basically, “it was never out of one hand,” Ole Matthiessen, global head of cash management at Deutsche Bank, told PYMNTS in an interview. “Even from an original equipment manufacturer (OEM) perspective, it was always through sales entities or sales partners in a specific country.”

But today companies, including those in the mobility and automobile sector, are increasingly moving away from that complex process and embracing B2B marketplaces, a fast-growing digital sales channel that provides the same seamless, secure and convenient experience users have when buying clothes or electronics, for example.

According to Matthiessen, the benefits they stand to reap from this model are wide-ranging: “Not only [do] you have direct client access and own the client interface, it also means that through a marketplace you can have your own ecosystem where other third party providers can sell goods and services. “[This] makes it even more sticky and the ambition of owning the client can be fulfilled.”

It’s a goal Deutsche Bank is helping Smart achieve today, recently partnering with the German car manufacturer on online payments for the new Smart #1, the first all-electric smart compact SUV that will be launched on the German market next month.

All it takes is six short steps or clicks, Matthiessen explained of the process required for users to complete the purchase and get the electric vehicle delivered to their doorstep.

That seamless process is enabled by the marketplace payment engine Deutsche Bank has developed for its business clients, one that offers comprehensive payment methods and gives them access to features such as a single purchase API, currency conversion and split payments.

“That’s the unique solution we have built [for B2B marketplaces] since embarking on that journey about 18 months ago,” he said.

Digital Marketplaces: Game-Changing Potential

According to Matthiessen, the mobility and automobile industry is not the only sector catching on to the B2B marketplace trend. In fact, several industries are currently going through that business model transformation, he said.

To buttress his point, he referenced a research study by McKinsey that shows global sales generated via B2B marketplaces will quadruple from $1 trillion to $4 trillion between 2020 and 2025, while marketplaces are expected to account for 60% of online sales by 2023; a 22% annual increase compared to pre-pandemic levels.

This creates a ripe opportunity for financial institutions (FIs) like Deutsche Bank to make a significant impact in that “massively growing area,” he noted, helping to ensure quick and seamless payments and leveraging the data gathered to better understand and meet the current and future needs of their clients.

“It’s a big opportunity for us to create stickiness, move from a financial service provider to a strategic partner, and then help our clients to be successful in their service to their end clients,” he said.

Data Protection: Banks vs FinTechs

For online marketplaces, processing the huge collections of customer, seller and buyer personal data and information can be a difficult undertaking, not to mention having to comply with different local regulations and ensuring the right balance between fraud protection, privacy and data security when operating as a global marketplace.

Per Matthiessen, this is where well-established traditional banks that are equipped with handling sensitive data on a day-to-day basis have an edge over newer FinTech players that can only provide one piece of the entire end-to-end value chain.

“Our clients want to have a strategic partner that can deliver across the world, and ideally also provide add-on services such as different currencies and financing options, [as well as] think beyond the initial part of the payment process towards other financial services that can be embedded onto marketplaces in the future,” he said.

So, while paying for a car online is not less or more secure than going to a physical store, ensuring a reliable and secure payments process is what ultimately makes the difference, considering the large transactions at stake.

“That’s the data reconciliation we offer and also where clients [like smart] rely on us bank partners, instead of non-bank FinTech players in that space,” he said.

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