With innovators and venture capitalists alike acknowledging the vast opportunities in improving the way corporates manage money and make payments — often with dramatically higher values and volumes than consumer finance — B2B FinTech continues its upward momentum amid a period of accelerating enterprise digitization.
But the term “B2B FinTech” can have many meetings. On one hand, it could mean technology designed for a business, but with a consumer as the end user in mind. On the other hand, it could also mean financial technology designed for other financial service providers. Ultimately, B2B FinTech does not necessarily specify financial technology developed for the business and user.
According to Wouter Born, general partner at venture capital firm Born Capital, this category of FinTech startups deserves its own classification among investors. Speaking with PYMNTS, Born discussed the rise of what he calls “CFOTech,” and what he considers to be the investors’ role in helping chief financial officers (CFOs) embrace a new role as a strategic business partner within the enterprise.
The B2B FinTech Niche
The increasing dominance of B2B FinTech startups within the portfolios of venture capitalists and other investors has unlocked the door for innovators to usher in new eras of modernization within the financial services landscape. But this proliferation of innovation and investment has also led to the creation of a community of startups addressing a broad array of pain points and opportunities.
For some investors, the term “B2B FinTech” may now be too broad to reach the investment targets they seek.
According to Born, the creation of the term CFOTech is the result of a desire to bring greater clarity to the market and to FinTech startups that may be interested in pursuing funding. Focusing on startups that offer innovative technologies and solutions designed for the CFO end user is the result of a recent proliferation of this sub-category of B2B FinTech. As Born explained, it also reflects the continued evolution of the role of the CFO.
Finance chiefs have evolved from number crunchers to financial advisors to now strategic business partners.
“I see this trend getting only stronger, and we believe that there is a huge opportunity in new technology companies that facilitate the process of the CFO becoming that business partner and value creator,” he said.
The CFO Identity
Pointing to Hackett Group research, Born noted that large corporations are increasingly expecting their CFOs to embrace their role as “valued business partner” more so than any other role they play.
It’s a position with much greater responsibility that reaches beyond the finance department alone. Rather, it’s a position that requires a forward-looking attitude to drive growth of the overall enterprise.
“Stakeholders of large companies want to see the administrator and finance expert role [evolve] to affiliate business partner,” said Born, noting that these partners can sit together with other business leaders to create a growth strategy based on financial data.
“It’s not just looking back,” he continued. “But affiliate business partners can work together with the business department and look at what the company is going to do next year.”
In order to embrace this role, however, CFOs must be supported by more sophisticated and innovative technology than they’ve ever had access to before.
Supporting CFOs Through FinTech
While the term “CFOTech” can narrow the definition of B2B FinTech, there are still plenty of solutions and product categories emerging in this niche. Some solutions are designed to tackle specific pain points, like accounts payable (AP), accounts receivable (AR), cash flow forecasting and more. Other innovations set their sights on broader impacts for CFOs and their finance teams through driving enterprise digitization with solutions that can be used in a wide variety of workflows.
Born said he sees the greatest opportunity within CFOTechs that apply cutting-edge technologies, like robotic process automation (RPA) or artificial intelligence (AI) on particular points of friction.
“I think it’s more and more common that solutions are very specific and solve one very specific pain point,” he said. “That’s where we see most opportunity — in smart, new fit-for-purpose solutions.”
RPA, for example, has significant potential to ease AP friction and drive cost savings by automating tedious workflows normally conducted by a human.
With CFOs increasingly embracing this new responsibility to drive value and growth for the enterprise, B2B FinTechs continue to see their greenfield opportunities proliferate. But with so many solutions and technologies flowing into the market, these FinTechs that target CFOs will need support in the form of both funding and strategic guidance to cut through the noise and stand out in the crowd. Supporting these innovators will remain a key focus for Born Capital.
“We’ve been in the shoes of startups,” Born said. “We know how hard it is to get the CFO to buy your solution.”
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