Offering a positive end-user experience has long been a guiding principle for developers of consumer-focused financial services. But in the business-to-business arena, that customer-centricity historically has taken a backseat to considerations such as cost-effectiveness, scalability and security.

But that’s changing fast, with the rapid expansion of embedded finance into the B2B sector giving rise to digital financial experiences that are just as seamless, contextual and personalized as those found on the consumer side.

This new breed of service model enables businesses to perform everyday tasks, such as making payments, significantly faster and easier.

But the benefits go beyond convenience. B2B embedded finance can drive efficiencies–in terms of both money and valuable time–that positively affect a company’s bottom line. And amid the current environment of economic headwinds and financial uncertainty, realizing cost savings by optimizing key processes is more impactful than ever.

The Answer to Eliminating Friction — Stopping the ‘Swivel Chair’

One of the key benefits of embedding financial capabilities into the cornerstone non-financial systems companies use, such as enterprise resource planning (ERP) platforms, is the elimination of what Galileo Chief Product Officer David Feuer calls the “swivel chair” approach–the inefficient process wherein employees must toggle between multiple systems to accomplish a single desired task.

“That context switch creates a tremendous amount of friction, negative experience and opportunity for really making very expensive mistakes,” Feuer noted during a recent panel discussion on embedded finance hosted by PYMTNS. “And so being able to create embedded experiences that go across a… user's daily flow is supercritical, and we're starting to see that catch on as a major point of emphasis and focus in [B2B] financial services.”

The push to provide such cross-contextual functionality signals a recognition by financial service providers that B2B users increasingly are expecting the same level of functionality and user experience they’ve grown accustomed to on the consumer side–a significant change from the historical approach of top-down mandates and non-intuitive systems, Feuer noted.

“One of the biggest mistakes we can make is assuming that B2B users are somehow less demanding or deserving of frictionless experiences. There was a feeling that the purchaser in IT is sort of far away from the user and so what [is sold] into B2B can be less polished or less customer-centric,”  Feuer said. “The consumer experience has defined a sort of mobile, social, local and hyper personalized experience–and customers in enterprise and B2B expect the same sorts of experiences.”

Gain a First Mover Advantage as a B2B Provider

In Feuer’s view, it’s still early days in the overall development of the B2B embedded finance market. That means meeting demand for consumer-level embedded finance capabilities in the sector represents a major opportunity for both financial and nonfinancial B2B providers seeking to gain market share. But the time to act is now, he urged. 

“It’s early innings, and I think there's a lot of opportunity for companies to… look at the B2B services that they could offer, and get first mover advantage in those experiences” Feuer said. 

“The first mover in embedded finance frequently wins a ton of the opportunity.”

As an example from the consumer side, Feuer cited point of sale financing offerings. 

“When you're checking out in a big box store and they offer you point of sale finance, nobody says, ‘Oh wait, let me check if my bank has a competing offer. Let me bring up my bank app on my phone,’” said Feuer. “You either take that offer for financial services or not. So the first mover into that POS finance position won that customer in that particular micro-moment.”

The battleground for such micro-moments will extend into the B2B arena, Feuer predicted. 

It’s All About the APIs

When it comes to developing effective B2B embedded finance offerings, application programming interfaces (APIs) are the fundamental building blocks. As such, it’s crucial for providers to either offer powerful, flexible APIs, or align with a fintech partner that does, Feuer said. Otherwise, potential clients will look elsewhere. 

“If you're not thinking about embedded finance in terms of the developer experience and how developers can leverage all this functionality across your [technology] stack to get what they need done, they're going to go to another stack,” Feuer warned. 

In the view of Galileo’s product chief, assuring the company is providing the APIs needed to create that positive developer experience is a mission-critical matter.

“That’s top of mind for me,” Feuer said. “It's the number one thing I think about every day when I wake up.”

To read more about how Galileo can help you capture the B2B embedded finance opportunity, click here.

To learn about the latest development in the B2B embedded finance space, download our latest Embedded Finance Tracker, produced in partnership with PYMNTS.