Blockchain and bitcoin are two of the most covered — and yet most confusing — topics in financial services today. Industry executives and business owners of all sizes are still grappling with what the technology means for their companies and what it will do for their businesses.
Case in point: According to the Payments Pulse report my company released last month, a majority of the 500 CFOs we surveyed said they are extremely confident in their understanding of blockchain (61 percent) and expect that it will change their accounts payable operations (50 percent). But, only six of the respondents had a concrete notion of how it will be used it to make their business more competitive.
So while there is consensus that the future of payments is digital and data-driven, the number of actual use cases of the technology is limited. Business owners can’t afford to sit back and wait for change to come, though. The first step to stay ahead of the curve is to understand the differences between the two and how they work together.
Blockchain is the platform that makes bitcoin possible — it’s a decentralized, secure, publicly shared database that simplifies transactions. Bitcoin is just one (arguably the most high-profile) application that takes advantage of the technology. Blockchain is primarily an enabler that allows for other applications to be built on top of it. And with potential benefits like increased payment speed, improved security and transparency, a simplified process and significantly reduced costs overall, there’s little doubt that the business world will work through its fears and adopt blockchain in a major way.
How can you ensure that your business is prepared for the digital payments landscape of the future? Here are three tips to help:
1. Understand new technologies and the purpose(s) they aim to serve.
This is a simple directive: Stay current on the tech surrounding your sector and your business function. This also means educating your staff about digital payment systems and transactions. Read voraciously and be an active participant in online forums and conversations surrounding the latest and greatest discoveries in your field.
2. Listen to suppliers and start conversations with industry peers about current/future business needs.
This is related to tip No. 1, but with a more outward-facing focus. Engage with your peers — attend conferences when you can, for instance — but also consider your supply chain in its entirety. Are there places along the way that are already adopting future-thinking processes and technologies, and can you look to partner with and/or emulate those? Anticipate needs so that you won’t find yourself behind the eight ball when industry shifts become the new paradigms.
3. Look for outside vendors that may be able to fill in areas where your organization may not have strength.
Ideal solutions can be difficult to scale without a specialized vendor. For example, WEX’s virtual card technology played a key role in helping client HotelTonight scale quickly and internationally, becoming one of the top three online travel agencies in the U.S. in card-based hotel bookings. The immediacy of payments provided by virtual credit cards can help to build trust with suppliers, and allows businesses to focus on building their company. Payment processing companies do this best, and the right vendor will work with your business to provide customized payment options and tools.
When looking at the factors that influence the selection of a payments platform, our survey revealed one final interesting point that should be kept top of mind: As vital as other factors may be that are pushing businesses to dip their toes into the digital payments world, the top consideration is that old standby: customer experience.
While reporting analytics and speed of reconciliation capabilities were each cited by 60 percent of respondents as key, it was overall user experience that led, with 71 percent of those surveyed naming it as the most influential criteria for selecting a payments platform.
Even though technology will remain a necessary tool to stay competitive, it’s trust among customers, staff and suppliers that will ultimately grow business.