The payments technology revolution of the past few years has given consumers myriad new ways to shop across different channels. Business payments have not enjoyed the same level of attention.

Now it's time for the guts of the businesses to innovate, according to Citi Ventures' Arvind Purushotham.

"After a big push and strong growth in the consumer sector, financial institutions are embracing new standards for paperless digital transactions and back end processes," said Purushotham, managing director and global head of venture investing at Citi Ventures, adding there will be more B-to-B focused startups in the year ahead that focus on solutions for the enterprise, addressing areas like treasury and trade services, back end accounting and cashflow management.

Arvind Purushotham, managing director and global head of venture investing at Citi Ventures
"As the payments industry continues to evolve through 2017, the role global banks play as intermediaries in cross-border transfers and payments could also be revisited," says Arvind Purushotham, managing director and global head of venture investing at Citi Ventures Citi Ventures

Citi Ventures' most recent investments fall into this area, including participating in a $49 million Series D round in BlueVine, a startup that powers digital invoicing; an undisclosed investment in Feedzai, a risk management play; and FastPay, a B-to-B payments platform that focuses on transactions for media content.

"As the payments industry continues to evolve through 2017, the role global banks play as intermediaries in cross-border transfers and payments could also be revisited as new technology-driven transfer solutions on new platforms such as blockchain emerge," Purushotham said.

Citi Ventures' most recently announced investment is its participation in a $44 million Series B round to fund Plaid Technologies, a startup that uses an application programming interface (API) to allow other technology companies and payment service providers to access bank accounts, while producing data that can help spot and combat fraud.

Plaid aggregates and standardizes transaction data across thousands of financial institutions, enabling other payment companies to power features that allow the communication of payment details, authentication and balance queries, among other functions. Its users include P-to-P players Affirm and Venmo, as well as other financial technology companies.

Plaid also falls firmly into the current VC investment environment as outlined by Michael Moeser, director of payments at Javelin Strategy & Research, who said funds are largely going to helping e-commerce merchants accept transactions through online and mobile storefronts; offering wallets on mobile phones; or offering P-to-P payments with a heavy emphasis on remittance.

"Money movement is going digital," Moeser said. "Speaking of mobile wallets, cash and checks are dead or dying. People don’t want them and governments are trying to get rid of them. "

Plaid is creating a connectivity layer for consumers and financial services, Purushotham said. With an API based approach, it is enabling fintech developers to connect disparate services, and collect, analyze and derive insights from personal financial data.

"Customers get the benefit of using such apps to simplify their financial lives," Purushotham said. "In a short period of time, Plaid has become the favorite of developers, built a good team and has proven its business model."

The company's fee structure is driven by usage and performance.

"If your app uses Plaid and it turns out to be successful, you'll benefit from a tiered pricing structure to reduce the cost per access for the API," Purushotham said. "Or if you are just starting out, you don't have to pay a lot to turn on the functionality your customers care about."

Citi Ventures is also focusing on open development. Its portfolio includes DocuSign, which offers an API to power digital signatures and document management. Most of Citi Ventures' portfolio companies use APIs as an access or connectivity mechanism, Purushotham said. For example, Chain is a developer-focused company that provides blockchain infrastructure via software development kits and APIs. Another company, TradeIt, enables financial news publishers to embed trading functionality at the point of research.

"What makes the API and developer space so interesting is the innovation occurring within the backend, and the rate at which next-generation technologies and capabilities are evolving the financial services ecosystem," Purushotham said. "Advancements made by startups such as Plaid are ultimately improving customer experiences in an industry that has historically been constrained by traditional boundaries."

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