Artificial intelligence is the final straw for B2B checks
If you watch "Saturday Night Live," you may have seen “Cheques,” a recent sketch that embellishes the intrigue behind check writing. With a storyline reminiscent of "Dynasty," the segment casts a sardonic grin at the check in today’s fast-paced, electronic era. But, in its serial drama, SNL left out the biggest offender: the business check writer.
For those of us in financial services, this skit offers an all-too-familiar scene. As the consumer world progresses into a new payments paradigm with peer-to-peer solutions leading the charge, B2B payments continue to lag behind—at a shockingly large rate. According to the most recent Federal Reserve Payments Study, 19.4 billion checks flowed through the payments system, and 17.5 billion of them involved a payment to or from a business. In addition, the Association for Financial Professionals (AFP) reports a majority of organizations’ B2B payments continue to be made by check. Clearly, it’s a conundrum: Checks won’t leave the market until businesses work them out of their processes, and B2B payments make up a significant portion of check volumes.
But the tipping point has arrived. We’re in for a shake-up in B2B check writing due to the advance of artificial intelligence. AI offers ways to streamline solutions for businesses, helping them to cost-effectively move to digital services. And the market is primed for this business AI evolution for three reasons:
AI already has embedded itself in payments culture. Banks have increased investments in AI and have incorporated it into their infrastructure. In fact, a January report from Mercator Advisory Group details more than 70 processes banks have already improved with AI. While the bulk of these advancements support internally facing procedures—like fraud monitoring—that focus already has begun the shift to external customer needs. Chatbots and voice banking—both powered by AI—are emerging in customer-facing solutions.
Businesses are ripe for change. Studies reveal signs of changes in business thinking, which ultimately will impact payment habits. For example, a 2017 MIT Sloan Management Review/Boston Consulting Group study found that 83% of businesses see AI as a strategic opportunity, and 84% believe AI will allow their companies to obtain or sustain a competitive advantage. And a report from Deloitte emphasized the overall movement toward digital offerings: B2B e-commerce solutions are increasing at a faster CAGR (10.4%) than that of the full B2B market (5.8%). Marrying AI with e-commerce, more efficient business payment opportunities emerge.
AI technology has become more accessible to businesses of all sizes. Thanks to fintech development, intelligent platforms, virtual assistants and chatbots have become more commonplace. Solutions like smart vendor recognition and automatic workflows simplify the back-end for businesses and eliminate laborious processes.
And research backs up the business movement to AI: The Accenture report "Using AI to Succeed in the New Business Process Era" concludes: “For financial accounting systems in general, AI can now be used to perform journal entry and reconciliation, and soon the technology will be able to spot and potentially resolve audit issues in real time, advancing organizations from traditional quarterly closing to continuous closing capabilities. Thanks to these types of applications, AI has the potential to boost labor productivity by up to 40%.”
While in its infancy in influencing B2B payments, AI ultimately will change the way businesses of all sizes run their financial operations. Smart solutions will simplify processes, electronically linking systems and accounts and allowing for everything from automated data entry to new forms of automatic electronic payments. Businesses will rely on digitized, end-to-end processes that free them up to focus on what matters to them: building their business. As AI entrenches itself in organizations, manual procedures—like check writing—will slowly fade into eras of the past.