Christophe Spoerry, co-founder of Euler Hermes Digital Agency (EHDA), is describing the story behind Wilfried.ai, a tech framework bridging the gap between B2B marketplaces and the world of receivable finance and credit insurance.
Like any other sector, B2B commerce is moving to digital, offering businesses everywhere online commerce possibilities, just like each of us experiences in the B2C world. This is particularly visible on big B2B marketplaces like Amazon Business or Alibaba.com, although there is also a very large number of small yet fast-growing B2B platforms, with a sector or geography focus.
In fact, 2017 was a turning point for B2B commerce players: most distributors, intermediaries, manufacturers, exporters and importers started heavily exploring opportunities to launch or join marketplaces, turning to their usual broker, receivable finance partner or credit insurer for solutions that would enable B2B buyers and sellers to transact online with credit terms.
Selling online is a totally different experience from selling offline: very often online sellers supply to businesses they have never met, and yet those buyers expect, and in some cases demand, to pay with credit terms - 30 days, 60 days or 90 days after the order has been shipped. In the offline world, this is made possible by traditional credit management procedures, and supported by receivable finance and trade credit insurance.
Online B2B marketplaces usually help buyers and sellers to connect, and to easily negotiate a transaction. They rarely handle the actual payment of the B2B transactions, and almost never give access to credit risk mitigation services or financing. On the other side of the fence, most receivable financiers and trade credit insurers find it difficult to create the relevant offers and strategies for digital B2B commerce.
B2C service providers have been driving innovation for e-commerce at a very fast pace: payments, for example, are possible through virtual cards or accounts, tokens, PayPal accounts, Klarna, WeChat Pay, cryptocurrencies, and many more. By comparison, the B2B commerce world is at the beginning of a very deep transformation, partly driven by the rise of marketplaces.
In 2017, B2C platform operators, marketplace technology providers, Payment Service Providers (PSPs), and related enablers also started realizing that their offerings did not translate easily to the world of online B2B trade. The pressure is high, all the higher as online P2Ps see most of their growth coming from B2B transactions. With a market representing already US$4 trillion/year, and a 5-10% growth each year, the potential is there.
The question is how can the receivable finance and credit insurance industry leverage this opportunity. Euler Hermes Digital Agency (EHDA) started two years ago to look for the best ways to crack the challenges of B2B online commerce. It all began with “Credit Shield” API, which first launched in summer 2015, along with a policy for a blockchain start-up. The reason behind was to invite innovators to “hack” credit insurance and help reinvent EHDA value proposition for the digital era.
Many proof of concepts and pilots followed, from smoke screen experiments to actual product launches, and behind the scenes, a colossal effort to make the solutions work despite the constraints of a credit insurer’s structure.
This journey took us quite far away from traditional credit insurance. In fact, EHDA ended up creating Wilfried.ai, a framework for B2B marketplaces, with a vision to invite receivable finance partners and other proven solution providers into B2B online commerce platforms, forming a broad value proposition, that speaks the language of marketplace developers. The solutions need to plug seamlessly into their technology stack – a challenge for credit insurers, and from what we have seen, for receivable finance players too.
Along the way, EHDA realized how important it is to build outstanding technology – even though in the past, leaders in the industry only relied on relationships, underwriting skills and cheap capital.
The stack behind Wilfried.ai is truly up 24/7 and our APIs systematically respond in less than one second, even when large partners experience peak traffic. EHDA also learnt how much a great developer experience matters and had to find the right business model for data sharing. Finally, despite industry’s tendency to prefer well-established proven partners, EHDA discovered that opening access to early-stage start-ups is key, which requires to launch self-service pay-as-you-go solutions.
2018 is off a great start for EHDA very first B2B marketplace partner, Metalshub, starting its operations on Wilfried.ai. EHDA plans to open the Wilfried.ai framework to a few additional partners and B2B platforms by the end of H1 – step after step, shaping the future of B2B online commerce, with the expertise and assets of the incumbents who shaped Trade Finance.