Upcoming tech players in the financial services industry, aka “Fintechs”, have been attacking quite a number of sacred cows head-on, and not in the least the way we are paying. How will this payment revolution impact business travel?
One of the most frequently asked questions during the London FinTech World Forum last week was this one: “Will our children of today still think in terms of “opening accounts” and “dropping by the bank” when they are of age?”
Challenger banks like Revolut, N26 or Tide vehemently say no to this question. In fact Tide’s COO Laurence Krieger stated during the event that “our digital-native kids will think in apps and smartphones, not in bank accounts and offices.” More than a few signs suggest he may well have a point here.
Money in the digital age
Another legitimate question building onto this one is whether our children will even think in Dollar banknotes or Pound Sterling coins at all? The odds are looking quite low once again. In recent years we have first witnessed a gradual disappearance of cash money, albeit it being a roughly 3000 year-old concept. In the UK, for example, only 28% of all payments was made cash in 2018. Banking data suggest a further decline to only 9% by 2028. In China, over 90 percent of people in China’s largest cities use WeChat and Alipay as their primary payment method, with the number of non-cash payments growing practically every day.
As Yuval Noah Harari states in his best-seller Sapiens: “Money isn’t a material reality—it is a mental construct. It works by converting matter into mind. […] Money is in essence a system of mutual trust. Not just a system of mutual trust, but the most universal and most efficient system of mutual trust ever devised.” Such abstract thinking lies at the basis the evolution of the carrier of money from paper notes or metal coins to merely digits on an electronic bank account.
The second trend, resulting from the decline of cash money (and the surge of electronic payments), is the rise of alternative, global currencies like cryptocurrencies.
Today these alternative currencies are causing another type of erosion to he hegemony of the Dollar note or the Pound Sterling coin. Cryptocurrencies have emerged in many different forms and sizes. Together the whole cryptocurrency market today accounts for over $200bn. Even if it still too early to claim cryptos’ full-fledged success, it seems certain that financial institutions, companies and consumers are looking into alternatives to traditional national currencies.
Will FinTech save business travel?
The changing nature of money and payments may have a positive impact on the business traveler. For many people, traveling for business is perceived as an unavoidable pain.
The agony typically starts already at the booking process, that in many companies is either still initiated by a game of e-mail ping pong with the travel manager or is looked and paid for by the traveling employee on leisure travel platforms. During the business trip, the traveler typically also needs to pay his/her expenses in advance with own their own cards and money, on which high transaction costs may apply. In order to get reimbursed by the employer, the traveler needs to collect every single expense receipt and bring it home safely. Once back home, the sorting of expense receipts and the compiling of expense reports may begin. In most companies this painful experience is still a reality, even though the tool set to reinvent this process is present.
FinTechs and Travel & Expense Management players may together hold the solution. T&E players like Rydoo can eliminate the e-mail ping pong by implementing your company travel policy in its online booking tool. As travellers see in their app which hotels, trains, flights and rental car options are compliant, no time is lost on finding suitable dates or discussions for a certain upgrade. Great T&E players even allow your company to pay directly to them instead of to the multitude of suppliers your employees engage with. Once the trip is approved and booked, all the business traveler needs to care about is being on time at the airport. That’s it.
On trip, Rydoo users just scan their receipts with their smartphone and submit their expense claims with a few clicks. Instead of collecting every single expense receipt, they simply scan them and throw them away instantly.
Thanks to Fintech challenger banks, on the other hand, it is already possible today to keep the foreign currency transaction charges under control. Challenger banks offer pre-paid credit cards, that can easily be funded by the employer with the total per diem allowance for a trip, for instance. By integrating your credit card with your T&E tool, you automatically reconcile all your travelers’ on-trip expenses with the matching card transactions.
After the business trip, both FinTechs and T&E tools offer spend analytics. These insights give control to Finance teams, who can start optimising the company spending on travel expenses, by negotiating rates to suppliers, adapt the company travel policy, etc.
One lesson learned from the London FinTech World Forum is that FinTech and Travel & Expense Management players seem a good match to tackle the challenges of the business traveler. See it for yourself, and give Rydoo a spin today.