Long known for its innovation, the fintech sector will continue to drive transformation and growth in financial services technology in 2022. Within fintech, the B2B payments space – with WEX playing its ongoing pioneering role – is also influencing and enabling business growth across global geographies and nearly every vertical market.
CapGemini predicts that the B2B payments sector will continue to become increasingly digitized, using data to create frictionless customer experiences and streamlined backend processes. Payments solutions for small- to mid-sized businesses will benefit from adapting to this increasing shift toward data as a competitive advantage. DataScienceCentral predicts that moves to integrate varied data streams into one dashboard will remove some risk from operational decision-making, as the data insights will better prepare managers for the impact of their choices.
Indeed, across WEX solutions, we see customers relying more on data analytics and benchmarking across industries and functions which our wide market coverage can provide. In that same spirit of driving growth and improving productivity for our clients, we explore five key trends affecting businesses of all sizes and the industries we serve:
- Employers will shift focus to a continuous engagement model for employee benefit programs
- Advances in B2B payments technology solutions will enable more adoption of disruptive business models, particularly for fleet management
- Higher adoption of mental well-being benefit programs reflects changing industry priorities
- Regulation, incentives, and TCO will help drive the move to electric vehicles (EV) in fleets of all sizes
- Adoption of the merchant model by travel agencies and intermediaries is accelerating globally
1: Employers will shift focus to a continuous engagement model for employee benefit programs
Employee benefits can make a big impact on employee happiness and retention. In today’s very tight labor market, many employers are looking to make interaction with their benefits package a year-long story, instead of a singular task during the open enrollment period.
“There is a trend toward continuous communication campaigns, in order to ensure that the value of a benefits program is fully embraced by employees,” says Matt Dallahan, Vice President, Product Portfolio, WEX Health. “As employers look for solutions to attract and retain talent, we see more attention on competitive benefits and a greater emphasis on ancillary benefits such as pet insurance, as well as more use of lifestyle savings accounts (LSAs), which provide flexibility to remote employees by covering things such as a home gym or a gym membership.”
Given the importance of benefits to employees' well-being and financial health, it’s surprising that most employees only spend about 18 minutes on their benefits enrollment. Rather than limiting the opportunity to one time period, the continuous campaign model creates motivation and engagement opportunities throughout the year.
How does the continuous campaign model work?
We live in an age where people learn through short videos and gamification. HR professionals are experimenting with those same formats to reach employees during open enrollment and all year, according to a recent Benefits Buzz podcast featuring industry thought leaders.
A healthy workforce is more productive and is better able to grow the business. While the open enrollment experience is a critical time of year, employers can encourage engagement year-round.
“The role of a benefits solution provider like WEX is also evolving to support this need for continuous engagement,” Matt says. “We support HR professionals and our partners with technology, content, participant data analysis, and insights to nurture engagement. We help employers help employees make the most of their benefits.”
How virtual work has enabled better benefits adoption
One driver of this continuous engagement strategy developed with the shift to remote work and the annual on-site benefits fair went virtual. “Digital was always a more convenient way for people to access the information needed to make the best decision about health and wellness benefits,” Matt says.
Virtual benefits fairs can run all year and are more accessible to remote employees as well as non-employee decision-makers like spouses and partners. With the rise of health savings accounts (HSAs) and flexible savings accounts (FSAs), HR professionals want to help employees navigate their full benefits opportunity, get the most value, and find what makes the most sense for them.
“The last thing an employer wants is to offer benefits that no one takes advantage of,” Matt says. This is where the advanced technology of solution providers such as WEX and our partners really help. “We can identify opportunities and support employees through major life events like the birth of a child, the aging of a child out of benefits coverage, a wedding, a move to a new city or jurisdiction, and any time when lifestyle changes necessitate a different kind of benefits choice.”
In 2022 and beyond, HR professionals and benefits administrators will lean on the technology, data analysis, and solutions expertise of WEX and its partners to help employees understand, embrace, value, and take advantage of their benefits. Digitization has changed the way employees can engage with their benefits and offers employers the opportunity to augment more comprehensive benefits adoption.
2: Advances in B2B payments technology solutions will enable more adoption of disruptive business models, particularly for fleet management
More automation in payments processing solutions, like those from WEX, allows business leaders to adopt new business approaches to create a strategic competitive advantage. Businesses that use payments solutions want to simplify their backend processes as well as support advanced experiences for their employees and customers. This is particularly evident with customers of WEX fleet solutions.
“Our fleet customers are focused on solving for new mobility trends, and need a streamlined backend that helps them to use analytics and adapt and compete in new ways,” says Brian Fournier, SVP, GM, Global Fleet Partners. “To execute, they have to be freed up from backend processing and focused on the things that are most valuable to their business growth.”
Fleet companies have been digitizing their payments and now want to focus on the operational efficiency that can come from that digitization
As a large number of enterprise digitization efforts now enter the later stages of implementation, operational efficiency has become a key area of focus for businesses in many industries. There is a lot of operational data that payment solutions providers like WEX can gather and analyze for businesses so they can operate more efficiently, Brian says.
“For example, direct-to-payment is a way for companies to work more effectively with vendors, negotiate more discounts and favorable payment terms, and improve the entire value chain of the process,” says Sharon Linnane, Director of Strategic Relationships at WEX.
From “fleet manager” to “mobility manager” – roles are changing with business needs
“Businesses want to provide an individual with one card or virtual payment tool that can interface with a variety of vehicles and fueling options, including shared electric bikes, ride-hailing apps, a personal vehicle, and vehicles owned or managed by the employer,” Sharon says. “This is why the title of ‘fleet manager’ is quickly moving to ‘mobility manager.'” It’s about getting people where they need to be in the safest, most efficient, and convenient manner – all within one payments solution.”
In the scenario above, the mobility manager has to exchange money with a variety of vendors and optimize driver/rider behavior across a network of options. “The fleet or mobility manager is now expected to be a transportation expert, fluent in the sharing economy as well as able to manage budgets through fluctuations in fuel prices and charging fees,” Sharon says. “It used to be as simple as, ‘Where are you going and when will you be back?' but today it’s about finding the most efficient and cost-effective way to solve the challenge.”
Payments solutions will continue to evolve this year along with these trends, giving the mobility manager choices without constraints on the backend. Solutions may include providing data insights to power recommendations for the best routing or transportation choice and facilitating electronic platforms for payments to drivers, vendors, mechanics, fuel and charging providers, as well as discounts with tool and equipment vendors, restaurants, and convenience stores.
With one card or virtual payment, each business can set rules for payments that make sense for their needs. “When they have the flexibility to pay a variety of vendors using a variety of solutions, they can make better strategic decisions on how they will interface across their vendor ecosystem,” Sharon says.
Fleet management needs visibility and control beyond fuel
The key directive in fleet operations is to keep the business moving, Brian says. “Our solutions must continue to provide that forward movement with more utility, more power, more fraud protection security, and more efficiency to give managers a 360-degree view of their entire operation and the ability to manage all the related expenses,” he says.
The trends point to visibility and control beyond fuel, he says. “Mobility managers need to leverage tracking to improve safety, route optimization, connected and electric vehicles, various vendor payment systems, and all the external factors that affect pricing, plus manage their credit relationships, optimize driver behavior and find cost savings. Having one payments platform that can enable all that information effectively and help with decision-making is key to success,” he says.
3: Higher adoption of mental well-being benefit programs reflects changing industry priorities
Nearly 4.5 million Americans left their jobs in both September and November of 2021, setting new records each month, according to the US agency responsible for collecting the data. This ongoing “Great Resignation” trend, along with the collective exhaustion and emotional toll of a global pandemic now entering its third year, is driving a trend among HR professionals and employers of all sizes to focus on benefits that support employee mental well-being.
Mental wellness has become a key priority for employers
Mental health concerns have become more top of mind in the past two years. One Harvard Business Review survey of employees found that 76 percent of respondents reported at least one symptom of a mental health condition in the past year. That’s an increase from 59 percent in 2019.
In our annual survey of consultants, brokers, and HR professionals, WEX learned that mental wellness is a key priority for 2022. During the first years of the pandemic, the desire was for stability and flexibility. This year, a focus is emerging to support employees’ mental and emotional health through what is expected to be another year of pandemic-related societal and regulatory disruption.
How employers are expanding their mental health benefits offerings
Employers are expanding their support of employees’ mental health needs in a variety of ways. While some employers are focusing on employee assistance programs (EAPs), others are giving their employees access to a variety of new tools and resources, such as fitness and calming apps. Many employers are offering new or expanded healthcare savings accounts (HSA) and lifestyle spending accounts (LSA). Others support employee wellbeing by providing financial wellness solutions such as offering student debt relief and/or short-term loans for emergencies such as a car accident or home repair, according to a recent Benefits Buzz podcast.
Structuring benefits programs to meet the needs of employees at all different life stages is tricky. The key is to listen, says Sherry Olson, VP, HR Business Partner at WEX.
Benefits consultants, brokers, EAP vendors, and solutions providers such as WEX help HR professionals analyze claim data to inform which benefits packages make the most sense for their workforce and keep the employer competitive in a challenging hiring market.
“Our primary concern is, ‘How can we best take care of the people taking care of the business?” Sherry says. “While we want to address employees’ priorities, there is fatigue from back-to-back video calls and numerous employee surveys. So we need the industry and our own data to help guide us in understanding the current and future needs.”
Insights from the data help HR professionals identify needs like training on manager sensitivity and education on financial health beyond the 401(k). “An HSA can provide terrific pre-tax savings, but many employees don’t fully understand the opportunity,” she says. “I ask them, ‘Would you like to get a discount on your medical expenses?’ and that opens a lot of eyes.”
4. Regulation, incentives, and TCO will help drive the move to electric vehicles (EV) in fleets of all sizes
“The need to move to fully electric fleets is more a gentle wave than a pounding surf,” says Jay Collins, SVP, General Manager Small Fleet for WEX. “The total cost of ownership (TCO) can be attractive but the applicability depends on the vehicle use case, availability, and the charging infrastructure. We’ll see most businesses adding EV’s into their fleet, but not immediately replacing their entire fleet, he predicts.
Factors that are driving the move to EV include demand from employer environmental and social responsibility (ESG) commitments, regulatory incentives, and total cost of ownership. Therefore, WEX is seeing most of the 2022 conversion to electric vehicles occurring within government sectors and large corporate fleets managed by our fleet management partners.
The transition to EVs will involve a period where fleet managers oversee a mix of vehicles
“Since fleets don’t replace all their vehicles at once, the rate at which fleets convert to electric will depend on incentives, availability of vehicles, and accessibility of a charging network,” Jay says. “We will be in a mixed fleet world for the foreseeable future.”
Fleet payment solution providers like WEX are moving to support this transition to mixed or hybrid fleets, and eventually all-electric fleets, Jay says. “Our partnership with ChargePoint is a great example of how solution providers are combining their knowledge of the space with new fueling technologies.”
Change is hard to predict, but most mobility managers are looking for continuity. “The value that WEX brings to fleets today will remain highly relevant in a mixed fleet world, specifically optimizing the energy needs of vehicles whether they are combustion or electric,” Jay says. “Mobility managers need a way to understand driver behavior and cost patterns in order to optimize their productivity and spend. Fleets adding EV’s are
contacting WEX for a single solution to their security, control, fraud protection, and data analysis needs, especially as networks change and energy costs fluctuate.”
How data helps with the adoption of EVs for a fleet business
Robust data is required for fleets to know the health of each vehicle and how to benchmark it for optimal productivity. The use of mixed fleets means that battery charging must be carefully managed through analysis and driver training.
Mixed fleets bring new complexities to a payments infrastructure. “‘Get my driver fueled and on their way' is a mantra we often hear from our customers," Jay says. "For EVs, that will mean putting chargers and their payment transactions closer to where vehicles are parked and stored. In our business, if a driver has to wait twenty minutes for an available charging station and then another twenty minutes to charge that has an enormous impact on their daily productivity, negatively impacting the value of and EV’s total cost of ownership. Charge station identification and reservation are a perfect example where WEX can help ensure effective, efficient fueling (charging) of a vehicle."
Other challenges include how companies will reimburse employees for home charging, how to optimize charging behavior to avoid higher rates, and deciding which vehicles are suitable to be replaced with an EV.
With all this, and the ongoing need to monitor driving effectiveness and efficiency, fleet and mobility managers don’t want two management systems, they want one overall dashboard. “EVs are here and we are supporting our customers and partners by crafting the right set of solutions as they introduce them into their fleet,” Jay says.
5: Adoption of the merchant model by travel agencies and intermediaries is accelerating globally
As COVID continues to impact the travel industry and travel businesses seek to adopt an increasingly customer-centric approach, travel agencies and intermediaries across the globe are adopting the merchant model to offer more choice and less friction to travelers, while streamlining their payments options with suppliers.
With the merchant model the travel agency collects the inbound payment from the end traveler and makes separate payments to each end supplier as needed. In contrast to the traditional agency model where the travel agency passes payment details to the suppliers, the merchant model allows travel agencies to manage a diverse inventory and offer an integrated approach, while effectively managing payment risk. At the same time, the merchant model provides travelers with one interaction and the assurance that their bookings and cancellations across multiple suppliers are being managed in a coordinated way.
Two travel industry trends that are accelerating adoption of the merchant model
“The travel industry is experiencing two connected trends which make the merchant model a smart solution for travel agencies right now,” says Jason Hancock, Senior Director, Strategy for WEX Travel and a lead author of a new WEX report, Travel Retailing: The shift to the merchant model that is redefining B2B payments and distribution strategies. “The first is a renewed focus on indirect distribution channels by suppliers who are looking to fill capacity and serve a broader group of global travel customers. That trend is coupled with travel agencies adapting to changing traveler preferences and priorities in recent COVID times.”
The evolution of e-commerce and online retailing has shifted traveler expectations over the past decade. As a result, many travel agencies have had to move toward a ‘retailing’ business approach to align with these expectations. The intersection of these trends is driving the industry toward greater adoption of the merchant model, according to the travel retailing report.
The merchant model provides security amid travel uncertainty, Jason says. When travel agencies adopt a merchant model, they need a robust payment platform that can ensure secure, rapid transactions across currencies and a wide set of suppliers. They also take responsibility for managing fraud and customer refunds, which have been a common occurrence during the pandemic. In 2020, during the height of the pandemic, WEX recovered more than $1B for its travel industry customers through effective chargeback and refund processing.
“There is a win-win collaboration between the three players in this ecosystem,” says Jason. “Travelers are looking for flexibility, peace of mind, security, and protection. Travel agencies are positioning themselves as trusted brands by delivering better customer experiences. Travel suppliers like airlines and hotels desperately want to fill spare capacity. And all parties are looking for convenient, fast and secure payments; while agencies and suppliers are also looking to streamline their payments process.”
Payments trends and fintech innovation will create opportunities in 2022
Businesses of any size can capitalize on these trends to grow their business and create more engaging customer and employee experiences. For everyone, insights from your own business data patterns as well as benchmarks from the industry will help corporate leaders and business owners make better decisions and choices throughout the coming year.
Learn more about WEX B2B payments solutions and how they can help you streamline your backend operations and accelerate your growth.
Harvard Business Review survey