Citi, PNC invest in B-to-B payments fintech

Technology to improve commercial payments processes has gained much interest from banks in the last year, and that trend is translating into new partnerships and investments.

In the latest example, Citi Ventures and PNC on Wednesday announced a strategic investment in the fintech firm HighRadius, which makes business-to-business payments and receivables software. Terms of the investment were not disclosed. HighRadius has an existing partnership with Bank of America on an accounts receivables platform, and also counts as clients Fortune 500 companies such as Walmart, Johnson & Johnson, Procter & Gamble and Starbucks.

HighRadius’ technology aims to streamline what has long been considered a cumbersome area in corporate finance, as B-to-B payments are largely paper-based and not completed in real time, with human intervention required to manage data in different operational silos.

Daniel Acker/Bloomberg

“The problem HighRadius is tackling is a huge problem in the industry,” said Luis Valdich, managing director of venture investing at Citi Ventures. “The combination of paper-based processes and the fragmentation of payments mechanisms used makes for a very complex environment.”

HighRadius employs artificial intelligence technology to automate tasks that previously required human intervention — such as extracting remittance data from emails, email attachments, electronic data interchange and payer web portals and matching payments to open receivables. It also supports a payment network, allowing suppliers to digitally connect with buyers.

This use of AI to solve practical business problems attracted Citi Ventures to invest in the company, Valdich said.

“People sometimes ask, is AI overhyped?” he said. “But when used for real-world applications to create superior business processes, it is very compelling.”

Overall, banks have put greater focus on applying tech innovation to commercial clients recently. Last year alone, banks such as Wells Fargo, KeyCorp and U.S. Bank commited significant investments in tech for commercial clients.

“The rapidly growing rate of electronic payments, including same-day ACH and virtual cards, means that commercial customers are looking for new capabilities from their banks beyond traditional lockbox services,” said Sashi Narahari, founder and CEO of HighRadius. “With this higher rate of electronic payments, there is an equally daunting growth in the need to reconcile those payments with a broader array of remittance formats coming from payers.”