How Technology is Fueling Growth in the Middle Market

Technology investments are driving anticipated returns on investment from retention and recruitment to payments processes

Today, middle market company decision-makers are prioritizing investment in technology to improve their payments, customer experience, retention and hiring goals, operations and supply chain/logistics processes.

Capital One surveyed 400 financial and technology decision-makers at companies with revenues between $20 million and $500 million to understand their challenges, opportunities and investment priorities with business technologies. Key findings shed light on stakeholder perceptions of the value of technology for business strategy and day-to-day operations.

COVID-19 Accelerated Business Technology Implementation 

In response to the pandemic, businesses doubled down on adopting technologies that helped them stay competitive in the new economic era. Survey respondents reported that COVID-19 accelerated implementation plans for technologies supporting customer experience (63%), operations (60%), payments (58%) and supply chain/logistics (56%). 

The survey found a majority of companies have implemented or upgraded technology in the past year and believe their current or planned investments will help fuel growth. Respondents also anticipate their investments will drive ROI–with a focus on revenue generation and cost savings over adoption rate and speed–within the first year.

Technology Plays a Key Role in Employee Retention and Recruitment

At the onset of the pandemic, many companies quickly leveraged new capabilities to help enhance remote collaboration and communication within a remote environment. They also invested in digital tools to help improve the recruiting function, from communicating with candidates to onboarding new employees.

Survey respondents reported that they recognize the strategic importance of technology in employee recruitment, engagement and retention:

  • Eighty-seven percent (87%) said their technology roadmaps are a critical part of employee retention.

  • Eight-nine percent (89%) said their tech systems enable employees to do their jobs seamlessly.

Hybrid Work Has Affected Organizational Technology Adoption

Businesses are reinventing processes and using new tools to help their workforce stay connected to their work and to each other. A significant percentage of survey respondents (89%) indicated that hybrid work has accelerated their need to adopt emerging technologies to cope with shifts in operations, employee expectations and culture.

Respondents agreed that hybrid work is:

  • Creating new challenges with technology integration (87%)

  • Shaping the nature of business strategy and investments for at least the next five years (86%)

  • Changing how they attract and retain talent (86%)

  • Causing significant disruption for middle market companies (76%)

While the hybrid model will look different from organization to organization, key technologies can help make hybrid models effective. Typically these include new meeting tools, training technology, team collaboration software, communication platforms, document management applications, mobile tools, payment technology and security systems.

Payments Digitization Drives ROI 

Payments technology helps simplify the way businesses receive payments from customers and make payments to vendors. Today, many companies are still writing and mailing checks to vendors, which can be time-consuming and costly. By investing in the technology infrastructure for more efficient–and remote–payment processes, companies can help transform how they do business and drive a return on investment at the same time.

That transformation can pose challenges to leaders; survey respondents pointed to security/fraud (42%) and friction across systems (25%) as top concerns while digitizing their payments processes. To address those challenges, they’re heavily investing in:

  • Automated, real-time or fully integrated payables systems (36%): Through integrated payables systems, companies send a single file to their bank, which then prompts the bank to make payments across check, ACH, card and wire transfers, effectively helping reduce the amount of time the company spends on payments. And adding automated and real-time capabilities allows them to typically access funds quicker. 

  • Digital payments (17%): Designed to enhance productivity and increase transparency, digital payment tools include customer payment portals, remote capabilities for bank deposits, cash withdrawals and payroll, and converting check processing to virtual card and ACH transactions.

  • Fraud prevention/security (14%): Capabilities like access control, which helps ensure the right people have the appropriate access to financial systems, and fraud screening, which helps enforce preset rules for invoice and receivables routing and processes, help combat payment fraud risk and help protect transaction integrity.

Technology Implementation is No Longer Siloed

In the past, technology solutions have largely been adopted for a specific department or used to solve pain points within a specific process. At the onset of the pandemic, there was a massive technology transformation that spanned across business functions. For many businesses, the shift to digital touched nearly every department, every process and every person–and will continue to do so in the future.

For Informational Purposes Only

The information contained herein is shared for educational purposes only and it does not provide a comprehensive list of considerations or best practices. This information does not represent any opinion, guidance or recommendation, whether formal or informal, of Capital One, National Association, or any of its officers, directors, employees, advisors, attorneys, consultants, affiliates or subsidiaries (collectively, “Capital One”). Nothing contained herein shall give rise to, or be construed to give rise to, any obligations or liability whatsoever on the part of Capital One.

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