How can access to financial infrastructure impact global expansion success?

Global trade might have opened up global business opportunities, but to take full advantage businesses need to be digital-ready from top to bottom. Pranav Sood, General Manager EMEA at Airwallex explains why digital payments innovations and global financial infrastructure are equal to global gains.

Man using mobile phone and laptop computer with international currencies – FinTech, Global business

SMEs make up the bulk of businesses worldwide and play an essential role in the economy, from job creation to global business development. According to The World Bank data, SMEs account for 90% of businesses worldwide and over 50% of global employment. This research also stated that in emerging markets, their GDP contribution could extend to 40%.

Global trade, technology and advancements in financial services have played a significant role in enabling international communities, but are these same opportunities available to UK SMEs who might not have the right resources and technology to scale?

Our recent survey of 1,508 SME decision makers revealed that the vast majority (85%) of UK SMEs are planning international expansion projects by the end of 2023. Given the pandemic and the current economic climate, one can expect business growth over the next year to slow down. So, what can SMEs do today to help boost their future expansion plans and gain a competitive edge?

Where does expansion start?

Now more than ever, SMEs need to identify the necessary tools and resources to become an international business. As a company you should be able to tap into global market opportunities while also still having a local feel - this can help to maintain and build customer loyalty. However, this is much easier said than done, as no two SMEs are the same.

Some SMEs prioritise winning new customers (50%), but others value internal business strategies like team growth to support expansion and sourcing new suppliers (42%) to open up opportunities further.

As an SME and business owner, you need to be able to cut through the noise and figure out what is the most vital priority to help your business scale. For example, if you’re an online retailer and planning to onboard a new supplier in a different country, you’ll need to prioritise your payment infrastructure, so you can collect, convert and send funds in multiple currencies without high fees or geographical constraints. This is where technology and fintechs can shine.

Is the technology and financial infrastructure there?

Having a comprehensive international strategy is one of the first steps to going global. But there are a number of factors that can hinder or help businesses achieve their growth ambitions.

Factors like local regulations (20%) and lingering pandemic issues (18%) can be barriers to successfully hiring globally, with our research revealing that more than a fifth (22%) see not having the right technology as their biggest barrier when it comes to building out their workforce globally.

To achieve international success, SMEs recognise the importance of having the right infrastructure in place to grow more quickly (44%), better serve their customers (43%), have a more diverse workforce (39%), hire more technical positions quicker (39%) and help with regional supply chain issues (36%).

Is it feasible end-to-end?

It’s clear that the opportunities are exponential for growing SMEs, but there’s often a lack of clarity for how best to navigate the challenges of running a business. Shockingly, our research found that most SME decision makers (70%) admit that they need to modernise their systems before international expansion is possible for their company.

SMEs looking to expand across borders identified cross-border payments and FX (33%), marketing (32%) and HR capabilities (29%) as the most crucial missing parts in their current expansion execution plans.

Once SMEs understand the logistical requirements of expanding across borders, they can look to technology to scale operations. For example, 63% of UK SMEs admit that if they had a modern tech solution that made it easy and seamless to pay employees around the world in various currencies, they would recruit more globally.

While there isn’t a one-size fits all solution, it’s evident that having a digital-first approach, specifically adopting the right global infrastructure and utilising digital payments innovations, can play an integral role in enabling SMEs to grow and thrive in today’s climate.

Financial infrastructure is key to global scalability

While SMEs have a clear understanding of what’s needed to put international expansion plans into action, they recognise technology, specifically financial infrastructure, as the key to providing solutions to the majority of their biggest challenges - hiring globally, serving customers and managing local supply chains.

Few SMEs (3%) in the UK have the infrastructure in place to be able to hire globally. This reflects the wider issue of SMEs’ expansion plans being hindered by the technology they currently use. With the right financial/digital infrastructure, they can achieve the confidence and tools to grow teams and customers across borders seamlessly.

Technology access and adoption shouldn’t be barriers for businesses to grow beyond borders. SME leaders should instead be looking for innovative partners who can help them get the right technology platforms in place to support their needs as well as their customers. With the right infrastructure, businesses can improve their customer’s experience with their brand, increase conversion rates and ultimately, become a global powerhouse.

Pranav Sood is the General Manager of EMEA at Airwallex. Based in Airwallex’s London office, Sood is responsible for building out and overseeing Airwallex’s operations and teams across EMEA. As part of the global leadership team, he also plays a key role in supporting Airwallex’s global strategy. Prior to Airwallex, Pranav was VP of Small Business at global fintech GoCardless and led a cross-functional team responsible for acquiring and growing the SME customers who represent the majority of the company's revenue.