There was a time when it seemed daunting for a US small business to sell in overseas markets.
For starters, big banks didn’t want to risk lending to less-tested entrepreneurs when they could instead do business with more-established companies. When it came to paying suppliers and bills overseas, making international wire transfers through a bank were slow and often costly. And entering foreign markets – which came with mountains of paperwork and regulations to open bank accounts in each new country – didn’t always seem worth the hassle.
But that’s mostly changed for small and midsized businesses (SMBs) now, thanks to the help of financial-technology companies (Fintech) that have addressed each of these challenges.
Today, US SMBs that export goods and services overseas make up a staggering 98% of all exporting firms and 34% of US exporting value, according to a recent 2016 Small Business Exporting Survey. The survey also found that 58% of US SMBs have sold merchandise or services to customers outside the US, and that 65% of those businesses say the primary reason for entering new foreign markets is to “increase profits and sales.”
Fintech has played a key role in helping small to medium American companies go global. Our upcoming “Frenemy Feud – Banks vs Fintech” interactive at SXSW on March 12 will dive into this topic by having banks and Fintechs face off, but here’s a sneak peek:
1. Fintech has made lending more accessible for SMBs.
Beyond specialized small business lenders, the introduction of online crowdsourcing and peer-to-peer lending have made it much easier for SMBs to get working capital, export, and expansion loans. A recent article from Small Business Trends explained that SMBs are “benefiting not only from access to financing, but in some cases from superior rates, spurred by both the removal of intermediaries and competition for early market share.”
2. Fintech has broken down barriers for SMB global expansion.
In the past, SMBs would have to spend precious time and money opening bank accounts each time they expanded into a new country. But today’s international payment technology cuts much of the red tape and startup costs that expanding small businesses used to face.
For example, the international payments technology of World First USA, Inc. lets e-commerce sellers receive their overseas earnings through in-country receiving accounts (which World First opens for them), from which they can repatriate their funds back into their US bank account whenever they want (24/7 online). This allows them to focus on expanding into new markets, rather than worry about opening overseas bank accounts. SMBs can also use our technology to directly pay bills overseas from one centralized account.
3. Fintech has made banking faster and less expensive
Online and mobile banking technology – again, created through Fintech — has empowered business owners to instantly deposit checks or transfer funds without even needing to visit a local branch. Meanwhile, developer-made “Robo-Advisors” offer lower fees than a financial advisor while delivering solid returns to investors.
Fintech is making cross-border payment transfers faster and less expensive than ever before too. World First for example, helps many online sellers and SMBs save thousands of dollars every year on conversion charges and pay lower transfer fees when SMBs pay overseas suppliers and repatriate their earnings from abroad.
By working collaboratively with banks, Fintechs are helping to solve many of the problems that SMBs face when it comes to making financial transactions quick, safe, and cost-effective.
Want to learn more about how banks and Fintechs can help SMBs grow? Join us for “Frenemy Feud” at SXSW! Come to our one-hour “Frenemy Feud” Banks vs Fintech interactive show at SXSW on March 12 at 12:30pm in the Austin Convention Center (Trade Show – Next Stage – Exhibit Hall 4). And be sure to follow us on Twitter for live updates. We hope to see you there!