International payments solutions will be more important than ever post-Brexit. Fortunately the UK has the fintech expertise to make it happen, says Kerry Agiasotis of Western Union
Since her arrival in Downing Street, Theresa May has stressed the importance of exports as a key growth opportunity and a central aspect of her new economic and industrial strategy. Indeed, the UK Trade & Investment department (now renamed Department for International Trade) has already set the ambitious target of getting 100,000 additional companies exporting by 2020.
However, if international trade is to play a major role in the future success of the UK, companies of all sizes must face the challenge of managing their international financial operations. This is even more pertinent during periods of market instability and volatile exchange rates – businesses need to stay on top of paying suppliers and delivering on export orders.
Today’s evidence suggests many are not doing enough. Analysis from East & Partners found that only 20–25 per cent of SMEs in the UK were prioritising the mitigation of exposure to financial exchange fluctuations.
At present, SMEs are forced to spend an average of one day a week managing their payments, enduring the challenges of a highly fragmented and regulated international banking environment. With that in mind it’s easy to understand why one in four medium-sized firms are put off selling their goods and services overseas.
The current advances in technology-led innovation are therefore perfectly timed to lead this constituency of businesses through an uncertain marketplace and towards prosperity.
Driven by the need for business growth worldwide, London has become one of the international hubs for fintech, a situation that has hugely benefited British business in the past five years. For example, technology has revolutionised key transactional functions, from contextual and mobile payments to integrated cash management and global payment systems.
Beyond addressing these core transactional processes, fintech innovations feed into the operating infrastructure of a business, offering tools and software applications previously reserved for larger corporations.
Financial platforms can save them time and money, while expanding the global reach of a business – expanding trade beyond Europe will be crucial to prosperity following the Referendum vote.
Recent Western Union research in collaboration with East & Partners found that Europe continues to be the number one export market for UK SMEs, with 75.3 per cent identifying it as a priority.
However, there is a strong shifting sentiment towards China becoming a primary destination, with 72.6 per cent characterising it as a key market. At 12.5 per cent, India is the fastest-growing new target and this pattern will continue with the help of new financial technologies.
The research also found that 30.8 per cent of the thousand SMEs surveyed see currency validity as a major concern when trading internationally.
Access to foreign currency infrastructure through financial platforms allows for effective cross-border payments and greater certainty in changeable times. This is vital as SMEs look not only to mitigate risk but make smart, quick decisions and thrive in a post-Brexit marketplace.
It’s not only technology, it’s the knowledge, expertise and partnership of established organisations that can offer a further level of comfort to UK businesses, which arguably smaller financial start-ups cannot.
Western Union’s heritage in financial services is unrivalled and is now translating into investment in Fintech innovation to help and support SMEs connect, empower and grow their businesses.
If these companies are to compete and thrive in a globalised world, embracing this technology is not a luxury, it’s a necessity. No longer the preserve of bigger business, there is no doubt that technology will play a key role in the success of a post-Brexit world.
Innovations in the payments industry – what’s in it for business?
Join us for this breakfast seminar on 4 April 2017 for high-level discussion around innovations within the payments ecosystem, allowing you to understand how the future potential for frictionless payments could help you drive productivity in your business.
Find out more and book tickets at www.iod.com/payments