Fintech is overhauling how both businesses and consumers manage their finances.
And this is only the tip of the iceberg. The impending arrival of Open Banking in January is set to usher in a new wave of innovation, as digital challengers prepare to take advantage of access to open APIs across the banking industry.
This access will encourage disruption and innovation in the sector as all providers, from established high street banks to new challengers, have to adapt to retain customers and relevance in this new era of digital banking.
Technology has also vastly transformed how small and medium-sized enterprises (SMEs) trade internationally.
Online marketplaces like Amazon and eBay have created a virtual high street for SMEs, and allows them to sell to customers across the world. Nowadays, buying or selling across continents is as easy as a few clicks.
SMEs have taken advantage of this in their droves. Research we conducted with the Centre for Economics & Business Research (Cebr) revealed that SMEs accounted for 9 per cent of all UK eCommerce sales in 2015 – the equivalent of £53 billion – up from 4 per cent in 2009.
Significantly, the Cebr findings also identified a £21 billion exporting opportunity for the country by 2020, if more SMEs fulfil their potential and export their goods and services online around the world.
International payments preventing SMEs achieving full online trading potential
At present, a large number of SMEs encounter problems with international payments when trading online with the process often difficult, expensive and time intensive. Worryingly, these pressures could stifle the untapped, global online trading potential of UK SMEs.
For example, SMEs trading on Amazon internationally have to provide bank account details for the country they are selling into. In order to sell into the US, a UK business will need a US bank account number to receive income from their sales.
For anyone who has gone through the process of setting up an international bank account, they will know how painful it can be. It often requires proof of residency or evidence of a local company entity – which for a small business with limited resources is nigh on impossible – thus making the process of international transfers very expensive.
Recently however, Fintech has stepped in to relieve what is a pressure point for internationally minded entrepreneurs. Multicurrency accounts – such as WorldFirst’s World Account – are ending the countless complexities and age-old problems associated with opening an overseas bank account.
The World Account enables SMEs to quickly open multiple international currency accounts free of charge. SMEs can access and manage their accounts through a single platform, either online or using a mobile app. They are also able to send international payments or receive funds from overseas without experiencing expensive hidden fees.
Multicurrency accounts solve the age-old problem of opening an international bank account to trade in a particular country – a problem which has plagued generations of SMEs.
This is just the beginning. Organisations like ourselves are looking to evolve traditional banking models so modern businesses can trade in a modern way. No more unnecessary fees and complex forms to send and receive money internationally. International banking will be just as easy as online shopping.
With SMEs well placed to make a critical contribution to UK exports in the years to come, in the post-Brexit environment it is especially important they realise their potential. Fintech can help make this a reality, and we must ensure we make the process behind international trade as simple as possible.
Jonathan Quin is the CEO of WorldFirst.