In a rapidly changing financial landscape, modern businesses are increasingly seeking alternative solutions to meet their financial needs. Today, Airwallex, a leading global payments and financial platform for contemporary enterprises, unveiled a groundbreaking survey that highlights a growing demand for cloud-based financial services.
More than 80 percent of small and medium-sized businesses (SMBs) are looking to migrate from traditional banks in search of better payment options. The report, a collaboration between Airwallex and consultancy firm Edgar, Dunn & Company, exposes the pain points SMBs face and emphasises the potential for software platforms and marketplaces to address these challenges.
Redefining Financial Services for SMBs
The data from the survey reveals that 82 percent of SMBs worldwide, a staggering 86 percent in the UK and US, feel overlooked by traditional banks. They express a willingness to change their banking providers if they can find similar alternatives in software platforms or marketplaces. The key services SMBs are eager to access include cross-border payments collection and payouts, business bank accounts, foreign exchange, and treasury solutions.
This demand presents a significant opportunity for software platforms and marketplaces, such as eCommerce, customer relationship management (CRM), or expense management platforms. By offering embedded financial services, these platforms can better serve SMB customers and create new revenue streams, especially in the realm of global money movement and payments.
Overcoming Cross-Border Payment Challenges
Cross-border payments pose a significant challenge for SMBs. Lengthy processing and settlement times are cited by 45 percent of respondents, with Singapore and Australia feeling this issue most acutely at 52 percent. Forced currency conversion and high transaction fees are another prevalent concern, affecting 41 percent of SMBs, with UK-based businesses experiencing this challenge at a rate of 45 percent.
SMBs also face difficulties when making payments to vendors, suppliers, and employees, including delays in processing and disbursing payments (48 percent), which rises to 58 percent in Australia. Managing multiple payout methods and currencies further complicates the process, with 47 percent of SMBs facing this challenge, spiking to 57 percent in Singapore. To address these pain points, businesses can adopt an end-to-end payment processing system.
Changing Landscape of Financial Services
On average, 81 percent of SMBs rely on traditional banks to access financial services. However, these institutions often overlook the specific needs of SMBs within various industries, offering standardised products that don’t cater to their unique requirements. These inefficient payment systems lead to cash flow issues, which are particularly detrimental to SMBs. As a result, 77 percent of global SMBs are either contemplating or actively exploring new payment solution providers.
Traditional banks are perceived as the least likely to meet the financial service needs of SMBs (44 percent), whereas 64 percent of respondents believe that software platforms or marketplaces offering embedded financial services are better equipped to serve them. This sentiment is consistent across all regions, with the highest demand observed in Australia (76 percent).
SMBs Willing to Invest in One-Stop Solutions
The report also highlights that SMBs in China (93 percent) and the US (88 percent) express the strongest desire to access financial services through their existing software providers. Australia, with 66 percent, demonstrates a slightly lower appetite, as 19 percent of Australian SMBs already seek financial services from their software providers, the highest percentage among all regions in the study.
Additionally, the survey reveals that 76 percent of SMBs would be willing to pay more for a one-stop-shop provider that can support their financial and other needs as they expand their international businesses. Chinese SMBs are most open to this idea, with 91 percent indicating their willingness to do so.
In an era of rapid digital transformation, modern businesses are demanding more from their financial service providers. Traditional banks are falling short in addressing the unique needs of SMBs, prompting a significant shift in the financial services landscape. Software platforms and marketplaces are poised to fill this void by offering tailored financial solutions and unlocking new revenue streams. As the global SMB community seeks streamlined and efficient financial services, the opportunity for innovation and growth in the financial technology sector is immense. The key takeaway is that businesses that can adapt to these changing demands are likely to thrive in the evolving financial ecosystem.
