A robust demand for cloud-based financial services is on the rise, with over 80% of small and medium-sized businesses (SMBs) expressing their intent to shift away from conventional banks for their payment requirements.
A global survey reveals that 82% of SMBs feel neglected by traditional banks and are ready to switch providers if they find comparable alternatives within their current software platforms or marketplaces.
Services such as cross-border payment management, collection, and payouts, business bank accounts, foreign exchange solutions, and treasury services are among the offerings SMBs are eager to access. This trend highlights the changing landscape of financial services for smaller businesses.
That is according to a report produced by global payments and financial platform Airwallex. The report uncovers the financial services struggles that SMBs face.
The findings demonstrate a clear opportunity for software platforms or marketplaces such as eCommerce, customer relationship management or expense management platforms to better serve SMB customers and create new revenue streams by offering embedded financial services, particularly when it comes to global money movement and payments.
SMBs face several inefficiencies when receiving payments from abroad, including lengthy processing and settlement times, an issue particularly felt in Singapore and Australia. Forced currency conversion leading to high transaction fees is the second most cited issue and is particularly felt by UK-based SMBs.
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81% of SMBs globally rely on traditional banks to access financial services, but historically these institutions overlook the particular needs of SMBs within certain industries, providing unsuitable, standardised products. Inefficient payment systems cause cash flow issues which have a particularly damaging effect on SMBs. For this reason, 77% of global SMBs are either undecided or actively considering moving to a new payment solution provider.
Traditional banks are considered least likely to meet the financial services needs of SMBs, whereas 64% of respondents believe software platforms or marketplaces that offer embedded financial services can better serve them.
This was consistent across all regions, with the highest appetite in Australia. The research highlights that SMBs are in search of streamlined solutions tailored to the specific needs of their industry, which is something that vertical software providers would be well-placed to offer.
Businesses in China and the US showed the highest appetite to access financial services through their existing software providers. While appetite was lower in Australia, this is because 19% of small businesses in the country are already tapping up their software providers for these services, which was the highest of any regions within the study.
The report also found that in the majority of cases, SMBs would be prepared to pay more to work with a one-stop-shop provider that can support their financial and other needs as they grow their international business.