Is your business suffering from the “Bank Gap”?

This article was originally published on August 17, 2017 on the WorldFirst blog . 

Banks aren’t exactly cutting it for global businesses anymore. It’s why almost 50% of small- and medium-sized businesses (SMBs) said they felt traditional banks don’t fully understand their needs in our recent YouGov/World First USA, Inc. survey of 500 US SMBs.

It’s also why nimble FinTech companies like World First USA, Inc. (WorldFirst) are quickly aiming to fill this “Bank Gap” — the void between SMBs’ needs and banks’ often outdated solutions — especially when it comes to doing business internationally.

So what does the Bank Gap look like? When asked how financial institutions can help improve the experience for SMBs, the survey’s respondents said they wanted better customer service, more support with international business expansion, faster payment transfer speeds at lower cost, and greater security for payments.

How are FinTech companies trying to help? As we’ve talked about before, FinTech has done wonders in helping American SMBs expand globally — from offering startup financing and out-of-country bank setup to providing less-costly payments across borders. But FinTech has also been combatting several key SMB pain points that make up the Bank Gap from our survey.

In this piece (part one of our three-part SMB series) — because we have experience helping thousands of SMBs with cross-border payments since 2004 — we’ll talk about how World First is helping to bridge the Bank Gap for global SMBs that import supplies or do business overseas:

Bank Gap challenge #1: SMBs want better customer service

The Problem: Never mind the limits of banker’s hours. Today’s multi-service banks advertise as if they’re the jack of all financial services, which in turn makes them the master of none.

Filling the Gap: By focusing on their niche, FinTech companies can offer specialized services designed to fit the needs of expanding SMBs.

Example: WorldFirst gives every client their own personal relationship manager (i.e. currency dealers with years of experience navigating foreign exchange markets) that gets to know the client’s unique situation — from which countries they repatriate earnings from, to their cross-border payment patterns.

In watching and anticipating major currency market events (such as Brexit or sudden central bank actions), these experienced relationship managers can suggest strategies to help each unique client minimize their currency risk and avoid potential losses. Best of all, this award-winning service is free for clients.

Bank Gap challenge #2: SMBs want more support for international business expansion

The Problem: SMBs from the recent YouGov/WorldFirst USA, Inc. survey said they’d like more global expansion support when it comes to foreign country regulations, staffing, currency exchange, security, and cultural understanding. But all too often, large international banks expect SMBs to pause their expansion to find these business partners on their own.

Filling the Gap: By teaming up with complementary service providers (including banks), FinTech companies can expand the types of services available to SMBs.

Example: WorldFirst enables online sellers to expand their business into international markets, taking care of bringing back your overseas earnings.  And we can help connect clients with our network of partners that specialize in global taxes, freight logistics, foreign language translation/market localization and other experts that can help them get set up.

Bank Gap challenge 3: SMBs want faster transfer payments with low (or no) fees

The Problem: International wire transfers can take up to three business days or more, and bank charges for international transfers can add up fast. A 2016 Nerdwallet survey found that US banks charged an average of $42 for an outgoing international wire transfer. Add in conversion charges, which can be around 3% — or $300 for every $10,000 transferred — and a few hundred transfers a year could cost a profit-stopping fortune for SMBs.

Filling the Gap: New mobile and online platforms are helping FinTech companies make cross-border payment transfers faster and less expensive than ever before.

Example: By taking smaller margins and passing great currency conversion rates on to clients, WorldFirst has helped hundreds of online sellers and SMBs save tens of thousands of dollars every year on conversion charges and transfer fees as clients make payments and repatriate earnings from overseas. Amazingly, WorldFirst’s international transfers can sometimes be completed in the same day depending on the territory.

The Takeaway

Working alongside banks, FinTechs like WorldFirst are bridging the Bank Gap that keeps too many SMBs from being able to successfully grow here and abroad — specifically when it comes to making quick, safe, and cost-effective international payments for businesses.

Stay tuned: Caught unprepared, SMBs may suffer from more, potentially profit-crushing (yet avoidable) challenges as they do business globally. That’s why in part two of this three-part series, we’ll talk about bottom-line effects of currency volatility — which could mean the difference between profit and major loss for your business (see Toyota’s 18%, profit-plunging mistake for a real-world example). Read on to part two — Why should I have a currency exposure plan?

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