Key Takeaways
- A disheartening 70% of SMEs have abandoned their overseas expansion plans due to insufficient resources and support.
- Nearly three-quarters (72%) of business owners feel that banks provide inadequate support around international finances.
- The persistent gap between the financial needs of SMEs and the services offered by banks could jeopardize the economic contribution of these businesses.
A Dream Deferred
A shocking 70% of small and medium-sized enterprises (SMEs) have abandoned their plans for international expansion due to a dearth of resources and support. This startling statistic, revealed at the renowned Money 20/20 event, underscores a pressing issue facing SMEs across the globe.
Banks: Allies or Adversaries?
Interestingly, the blame for this setback seems to be falling squarely on the banking industry. A whopping 72% of business owners lament that their banks offer only ‘very limited’ support when it comes to international finances. Such perceived apathy from the banks can significantly hinder the growth of SMEs, forcing them to halt their global expansion ambitions.
Bridging the Gap
The discussion at Money 20/20, attended by over 7,500 delegates from more than 2,300 companies, emphasized the crucial role that banks need to play in fostering the growth of SMEs. Particularly, the focus was on the banks’ role in facilitating international trade by providing the right financial tools to protect businesses against fraud, currency fluctuations, and hidden costs.
The Managing Director of HedgeFlows, Neh Thaker, elaborated on this need for banks to step up, stating that the traditional coverage model by banks makes it challenging for diverse and fragmented SMEs to scale beyond payments and current accounts.
The Cost of Inaction
The implications of banks’ inadequate support for SMEs are far-reaching. Many SMEs never mature enough to afford the right tools, leaving them vulnerable to various risks, ultimately leading to their unnecessary demise. This situation also perpetuates an unfair bifurcation between big and small businesses.
The Power of SMEs
It’s essential to acknowledge the economic contribution of SMEs. According to the UK government, at the beginning of 2022, SMEs accounted for a staggering £2.1 trillion turnover, equating to 51% of the economy. Given their substantial economic contribution, providing the right support to SMEs can significantly bolster the economy, leading to a win-win situation for all parties involved.
A Fresh Approach to Financial Support
During Money 20/20, Alex Axentiev, also a Managing Director at HedgeFlows, emphasized the need for a fresh approach to treasury and risk management solutions for businesses seeking international growth. The process of doing business internationally can be daunting for SMEs and early-stage businesses. Hence, having access to resources and support that simplifies financial planning, risk management, and automation across currencies is crucial.
The Road Ahead
While the findings from the SME Empowerment Report are sobering, they also point to an opportunity for banks to step up their game and provide the much-needed support to SMEs. Companies like HedgeFlows are leading the way with their financial toolkit designed to help smaller businesses manage their international finances. By presenting banks with diverse partnership models, such platforms allow the banking sector to extend comprehensive financial services to their SME customers.
The financial industry has a pivotal role to play in supporting SMEs’ international ambitions. By closing the gap between the needs of SMEs and the services provided by banks, we can ensure that these enterprises continue to serve as the backbone of our economy, innovating, and growing on a global scale. Only then can we hope to see fewer shattered dreams and more tales of international success.
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