FX Solutions for SMEs

In the realm of foreign exchange (forex), small and medium-sized enterprises (SMEs) often find themselves in a challenging position. Unlike their larger counterparts, SMEs have limited options when it comes to traditional FX services. This results in difficulties when handling international payments. Fortunately, new solutions are emerging, poised to transform this landscape.

Exploring the Current State of Foreign Exchange Services for SMEs

Our recent Banking of the Future Think Tank focused on addressing the forex challenges faced by SME owners. Experts from various financial sectors, including FinTech companies and large-scale banks, convened to examine the issues and propose solutions.

We began by delving into why traditional banks tend to neglect SMEs, pinpointing three key factors:

Extensive Regulatory Hurdles: Complex regulations often bar SMEs from accessing essential services like underwriting and invoice financing, hindering their ability to secure working capital and sustain operations.

Lack of Risk Guidance: A HSBC survey revealed that 70% of CFOs reported reduced earnings due to unhedged forex risk. Many SME executives lack sufficient risk advice, potentially jeopardizing profitability, especially for those heavily reliant on foreign revenue.

Unsuitable One-Size-Fits-All Approach: While digitalization has accelerated in finance, FX provision for SMEs remains lacking. There’s a notable absence of a global payment solution tailored to SME clients.

How SMEs Currently Handle Foreign Payments

SMEs are forced to utilize the same solutions as large corporations, leading to exorbitant international transaction fees and a lack of transparency. Complex payment forms filled with financial jargon further complicate matters. Additionally, the slow pace of such payments can be frustrating in a fast-paced business environment.

Emerging Foreign Exchange Services for SMEs

The landscape for SMEs in forex is evolving, thanks to the emergence of new foreign exchange brokers. These brokers not only educate SME executives on FX risks but also assist in incorporating FX costs into quarterly and annual cash flow forecasts. They may even provide costed currency level guarantees to eliminate surprises.

Notable companies offering such services include AFEX, a global risk management and payments platform, and XCAP, which offers significant savings on international currency transfers.

New BaaS Platforms Offering Foreign Currency Services to SMEs

Banking as a Service (BaaS) solutions for FX are part of the embedded finance revolution and are particularly suitable for SMEs. Notable examples include:

CruisePay Finance: An API-driven platform enabling the integration of financial services into products, offering real-time FX conversion and global regulatory coverage.

Curve: An innovative mobile app that consolidates cards from various banks, allowing easy fund transfers between them and compatibility with ApplePay or Google.

Stripe and Airwallex: Web-based payments infrastructure providers that can be connected with brick-and-mortar establishments for personalized assistance.

Kantox: Offers a system for managing currency exposure and assists in decision-making regarding hedging positions.

TreasurUp: An integrated platform designed to interface with numerous bookkeeping and ERP platforms worldwide.

The Ideal FX Platform for SMEs

An ideal FX platform for SMEs would include:

Integrated services covering all payment needs.

AI-driven technology for simplified banking processes.

A platform recognizable worldwide.

Inbuilt risk management functionality.

Human support when required.

Real-time market overview and currency fluctuation monitoring.

Vivien Cheung, Director of Strategic Partnerships at Airwallex, emphasizes the importance of connecting traditionally siloed services for businesses’ benefit.

Agnieszka Durlej, Sales Director for Finance Markets at Bank Pekao SA, suggests a “try for free” approach to build trust with unknown providers, with bundled solutions in subscription plans.

The Financial Companion App for SMEs

A proposed solution is a comprehensive app for SMEs with international customers and suppliers. This app integrates bank accounts, email, CRM, accounting, and invoicing systems, offering a holistic financial overview, FX risk analysis, and real-time currency information. Users can access support through a chatbot or in-person consultations.

FX Risk Management

Developing an advisory tool for FX transactions that defines risk profiles and proposes hedging scenarios is essential to empower customers to manage payments and investments wisely.

Navigating Differing Regulations

Addressing varying regional regulations and electronic money regulations is crucial, especially concerning scalable solutions for different markets.

The Future of Foreign Exchange Solutions for SMEs

The future of forex solutions for SMEs hinges on integrated, efficient, and affordable finance platforms tailored to individual users. FinTech providers should focus on creating user-friendly embedded platforms that connect with existing banking providers and other financial tools, ultimately enhancing cash flow predictability. Incorporating risk management tools and real-life support through partnerships further enhances this evolving landscape’s potential. Harnessing this potential in the right way is key.

#CurrencyMarketsJobs#Recruiters

#FinancialRecruitment#FXCareerPath#TradingProfessionals#JobSearch#CurrencyTraderJobs#EmploySolutionsFX#FinanceCareers #TradingJobs#CurrencyExchangeJobs

#Professional