How FinTech is powering backbone of UK economy
Small businesses are the backbone of every economy. In the UK alone, SMEs account for 47% of all private sector turnover, and employ 60% of all public sector workers.
Not everyone is cut out to be an entrepreneur. The stress of starting, growing and maintaining a sustainable company isn’t for the fainthearted, and most SMEs have to run a tight ship to stay ahead.
Any investment made in products or talent takes time to transform into liquidity.
By the time you’ve considered payroll and overhead costs, suddenly an SME without solid cash flow is borrowing money at high street rates, which hinders profitability. From that point, you’re only a couple of problems away from a crisis.
SMEs must therefore find savings wherever they can, and the UK’s globalised, digital economy provides plenty of opportunities to do so. From buying goods and services overseas to paying remote workers, there are dozens of ways to diversify and expand that were unimaginable just a few decades ago.
This is why digital money transfers have become a lifeline for so many SMEs. In the past, businesses used a bank or a high street money transfer shop to send international payments for goods and services. These transfers were very expensive, full of hidden costs and usually took several days.
FinTech innovation injected much-needed competition into this sector, helping to bring better rates and faster transfers to billions of smartphone owners worldwide.
By avoiding banks and traditional money transfer giants like Western Union and Moneygram, SMEs can save as much as 75% on international payments - while also enjoying a secure and convenient way to send money from a mobile phone. These savings are critical for businesses that run on tight margins.
With Brexit looming, the pound has also taken a severe beating. A weak pound drives up costs for businesses buying goods and services abroad.
Banks still charge up to 12% of the sending amount for international payments. With most digital providers charging 2% or less, SMEs can make huge savings by sending money online.
We launched Azimo for people working abroad and sending money back home. We never imagined that so many entrepreneurs would use our service to support their business operations.
Today, we help thousands of small and medium enterprises across Europe to manage international payments - from restaurant owners and publicans to boutique merchants and bakers. Some of these transactions exceed one million pounds – amounts that in the past only banks would have only been trusted to manage.
The financial services sector has changed forever, thanks to the disruptive power of FinTech. We expect the digital money transfer market to continue to grow in size and significance as the UK SME sector expands each year.
In 2016 alone, there were 5.5 million private sector businesses, up 97,000 in 2015. They account for nearly 30 percent of global imports and create millions of jobs for the UK.
Despite their integral role in the British economy, SMEs have been ripped off by banks for years. Digital money transfer firms are disrupting the market, bringing down costs and improving transfer speed - leaving SMEs free to focus on the things that matter most: products, people and services.