The role of fintech in a frictionless future for payments

By Jeremy Thomson-Cook, chief economist, WorldFirst

Supply chains have never been as in vogue as they currently are, thanks to the ongoing pressures on international trade at present.

From struggling Brexit negotiations to the Trump-China trade war, there is little that the average SME can do to influence the direction of these grand scale events.

What they can do, however, is reduce any friction within their supply chain in order to best prepare for the impact of the current political environment on international trade in the coming months.

For some that will mean leaner logistical practices, while others will look at further integration between different business units to improve performance. Across the board, however, it will mean tightening up the way they pay international suppliers, disperse funds to foreign operations and repatriate their profits from overseas sales – in other words, international payments are key.

Removing barriers to entry

Fintech companies that specialise in international payments have spent years refining the process of moving money across borders.

While challenging the incumbents simply used to mean doing things cheaper, faster and more easily than traditional banks, progress continues to be made in the space.

Though the end goal is still to make things as easy as possible for international businesses, more recently the focus has shifted from offering a price-centric proposition to eradicating the barriers to entry and overseas expansion.

The role of fintech

By now most people have heard of Bitcoin and the blockchain technology underpinning it.

While the jury is still out on how effective they will prove in effecting change in the process of moving money overseas, steps are being made to make the system more reliable and will likely have significant impact on the sector moving forward.

Another innovation that has come to the fore in the last year or so are multi-currency accounts.

Historically, these were only available to large multinational companies with offices or infrastructure based in foreign countries and were subject to high monthly management fees.

However, with ongoing fintech development in the space they are increasingly a viable option for smaller businesses. This enables them to trade, invest and grow like a local company in a foreign country without the need for an on the ground presence.

A frictionless experience

Ultimately, the creation of an environment wherein companies have access to their upstream and downstream supply chain all through a single platform allows everyone to maintain visibility over their payments landscape.

International payments should operate more like a domino run rather than a game of Mouse Trap; smooth, seamless movement between all parties, as opposed to a convoluted mechanism reliant on idiosyncratic systems.

The fintech industry was born of the financial crisis and the knowledge that the correct combination of technology and finance could enable businesses to perform at a higher pace than ever before.

For industries under pressure from international, integrated supply chains the future can be made a lot clearer by focusing on where their friction lies and the implementation of fintech-enabled solutions to help eradicate it.

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