How Fintech Companies Can Benefit From Global Expansion Learn how Fintech firms can navigate challenges with the help of uniquely-tailored partnerships to capture new markets and contribute to building the next generation of digital finance solutions.
By Wei Hsu Edited by Chelsea Brown
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Fintech was one of the industries that, as a whole, not only survived but gained from the Covid-19 pandemic. Buoyed by the world increasingly moving online, Fintech firms have managed to address new technological and economic challenges.
What's more, the growth wasn't limited to national borders. It expanded globally in a volatile economic climate and reaped rich dividends by solving complex problems with unique solutions. Such global expansion offers a variety of benefits, but it's not without challenges of its own. Fintech firms can navigate these challenges with the help of uniquely-tailored partnerships to capture new markets and contribute to building the next generation of digital finance solutions.
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Covid-19 transformed the future of business and the workplace
The Covid-19 pandemic triggered ripple effects that affected the global psyche toward business and the modern workplace. While professionals were occasionally dabbling in remote work and similar business innovations before the pandemic, global lockdowns significantly accelerated this adoption.
According to Gartner, after Covid-19, 48% of employees are likely to work remotely for part of their work week, compared to 30% before the pandemic.
A 2022 survey by Statista might shine a light on the reasons behind the phenomenon. People have rediscovered the meaning of work-life balance and don't want to let go of the flexibility they gained due to remote work, especially in terms of saving time and money, choosing their work location and having an increased focus on their job.
Employers, on the other hand, are also getting comfortable with remote work. They're vying to tap into a diversely skilled workforce by looking past their borders and leveraging gig workers more and more. These modern remote professionals embody the rise of a new mutually beneficial arrangement for both employer and employee.
Governments across the world are attracting foreign investment to recover from the devastating economic effects of the pandemic. They're relaxing conventional processes related to company establishment and global expansion, switching to online systems, simplifying applications and allowing verification documents to be submitted later.
These uncertain times and the efforts toward recovery created the perfect storm for an already-blooming industry to take center stage — the Fintech industry.
Related: Welcome to the Fintech Age: How Digital Currency Is Transforming Payments
Fintech thrived post-pandemic with global expansion
The sudden boom in remote work prompted businesses to move their operations online. The resultant increase in online transactions, the need for enhanced cybersecurity and the digital inclusion of developing and pandemic-hit economies led to the rapid adoption of digital financial services.
The Fintech industry, as a whole, tackled the pandemic reasonably well, and the numbers seem to confirm this. According to a World Bank study, on average, Fintech companies grew their transaction numbers by 13% in the first half of 2020, compared to the same period in 2019. A large portion of this growth came from emerging markets and developing countries that grew faster than their developed counterparts. As the world was forced to move the entire financial system online, Fintech was naturally poised to support as well as benefit from the transition. For instance, companies across the globe were quick to adopt solutions like Adobe Sign when signing contractual documents online after global lockdowns made traditional ways of working impossible.
Fintech firms, realizing the vast potential of global expansion in terms of market share, revenues, hiring world-class talent and diversifying investments, are looking to establish their presence in the Asia-Pacific, North America and EMEA regions. Now that governments are willing to re-open their borders, further opportunities are falling into place.
However, due to pre-existing challenges like a lack of funding, workforce reduction and minimizing fixed expenses, expanding global presence can prove to be one challenge too many. Establishing a presence in a foreign country brings with it a myriad of legal and operational challenges, including but not limited to incorporation, recruitment, payroll and tax compliance.
In a CFO Research survey of 166 senior finance executives, it was revealed that managing foreign stakeholders, navigating international payroll and dealing with long project times were the top concerns for companies deliberating global expansion. Companies may choose to create a subsidiary in their target geography, but this is costly and lengthy in terms of setup. Alternatively, they can choose to partner with a full-service global PEO (Professional Employer Organization) like INS Global.
Companies pursuing this option can outsource all the administrative and legal burdens of operating in the new country to their PEO partner. This has the added bonus of fast-tracking incorporation, hiring, visa application and legal compliance processes from months to days.
Clients of PEOs based in the APAC region, in particular, can find our PEO services incredibly helpful in facilitating their expansion to 30+ countries. Our PEO offers tailored, end-to-end employment solutions to over 600 clients to help them pursue international growth in more than 80 countries.
Fintech represents one of the most advanced and crucial industries for socio-economic development. The global market holds the following great benefits for the companies that manage to navigate international waters successfully:
Related: Key Opportunities to Leverage in Fintech and More
1. Serving the unbanked
The developing nations of the world are still desperately underserved when it comes to efficient banking and finance solutions. World Bank estimates that around 1.7 billion people remain unbanked around the world.
Public-private partnerships to solve these problems represent a promising revenue stream for Fintech companies, especially when governments are actively incentivizing foreign investment and looking for novel solutions to long-running financial problems.
2. Capturing the digital finance boom
Developing economies also provide markets actively looking to play a part in the advancement of the Fintech industry. Collaborating with foreign entities already involved in creating innovative solutions can prove to be incredibly successful for Fintech firms.
Next-gen industries and technologies, like Decentralized Finance (DeFi) and Web3, further offer limitless potential for Fintech companies to seek out international partners and build the future of finance together.
3. Exploring business-friendly geographies
Some countries may have laws that prevent companies from developing and achieving their full potential. In this case, they can instead move operations to alternate locations that provide a more conducive business environment while also incentivizing Fintech companies to set up shop within their borders.
Right now, Fintech companies need to assess their short and long-term business goals and plan for aggressive expansion in order to take advantage of the current favorable climate created by the pandemic and its aftereffects.
Exploring global expansion is not just beneficial, but almost essential in today's hyper-competitive and globalized world economy. Fintech's unique nature and flexibility make it an ideal candidate for international aspirations.
