70% of UK SMEs plan to scale internationally in 2023, but digital adoption will be crucial to success

70% of UK SMEs plan to expand into, or further into, foreign markets in 2023, despite the economic slowdown, an Airwallex poll has found.

The independent research, which surveyed 500 UK SME decision makers, considered where and how SMEs are planning to invest and grow their operations abroad in 2023 and beyond. 

Of those businesses that plan to expand internationally within the next five years, 81% have their sights set on Europe and North America, whilst 60% are looking to scale in Asia Pacific, Latin America, Africa and the Middle East in the future.

However, amidst rising production costs and the threat of inflation, SMEs will be keeping tight control of their budgets. Digital adoption will play a key role in facilitating growth and limiting expenditure as businesses navigate upcoming economic headwinds.

85% of UK SMEs to adopt fintech solutions within the next five years

71% of UK SMEs say the current economic environment has made it more important than ever to reduce unnecessary costs, and almost three quarters are investing in technology to optimise productivity in the face of economic pressure.  

Technology will also play a crucial role for businesses that are scaling internationally. 65% of SMEs say they need the agility of a fintech platform in order to manage global growth. But a quarter say they do not yet have adequate software in place to enable their expansion.

In order to reduce expenditure and maximise efficiency, 52% of SMEs say they will be moving away from traditional banking services onto fintech platforms within the next five years, and 33% say they have already made the switch.

Based on the data, we predict that 85% of UK SMEs will have adopted fintech solutions over traditional banking services within the next five years.

Juan Diego Farah, Head of Growth, EMEA at Airwallex says: “A key challenge for UK SMEs will be navigating the rising inflation and higher costs impacting all businesses. If SMEs are to continue driving expansion during the economic downturn, they need to be equipped with tools and technology that offer true flexibility over domestic and international payments, managing funds and expense management.” 

Employee retention, partnerships and retained profit key to growth 

Only 27% of SMEs surveyed say they will be financing their international expansion efforts through bank loans in 2023. 

Instead, 47% plan to fund their growth by reinvesting profits, and 38% will rely on partnerships and affiliates. 

Employee retention is also high on the priority list for businesses, with 71% agreeing that retaining talent is crucial to their growth plans. 73% say they are actively investing in their existing employees and 69% agree that employee retention is currently a greater priority than hiring new talent.  

The takeaway here is that businesses are looking to achieve global expansion without risk by capitalising on existing resources, including staff and partners. 

Improving efficiencies with the right financial infrastructure will be more important than ever as businesses work to do more with less.

Airwallex’s financial infrastructure empowers businesses to go global 

 Airwallex is an all-in-one financial suite which enables businesses to scale globally whilst saving time and resources.

Once signed up, our customers can open 11 foreign currency accounts at the click of a button, with no bank branch visits, monthly fees, or time-consuming paperwork required. 

 With Airwallex’s financial infrastructure in place, businesses can collect, hold and spend in multiple currencies without being subject to forced FX conversions. Opening up the possibility for frictionless global trade.   

Additional Airwallex features include borderless cards, bank-beating FX rates, high-speed global transfers and an online payments API which enables eCommerce businesses to collect multi-currency customer payments without paying unnecessary fees.

Pranav Sood, GM, EMEA at Airwallex says: “There is clear optimism for international expansion, particularly when supported by the right talent, partnerships and technology. Our mission at Airwallex is to empower businesses to operate anywhere, anytime, by providing a global financial infrastructure that offers them complete control over their finances in a single platform. In EMEA, we’re continuing to invest heavily in the regional team, so we can better support UK and European businesses, and help them achieve their growth ambitions as they prepare for future expansion.”

To learn more about how Airwallex's financial infrastructure can help your business expand across borders, sign up for an account today.