Banking woes dampen Singapore MSMEs overseas ambitions
Only 2 in 10 Singapore micro-multinationals think banks offer value for money.
Complexities in international banking are named as a top challenge for micro, small, and medium businesses (MSMBs) in Singapore to expand operations overseas, according to a study by fintech company Wise Business, formerly TransferWise.
Of the 508 Singapore MSMB leaders surveyed, 63% or over six in ten said that the cost and complexity of managing international payments is a major deterrent for them to venture or further expand operations abroad.
And whilst eight in ten or 83% of Singapore micro-multinationals—MSMBs who already have operations overseas—use old-school methods like bank transfers or card payments, only two in ten think banks offer value for money.
The only thing saving banks is familiarity, the survey found.
“Interestingly, whilst the cost of international payments is a top consideration for 86% of local micro-multinationals, only 2 in 10 (22%) think banks offer value for money — and it’s mostly familiar with the traditional provider that’s keeping them from leveraging better options,” Wise Business wrote in the press release.
“Indeed, micro-multinationals here are more likely to stick to their banks out of convenience than in other markets like Japan and Australia, as 38% believe it’s easier to use the same provider to manage both domestic and international payments,” the study added.
Globally, Singapore has the highest percentage of MSMBs (80%) who have been discouraged or prevented from expanding internationally. Payments emerged as a top challenge followed by lack of capital or resources (44%), import tariffs (36%), and culture or language considerations (32%).
The Lion City is found to be home to the highest proportion (70%) of MSMBs surveyed that already has operations abroad. Almost nine in ten, or 88% of these micro-multinationals indicated that it's harder to run a global business today as compared to five years ago, particularly due to the challenges of international payments and banking (61%).
Other factors making things more challenging for Singapore micro-multinationals include tariffs/taxes (40%), and the complexity of managing international supply chains (25%).
The global pandemic only added to challenges.
“The global pandemic has only further stymied expansion dreams, with 60% of Singapore micro-multinationals having had to either cancel or delay their global expansion plans due to COVID-19 — the highest amongst the countries surveyed,” Wise Business said.